article_detail

Electricity bills for homes across Spain shot up by 8.3% in July compared to the same month last year, according to the latest data from Eurostat. That's more than five percentage points above the EU average of 1.6% and well ahead of the eurozone figure of 2.1%.

 

Spain's price rise sits behind only Italy, where bills jumped by 13%, and ahead of Portugal, which saw a 6.1% increase. Germany and France went the other way, with bills falling by 5.3% and 1% respectively.

 

It's worth noting this data reflects what households actually pay, rather than the wholesale electricity price, which averaged over €100/MWh in July and has been sitting around €121/MWh in August.

 

One of the main factors pushing up costs since April has been spending on system operation services, part of Red Eléctrica's effort to strengthen grid stability following last year's blackout. These costs are now estimated to make up around 5% of a household's bill, rising to 8% for small businesses and 13% for energy-intensive companies.

 

Solar power has been playing a bigger role too, accounting for 14% of Spain's electricity generation in July compared to 12.5% the year before, and nearly 15% so far in August. Gas has also crept up though, now making up almost 11% of generation in August compared to 8.9% last year.

 

Despite rising prices, the government has held off on reintroducing any tax cuts this summer. A reduction in VAT on electricity and gas, which ran from March until the start of June, won't be coming back for now, as inflation didn't reach the threshold needed to trigger it again.

 

There is some relief on the way though. The government has permanently scrapped the tax on electricity generation revenue, with the rate cut by 30% from July, rising to 40% by the end of the year, before eventually being phased out completely by 2028. Officials expect this to bring bills down by around 6% once it’s fully in place.