Esteve Rodriguez, from Granollers, is Director of Markets and Operations at Estabanell. It has been 25 years since Esteve, a person closely linked to the social and sporting fabric of the Valais capital, worked in Estebanel. We talk to him to talk about energy, a concept that is very close and, at the same time, there is still a lot to discover.
It seems to me that people on the street think that all electrical energy is green because it does not burn gasoline.
It’s there, that fantasy, yes. It is true that a percentage of the electricity generated comes from renewable sources, but not all of it. We have succeeded in decarbonising a lot. But there is still a lot to be done to generate all the energy we consume from renewable sources. Elements such as gas are still used.
Gas? What does gas have to do with the topic?
One way to produce electricity is to use natural gas as fuel. Natural gas is burned in a turbine that drives a generator to produce electricity.
Does this have disadvantages?
Yes. And many, many more, and their impact on the environment. Among them is that gas is not renewable and is affected by the increase in raw materials…
For example?
There is a very clear case: when the Ukrainian crisis happened and gas prices skyrocketed, electricity prices skyrocketed because gas-fired power generation was still needed to meet all the energy demand.
In line with what you say, how does the electricity market work?
The electricity market has a complexity that we sometimes don’t fully understand. In the electricity sector there are two big worlds. There is a material world. That is, there is a point where electricity is generated, transmitted through transmission and distribution networks, and delivered to the final consumer. But parallel to this world, directly related but separate, is the economic world.
economic world?
Yes, wherever economic transactions of buying and selling energy flow take place. A unified market in the Iberian Peninsula in which electrical energy is bought and sold and in which sales agents, who are generators, and buyer agents, who are marketers, operate. In this central market what happens is an energy auction every hour.
Is it the famous cost of electricity that is explained in the media when the price rises or falls?
Yes. It is a different price every hour, and every day of the year, and relates to the point where supply and demand meet.
What does it depend on that goes up or down?
Well, it depends on several factors. One of the most important is energy demand. If there is a lot of demand, it means that many agents must come to generate power. This means that the most qualified people will enter, but the less qualified people will certainly also enter. That is, those who find it more difficult to generate energy in terms of cost. So the price will rise here. Conversely, if the demand is very low, those energies that are more efficient or those that cannot really decide whether to stop this generation or not will definitely come. We’re talking about photovoltaic technologies, wind technologies, which when the wind is blowing or when there are hours of solar radiation, they take advantage of that and can’t, obviously, stop the sun or the wind or not stop it.
Yes. And that in euros means…?
Well, in 2022 there were differences of 700 euros per MWh, and this year, although prices have stabilized much more, we are talking about differences between cheap hours and expensive ones of between 170 and 180 euros per MWh. .
Is the cost of this megawatt what I will see later on the bill?
What appears on the invoice is the selling price for trading companies. To clarify, the price per megawatt that is mentioned in the media is a very tentative price. There are all kinds of ingredients that need to be added. For example, we marketers buy energy at the point of generation, not at the point where our customers are located and there will be losses along the way. If a customer consumes 100 kilowatts, the marketer should buy 120, because 20 will be lost along the way. Another cost not included in this initial cost is the adjustment services, which are all the actions carried out by Red Eléctrica de España (REE), the owner of the transmission network, to translate all the economic orders to buy/sell energy into physical reality. There are more components, tolls, taxes…
I al final?
Well, in the end we will arrive at the price that was put on the market will only be 50% of the final price.
Who really sets the price of electricity?
There are currently two main types of pricing. There is the Small Consumer Voluntary Price, PVPC, which is a regulated rate that reflects market cost and adds regulated components set at the Bank of England. Benefit from this price? This reflects the market cost. flaw? He is quite fickle. There will be times when this price will be lower than the average price offered by marketers, and times, such as early 2022, when this price will rise significantly. On the other hand, marketers try to mitigate market volatility.
How do they do it?
We try to have tools that guarantee us the same price in the face of price differences in the central market. We try to pass a fixed price to our customers. In the end it comes down to saying: “What do I prefer as a consumer? I have a fixed price that has been known for a while and I know that I will pay that and everything will come according to my consumption or do I prefer to play the lottery and bet knowing that today I pay two and tomorrow I can pay 20?”
What does Estabanell suggest to clients: play the lottery or settle?
We have always emphasized that it is necessary to be transparent with consumers and offer them stability at all levels, not only in price, but also, above all, in service. Our differentiating factor is proximity. We want customers not to worry about their energy because they trust Estabanell.
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