Wind energy en the price of light
| Predicted demand coverage with wind energy (%) | |
| Price schedule PVPC (cent€/KWh) |
Wind energy en the price of light
WHY THE MARKET PRICE LOWERS WITH WIND ENERGY?
The final cost of the domestic electricity bill depends on three main components: regulated costs (which in 2020 accounted for around 52%), the cost of electricity generation (26%) and taxes (22%). It should be mentioned that 2020 was an anomalous year due to the pandemic caused by COVID19, which caused a collapse in electricity demand and very low prices in the wholesale electricity market (the lowest of the decade), so the proportion of regulated costs seems higher than it usually is (around 45%), while that of electricity generation is lower than normal (usually around 30%).
The regulated costs of the system are transportation, distribution, debt payment and interest on the tariff deficit, the incentive paid to large industries to reduce their electricity consumption if necessary (interruptibility), payments for capacity to conventional technologies, incentives for renewables and cogeneration, and extra costs for electricity generation in the islands, where it is more expensive to produce than in the Peninsula.
The cost of energy is set in a competitive market (pool) where the different energy sources offer electricity to meet the expected demand one day in advance. Since the cost of wind is zero, wind power producers can offer electricity at a lower price than others. For this reason, the price of the electricity market falls on windier days, displacing technologies with more expensive fuels. At the end of the month, an average is made with the prices of every day. The higher the proportion of wind energy consumed, the less Spanish people pay on their electricity bill. And vice versa.
The use of wind power instead of fossil fuels has meant savings for the system valued at 26,281 million euros in the period 2012-2020, due to the reduction in the price of the electricity market pool.
HOW MUCH DOES WIND ENERGY REDUCE THE ELECTRICITY BILL TO SPANISH CONSUMERS AND COMPANIES?
Wind generation has been a benefit for Spanish consumers Spanish, especially for industrial consumers. For an average consumer with Tariff AT1 and a consumption of 1,500 MWh annual, savings throughout 2020 have been € 7,886 (discounted wind energy incentives included in the electricity bill). If the existing 27,446 MW of wind power had not been put into operation, the electricity would have cost € 7,886 more per year.
In total, wind energy generated a net saving (after discounting the incentives) to electricity consumers of 71 million euros.
WHEN IS THE INFLUENCE OF WIND ENERGY MORE EVIDENT ON THE PRICES OF LIGHT?
The greater the coverage of electricity demand with wind energy, the lower is the price of electricity for domestic consumers.
WHAT PERCENTAGE OF THE ELECTRICITY DEMAND IS COVERED BY WIND ENERGY?
DID YOU KNOW THAT WIND ENERGY WAS THE FIRST SOURCE OF ELECTRICITY FOR THE SPANISH CITIZENS IN 2013 AND 2021?
Wind energy was the technology that contributed the most electricity to Spain in 2013, which was the first time in history in a full year. And Spain was the first country in the world in which this circumstance occurred. The energy produced by the wind in the year was enough to supply 15.5 million average Spanish households. In addition to annual production, wind power surpassed other highs in 2013. On February 6th, it recorded a new record for instantaneous power, with 17,056 MW at 3:49 p.m., 2.5% higher than the previous one, registered on April 18th 2012. That same day, the maximum hourly energy was also exceeded, with 16,918 MWh, between 3:00 p.m. and 4:00 p.m., which represented an increase of 2.8% compared to the previous one.
And in 2021, wind power was once again the first technology in the energy system in production that exceeded more than 60,000 GWh, that is, more than 23%, and with an estimated increase of 10.5% over 2020. In addition, wind power is the first technological source of the mix with more installed power with 27,446 MW. But also on December 8th a new record was recorded. According to data from the Spanish Electrical System Operator, Red Eléctrica, wind energy exceeded 20,000 MW of instantaneous generation for the first time in history. Specifically, it reached 20,034 MW in the Iberian Peninsula at 1:30 p.m. and 1:40 p.m. and at the national level it increased to 20,391.9 MW. The previous record was from December 28th 2020 where the wind power achieved an instantaneous production of 19,588 MW.
IF SPAIN IS ONE OF THE COUNTRIES IN THE WORLD WITH THE HIGHEST WIND ENERGY PENETRATION, HOW IS IT POSSIBLE TO SAY THAT IT IS ONE OF THE EUROPEAN COUNTRIES WITH THE MOST EXPENSIVE ELECTRICITY?
In addition to the cost of energy, the electricity bill includes many other concepts that increase the cost of electricity. Some are directly related to supply, such as transport – a service exclusively provided by REE – and distribution. Others, with supply security, such as capacity payments, national coal subsidies or the incentive paid to large industries to reduce their electricity consumption if necessary (interruptibility). And others are the result of political decisions, such as the costs of the tariff deficit, the incentives for renewables and cogeneration, and the extra costs for electricity generation on the islands, where producing is more expensive than on the Peninsula.
To this must be added direct taxes (electricity tax, with a tax rate of 5.11%, and VAT, 21%) and indirect (7% on generation).
In 2020, incentives for wind power accounted for xx% of regulated costs, while it contributed 21.9% of the electricity consumed by the Spanish citizens.
