From rise to rise: comparing electricity prices in Spain and the rest of the euro zone

The price of electricity in Spain is one of the most talked-about cost issues. most discussed in terms of expenses. For many, the constant rise in the price of electricity is seen as an unsustainable situation and mismanaged only by this country. For this reason, I have decided to create a comparison of the price of electricity in Spain with respect to other countries in the euro zone to see if it really is one of the countries with the worst rates.

Table of contents

1. Understanding how the light industry works.

2. Light in data.

3. Comparison with Europe.

4. The reality of the situation.

5. Summary table.

Understanding how the light industry works 

In our electricity bills we can see that the price of electricity in Spain is mainly composed of two elements:

• A fixed rate. For access to electric service, which is charged according to each kW of contracted capacity.

• Variable rate. Where the cost of consumption, which varies according to the different time periods established by our tariff.

With respect to the distribution of electricity expenditure in Spain, there is a certain disparity between electricity production and consumption across the different autonomous communities.

In regions such as the Community of Madrid, where electricity production barely reaches 4.8% of consumption, electricity expenditure is significantly impacted by the need to import energy from other areas. import energy from other areas. This scenario is repeated, although in different magnitudes, in communities such as Cantabria, the Basque Country, the Valencian Community, Andalusia, the Balearic Islands, and Catalonia.

On the other hand, regions such as Extremadura (with large investments in solar energy) and Castilla y León (investments in wind energy), which generate much more electricity than they consume, not only cover their local needs, but also export electricity.not only cover their local needs, but also export electricity.

Light in data 

The energy sector has undergone significant changes over the last year, which have had a direct impact on the price of electricity in Spain. One of the most notable changes has been the implementation of a new methodology for calculating the Voluntary Price for the Small Consumer (PVPC), which was affected by a new (PVPC), affected by a reform promoted by the European Union. This change sought to offer a more stable tariff, although not necessarily cheaper.

One of the main problems of the electricity bill is the lack of price regularity.

The average bill for a typical household (4.6 kW of contracted power and 292 kWh of monthly consumption) under the PVPC tariff in January 2024 amounted to 63.10 euros. This represents an increase of 10.4% compared to December 2023, when the bill was 57.10 euros.

Looking back over the last five years, the price of electricity in Spain has been volatile. the price of electricity in Spain has been volatile, reflecting regulatory changes and fluctuations in the global energy market.reflecting regulatory changes and fluctuations in the global energy market. In 2020, the average monthly bill stood at €56.28, but driven by geopolitical factors it peaked in 2022 with an average annual bill of €105.48.

Over the course of 2023, there was a slight reduction in the average monthly cost to 60.26 euros. This drop was the result of the fiscal support measures implemented to mitigate the impact of the mitigate the impact of the energy crisis. However, with the partial withdrawal of these measures at the beginning of 2024, a short-term rebound in the cost of electricity is anticipated.

Comparison of the price of electricity in Spain with Europe 

At the European level, the energy market in Europe in general has witnessed significant changes and volatility in electricity prices in recent years. And taxes and fees are important elements to consider in the bill. Spain has a VAT of 21% on electricity, one of the highest, along with Italy, which along with Italy, which applies 22%. While Germany and France apply 20% VAT.

The following table compares electricity prices per kWh for domestic and industrial consumption in some of the main European countries:

COUNTRY	Price per kWh (Households)	Price per kWh (Industry)	VAT	Main Energy Policies
Germany	€0.32	€0.24	20%	Transition to renewable energies, reduction of dependence on natural gas.
Spain	€0.31	€0.22	21%	Promotion of renewable energies, diversification of gas suppliers.
France	€0.17	€0.14	20%	Commitment to nuclear energy, development of renewable energies.
Italy	€0.32	€0.23	22%	Diversification of energy sources, promotion of energy efficiency.

Germany, Spain and Italy are the countries with the highest prices for both households and industry. While France benefits from lower tariffs. Taxes and fees also vary, which influences the final cost.

The reality of the electricity price situation in Spain

Spain is among the countries in the euro zone with the highest electricity tariffs. The high percentage of taxes and fees applied have contributed to our situation. Approximately 40% of the electricity bill corresponds to VAT and the Electricity Tax. On the other hand, the wholesale market model, where the price of electricity in Spain is fixed through a system of auctions, also contributes to the volatility of the price compared to other countries in a better situation.

The price system itself is what differentiates the situation of electricity in Spain from the rest of the European Union.

The price of electricity in Spain will continue to rise in 2024 after the withdrawal of fiscal support measures withdrawal of fiscal support measures. So be sure to analyze and compare the available energy tariffs to find the most suitable one according to your consumption profile, and adopt simple measures to improve electricity management. Such as turning off electronic devices instead of leaving them in standby mode, using natural light whenever possible and properly insulating spaces to minimize heat loss.

Summary table

Understanding how the light industry works	What elements make up the electricity bill. Distribution of electricity expenditure by geographical area in Spain.
Light in data	Variations in electricity rates in the last year. Comparison of electricity prices over the last five years.
Comparison with Europe	Analysis of tariffs in the main European countries. Advantages and disadvantages in data with respect to Spain. Comparison of increases with respect to the national situation.
The reality of the situation	Comparison of governmental regulation of light with respect to the best performing countries. Analysis of the actual situation in Spain and recommendations on energy management.

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