August brought with it a significant increase in the price of electricity, mainly affecting consumers who depend on the regulated PVPC tariff or on market-indexed tariffs.
During this month, the price of electricity experienced an increase of 28.68 per cent compared to July, exceeding 100 euros per megawatt-hour (MWh) for six consecutive days.
Does this have any impact on home charging of electric vehicles?
Álvaro del Pozo González, founder of LINC-E, explains to Mobility Portal España:
“Electricity prices, although it is true that they have risen significantly in August, only impact the end consumer who has a regulated PVPC tariff or a price indexed to the market.”
While those with a fixed rate, “which are the majority in residential areas,” are not affected.
It is important to remember that, as now, a PVPC or indexed rate has meant an increase in the cost of energy.
During the spring, during the hours of greatest solar radiation, electric vehicle owners were able to charge their cars almost free of charge, as the price of energy was at 0 euros per kWh or even negative, reaching -0.01 euros per kWh.
“According to statistics, in 8 out of 10 years it is cheaper to opt for this type of variable market-based tariffs,” he says.
Despite this relief for some, those under the most volatile contracts have noticed an impact.
To exemplify this situation, del Pozo González explains the impact it has on the domestic recharging of a Tesla Model Y.
In April, with an average electricity price of 31 euros per MWh, the cost to charge a 51 kilowatt (kW) battery was 1.56 euros.
In August, when it reached 101 euros per MWh, the cost of supplying the same electric car rose to 5.15 euros.
The difference would be less than 4 euros and with those 5 euros you could travel approximately 400 kilometers, according to the expert.
“It is still extremely cheaper to charge at home compared to refuelling with fossil fuels, as travelling the same distance would cost approximately 40 euros,” he says.
What preventive measures can be taken to mitigate this impact?
Juan Carlos Barranco, CEO and Co-founder of ESMOVE, suggests always looking for the cheapest rate or regulated rates, such as charging during off-peak hours.
“There are also fixed rates that include different time slots,” he tells Mobility Portal España.
It is worth noting that if the owner of an electric vehicle has a photovoltaic solar panel installation, he or she could significantly reduce the cost of his or her travels.
What caused the tariff increase in August?
According to EEE, this phenomenon is attributed to high demand during hours when solar generation is not available, which has increased dependence on the combined cycle.
This increase in consumption coincides with the summer season, when the use of air conditioning and other cooling systems increases electricity consumption.
At the same time, rising gas prices and CO2 emissions have contributed to this upward trend.
In a context of high volatility, the stability offered by long-term power purchase agreements (PPAs) becomes increasingly attractive for the corporate sector, which seeks to avoid market fluctuations.
In fact, according to industry consultants, the growth of the PPA (Power Purchase Agreement) market has been notable, with figures already reaching the total for 2023.
High rates in August are not an isolated phenomenon.
The year 2024 sees a gradual increase in energy prices, driven in part by weather conditions and the scarcity of renewable resources in the preceding months.
February, March and April experienced significantly lower average prices, at 40 euros per MWh, 20.31 euros per MWh, and 13.67 euros per MWh, respectively.
As the year progresses and demand increases, prices also soar, reaching 56.08 euros per MWh in June and eventually the levels of the eighth month.
The impact of these increases is not limited to individual consumers.
Businesses are also feeling the pressure of higher energy costs, which are affecting both daily operations and profit margins.
In this context, August could end as the second most expensive month in the history of electricity prices in the country, only surpassed by the same month of the Russian gas crisis in 2022, when the figure reached 154.89 euros per MWh.
Are there any possible solutions?
According to the Yearbook of the Business Association for the Development and Promotion of Electric Mobility (AEDIVE), a large-scale flexible operation of the distribution network is beginning to be considered.
This approach is seen as a key mechanism to contain the rising cost of network fees paid by the end consumer.
This flexibility, together with the promotion of renewable energy production and storage, could be key to mitigating future price increases and ensuring a smoother transition to a more sustainable energy future.
Meanwhile, for EV owners, home charging remains the most economical option, though not without its challenges.
