Three takeaways of an electrizing summer

This summer has been extremely hot for energy consumers in Spain due to the shocking rise in prices, especially in the electricity rate. In fact, August accumulates two records: i) it was the month with the most expensive electricity in history (105.94 euros per MWh), which tripled the average price of August 2020, and ii) the MWh reached its highest price on the 31st of August with a record of 130 euros per MWh, although such record was again exceeded in the first days of September in an upward trend that will continue well into 2022 and that is already affecting the current levels of inflation.

In addition to the general concern about the increasing prices of electricity, this summer people have realized that climate change is not an issue affecting only others but that it is already present in our daily lives: heat waves with record temperatures, floods from strong storms, serious forest fires, advance of desertification… The Intergovernmental Group of Experts on Climate Change (IPCC) of the United Nations has declared that the Earth is in ‘code red’ due to the need to drastically reduce the emissions of greenhouse gases to avoid a rise in temperatures of more than two degrees Celsius above pre-industrial levels.

As the increase in the natural gas prices is one of the reasons for the high prices of electricity, we have once again become aware of Spain’s high dependency on the imports of primary energy sources. We import 73% of the energy we consume, a percentage that goes up to 99% in the case of natural gas.

From this current scenario we can reach three conclusions:

  1. Spain urgently needs to reduce its dependency on primary energies. The fastest way to do it is by taking advantage of Spain’s resources -sun, wind, and water- and betting on energy efficiency.
  2. The implementation of renewable energy can be accelerated. Proof of this is that Red Eléctrica de España (REE) has granted permits for wind and solar plants for an aggregate of 147.1 GW that are not yet in operation, with an additional 24.7 GW currently immersed in the concession process. This permitting bottleneck must be eliminated to accelerate the entry into operation of clean energies that will replace those that burn fossil fuels.
  3. In the medium and long term, clean energies that enter into the system will help to lower the price of electricity. In the short term, a decrease in the electricity prices is almost impossible without regulatory changes. One alternative would be to eliminate the “windfall profits” received by nuclear companies and, in particular, by hydropower generation companies.

Meanwhile, as citizens, let us remember that the best way to fight climate change and, additionally, to reduce our energy bill, is to be more efficient in the use of energy.