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    Spain has not used so much gas for almost 15 years: the keys to the energy crisis


    June 17, 2022 - CE Noticias Financieras

     

      Once again, the price of electricity will rise this Friday after reaching 177.90 euros per megawatt hour in the wholesale market. The increase, of 4.15% over the figure set on Thursday, continues an escalation since the cap on the price of gas for electricity generation was applied, which also goes hand in hand with the fuel. In any case, there will be a slight respite, as compensation to combined cycle power plants hardly varies despite the fact that on Thursday they came to contribute 43.4% of production to the electricity system.

      The percentage is one of the highest seen in the last 15 years. In fact, since June 2008, combined cycle generation had only exceeded 40% on one occasion: two days ago. Gas continues to be the protagonist despite the fact that Spain, in theory, is not so dependent on it.

      What is the cause of the current crisis? And all of them could have had an impact on the price of electricity individually, so their conjunction has increased the price of everything in a sort of negative electrical synergy.

      The first, of course, is the price of gas, which continues to rise. Gas for electricity generation has gone from a price of 80 euros per MWh on the first day of the cap to 106.94 euros per MWh on Friday. It must also be taken into account that in the middle of a heat wave there is a lot of energy demand for cooling and, in addition, part of it arrives in generally quieter times, such as at night. On top of that, solar is not an option. Australia, still heavily dependent on coal, has gone so far as to ask the citizens of the state of New South Wales to switch off the lights for two hours a day to save energy.

      Back to Spain, wind power, the third leg of this unstable table of factors, has been contributing close to 10% of generation for three days (9.9%, 9.8% and 10.2% between June 14 and 16), when shortly before it was the predominant technology, with a load of a quarter of the work.Does the war have an influence?yes, to some extent. Russia stops short of turning off the gas tap, but it doesn't let it flow at full flow either. In fact, Gazprom cut production through Nord Stream by almost 60% in a few days: from 167 million cubic meters of gas to 67 million cubic meters. They claimed technical problems because they did not have the necessary material due to the sanctions, something that Germany does not believe. Be that as it may, the lower the supply, the higher the cost; how is the price calculated - in a reverse auction. Every day, the agencies in charge of energy management in each country go to the wholesale market, where producers bid the electricity they have available based on what it has cost them to produce it. Renewables, therefore, arrive practically free, with the particularity that they are all sold at the same price: that of the most expensive energy. The system is complex, but it is set up to, in theory, benefit green sources and enhance their development. However, there is currently not enough cheap energy being produced to meet everyone's needs and we have to resort to more expensive or polluting sources, such as gas.Why is gas important, apart from the fact that it fills the gaps in the system, because only combined cycle and hydroelectric plants can be brought on line quickly if there is a peak demand. Solar and wind depend on their sources - sun and wind - and coal and nuclear are not immediate, taking hours to days to start generating electricity.

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