Spanish electricity bills soar due to heatwave ahead of government aid

Energy

High temperatures increase demand, reduce solar efficiency and winds, but renewables cushion the blow of gas compared to other European countries

José A. González

Spain is melting under its first major heatwave of the summer and electricity bills are burning up again. Temperatures have pushed above 40C across more than a hundred weather stations, while the rising need for air conditioning has become unavoidable.

The surge in demand has fed directly into the wholesale electricity market. On Tuesday, prices jumped to 112.42 euros per megawatt-hour, breaking back above the 100-euro mark for the first time since 11 March. On Wednesday, the price eased to 95.57 euros per MWh , but still sat well above weekend levels.

The increase came fast. Electricity rose 12.5 per cent on Tuesday compared with Monday, when prices had already approached 100 euros per MWh. By Wednesday, prices remained 68 per cent higher than Sunday's 56.77 euros per MWh. Compared to Tuesday of last week, when the price was 98.30, the increase was 14.4 per cent.

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• Weather

  • Solar panels still produce strong output under intense sunshine, but extreme temperatures reduce their efficiency. Once temperatures climb well beyond the 25C benchmark, voltage drops and internal losses increase. In practice, solar still performs well thanks to strong irradiation and long daylight hours, but it does not operate at peak efficiency.

    Wind power also takes a hit. Hot, stagnant air reduces atmospheric movement, which weakens wind generation. With less wind, the system loses access to cheaper electricity at precisely the moment demand spikes. When renewables cannot fill the gap, gas-fired combined cycle plants step in, and their higher costs drive up prices.

    Monday already signalled the trend. The daily average reached 99.89 euros per MWh, a rise of nearly 76 per cent on Sunday. Peak prices hit 185.90 euros per MWh in the evening, when millions of people returned home and switched on cooling systems. On Tuesday, pressure continued, with the average climbing to 112.42 euros per MWh and evening peaks again nearing 185 euros per MWh.

    The renewables buffer

    Spain now has a stronger buffer than in the past thanks to a larger share of renewables, which reduces reliance on gas. According to the Bank of Spain, before 2021 a ten-euro per MWh rise in gas typically added around 20 euros to electricity prices in major eurozone economies. Today, Spain's energy mix limits that impact to roughly five to ten euros.

    Wind and solar now soften the blow of gas dependence, but they cannot fully offset the effects of a heatwave-driven surge in demand.

    For consumers, the timing also matters. Recent months have seen higher bills return as emergency tax cuts introduced during the energy crisis unwind. The government has restored IVA on electricity to the standard 21 per cent and reinstated the special electricity tax.

    Summer has only just begun and the first heatwave has already delivered a clear message: when Spain turns up the air conditioning, electricity prices rise with it.

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