The price of electricity in kWh or MWh
Consumers are more familiar with the price of electricity in kWh, as this unit of measurement is used in their bills. On the wholesale market, however, prices are expressed in MWh.
- The power tariffs you choose represent the price of electricity you will pay in €/kWh for your consumption.
- Companies buy and sell energy in larger units, the MWh.
Due to recent increases in the daily price of electricity in the wholesale market, the media have popularised the MWh and have followed its ups and downs very closely.
There is a simple correspondence between the two units: 1 MWh equals 1000 kWh.
The price of electricity today on the regulated market (PVPC)
The PVPC, or regulated market, is a tariff linked to the daily price of electricity on the wholesale market. By law, the price that the electricity company pays for electricity today is transferred to the price of electricity that PVPC customers pay the following day.
It is these types of tariffs which are most affected by the daily increases in the electricity price. In Spain, roughly 1 out of every 3 consumers currently has this type of tariff.
The price you pay for electricity under this sort of tariff varies according to the wholesale electricity market price every hour and day.
The price of electricity today on the free market
On the free market, you and your power company agree on a price for electricity, which is unaffected by daily rises in the wholesale market.
The free market affords greater protection against volatility in energy prices.
Factors that influence the daily price of electricity
In Spain there are daily energy auctions (referred to as the pool) in which the MWh price of electricity is agreed upon.
The companies that produce electricity sell the energy to the companies that market that electricity and then pass it on to Spanish households and businesses.
Power generation has a variable cost
Just as with any business activity, there is a price for generating electricity. It costs money to install solar panels, and also to optimise, monitor and maintain them.
In commodity-dependent plants, such as combined cycle plants, the price of the commodity must also be taken into account. Combined cycle power is all about natural gas, where prices are rising on the international markets which Spain is obliged to use.
Power generation is not always constant
Another aspect affecting the price of electricity is that not all energy is produced in the same quantity. Take renewable energies, for example. On cloudy days, less sun can be used for solar energy. During droughts, rivers carry less water, so limiting the amount of electricity generated by hydroelectric power plants.
Energy demand is not always even
There are certain times of the day, month or year when the demand for electricity in our country rises or falls. We know that in the coldest months we usually turn on our heaters or our central heating, while in the warmer months we turn on our air conditioning. And, of course, most people sleep during the night - when energy consumption falls dramatically.
The higher the demand for energy, the higher the electricity prices that energy suppliers will pay per MWh. And the reverse is also true.
Solutions to the daily rise in electricity prices
In the light of current uncertainty, One Luz tariff offers you a very low price for each kWh of electricity you consume. This especially competitive price is the same 24 hours a day so you can use energy with absolute peace of mind.
We also have options where electricity is free during certain parts of the day, such as the Tempo Happy tariffs, which are ideal for people who consume most of their electricity at specific times and they will pay €0 during these hours.