It is unusual for this to happen in December, which is why it is such a pleasant surprise: the cost of electricity this Friday 23 December has dropped to the lowest levels in 19 months, to 21 euros per Megawatt hour. It is also nearly 60% cheaper than it was on Thursday, so using domestic electric appliances before the Christmas weekend will be cheaper.
To put this in context, exactly one year ago electricity cost more than 383 euros/Mwh and during the summer it rose to almost 500/Mwh. The last time it was below 20 euros/Mwh was 9 May 2021, when it cost 10.5 euros/Mwh.
What has happened in just a few hours to lower the cost has a lot to do with the conditions which determine the market each day. One factor is the amount of electricity generated by wind, hydroelectric and solar energy plants. On Thursday 22 December 66% of the electricity produced was from renewable energies. In fact, 40% of it was produced by wind power, thanks to strong winds in much of the country.
Electricity produced from renewable energies lowers the prices because production costs are much lower than those of other technologies. Another reason for the reduction is that there is not much need for the plants which use gas to produce electricity, as it accounts for just 3%.
The price of natural gas is also lower at present than in recent weeks, helped by the fact that EU states agreed this week to cap the gas price at 180 euros/Mwh. On Thursday it was trading at around 90 euros/Mwh, the lowest level since June when prices began to rise sharply due to the tension in Russia.