Spain takes advantage of the collapse in prices after learning to turn off the lights to save

Electricity demand (the light consumption carried out by the entire economy, from homes to large industry) fell by 2.3% last year, the same proportion that already fell in 2022, in the midst of the energy crisis after the invasion from Ukraine. Today, this consumption is still lower than what Spain recorded in 2019, before the pandemic.

Being a variable that was always coupled with economic growth, why doesn’t it shine while GDP does?

For Antonio Delgado, CEO of Aleasoft, the drop in demand is explained “by the increase in energy efficiency, partly voluntary and due to advances in technology, and partly forced by the high prices” of electricity; also due to “the increase in self-consumption”; and due to the lower industrial activity. Despite this reality, there are already “first signs of a possible gradual recovery,” he says, thanks to much more normalized rates.

Cautious consumers

Such was the insistence on saving electricity at the worst time for prices that the Spaniards more than learned their lesson. From Aelec (Association of Electric Energy Companies) they point to this increase in efficiency as a cause of lower consumption. “Consumers reacted to the crisis and became more cautious about when and how they used energy,” the organization indicates.

Everything counts: moderate the temperatures of the devices; use ‘eco’ modes on appliances; make intensive use of light during cheap hours… And be much more cautious when contracting an appropriate rate.

When in the summer of 2022 the price of a kilowatt/hour (kwh) reached peaks above 0.40 euros and the average monthly bills far exceeded 100 or 120 euros, many consumers decided to switch from the regulated market to one of the options. that the electric companies offered them freely.

It was then that the president of Iberdrola, Ignacio Galán, reminded them how a modality with a stable price was better than a high PVPC as it was then. In the last two years, almost two million homes have abandoned this regulated price modality, the cost of which varies every day and every hour. So, they paid up to twice as much as in any of the best free market modalities.

The best rate now and in the future

But now, with generation prices almost at zero euros, the tables have turned. The 8.5 million PVPC tariff users (3% of the total) benefit from an almost ridiculous cost of electricity, of just four or five euro cents per kwh, when adding the fixed costs to the price of 0 euros of generation. However, those in the free market are paying, at least, ten cents per kW consumed.

Which is the best option? Energy experts argue that now is the time to renegotiate free contracts to put downward pressure on electricity companies.

There is also the option of going to the regulated market, which is cheaper these days, although you run the risk of having to assume any unexpected spike in electricity on your own bills. Furthermore, the PVPC is increasingly stable, like the free rates, with the new price formation system, precisely designed to avoid fluctuations like those of two years ago.

The installation of photovoltaic panels on private roofs has also changed electricity demand records. In 2022, a peak of 2.5 gigawatts (GW) was reached, although last year the installation was 1.7 GW.

The president of UNEF, José Donoso, highlighted this week that “2022 must be considered a peak year, due to its exceptional circumstances”, a reference to the fact that high electricity prices prompted many homes to install their own installations.

Will improve by electrifying

However, Alberto Martín Rivals, CEO of Neton Power, points out that “demand is not falling as much” because “it is measured after self-consumption”, that is, without taking into account that individual plates are also part of the system and are not They assume, de facto, that the Spanish consume as little light as it would seem.

Martín Rivals clarifies that it decreases “due to efficiency measures, but with all the decarbonization measures, which are based heavily on electrification, we will probably see an increase in electricity consumption” in two or three years.

The last variable that has influenced the drop in demand is explained precisely by the large consumers of electricity: the electro-intensive industry. Pedro González, general director of AEGE (Association of Companies with Large Energy Consumption), remembers that “the price that an industrialist pays in Spain is much higher than in other countries” due to the costs included in his receipt. And he points out that “companies go where they have the least electrical load due to their production” which is why he asks the Government for “active policies that put us on a par with neighboring countries” to maintain the same prices and competitiveness.