Since the pandemic, most consumers have noticed that inflation in the prices of goods and services is rising steadily to unsustainable levels. And Spain is unfortunately no exception. This generalised rise in prices has affected all sectors, with a particular increase in the energy sector, where the price of electricity bills in Spain has risen sharply.
That’s why, in this post, we explain the main aspects to bear in mind when formalising an electricity contract in Spain, so that you, as consumers, can find the most advantageous option for your electricity contract, basing your decision on the real energy needs of your home in Spain.
As this is a subject that is not dealt with regularly, many users are unaware of the options available to them. If you’ve decided to buy a home in Spain, this article will be of interest to you.
In what follows, we will look at and discuss the two main energy markets to which electricity contracts may be subject: the free market and the regulated market.
Electricity market in Spain : Regulated energy market and free energy market (Mercado regulado y mercado libre de energía)
Here are the 2 options that currently exist for taking out an electricity contract in Spain. There are a number of differences between them, which we will explain in more detail below.
What are the differences between the free market and the regulated market?
Number of companies offering services:
- In the free electricity market, there is a large number of companies that freely offer their services to customers;
- On the regulated market, on the other hand, there are a total of eight companies, known as “reference marketers”.
Conditions offered in contracts: Companies operating on the free market have complete freedom to choose energy prices, as well as any other clauses they wish to include in contracts.
By contrast, companies operating on the regulated market are not free to enter into contracts, but they all offer customers the same energy price, in addition to other contractual terms and conditions. As a result, there is only one tariff on the regulated market, the PVPC tariff. This tariff includes hourly price discrimination, establishing three different daily prices for energy, divided into off-peak periods: Valle , Llano y Punta
Possibility of applying for the social subscription (bono social eléctrico): those who decide to sign their contract on the free market automatically waive the right to apply for the bono social eléctrico, while those who sign their contract on the regulated market can benefit from the bono social, provided they meet the requirements of their application.
Power limits: Contracts governed by the free market can be for any power available, whereas for the regulated market, the contractual power is limited to 10 kW.
Additional services: Companies operating on the regulated market cannot offer additional services to their customers, such as repairs or maintenance, as part of their terms and conditions, whereas on the free market there are no such requirements.
How can I find out which electricity market in Spain is right for me?
Once you know the differences between the two types of contract, you need to carry out an in-depth analysis of the actual energy demand in your home and your energy consumption habits, in order to find the cheapest electricity company for each particular case.
Knowing your own consumption habits is of great interest, because in many situations the option with the lowest energy prices is not the best option for concluding a contract, since the savings will be determined to a large extent by the household’s consumption habits.
The truth is that there are certain situations that help to decide on one or other option as a general rule, and we would highlight the following cases:
It will be more interesting to opt for the FREE MARKET option in the following cases:
- Consumer energy demands exceed 10 kW of power; when consumers develop most of their consumption in the less economical time slots of the TTC tariff and cannot redistribute their consumption to more economical hours; and when, at the time of processing the contract, there is a large opportunity on the free market.
However, it will be more attractive to opt for the REGULATED MARKET when:
- Consumers can structure their consumption during the hours when the PTTC has a reduced price; when they intend to apply for the bono social eléctrico and the requirements are met; or if, at the time of formalising the contract, electricity prices are following a downward trend.
We know that these subjects can be confusing for those who are not experienced in the electricity market, which is why we have tried with this article to explain them as simply as possible so that you can understand when these subjects are discussed on television and which markets are subject to the greatest variations.
And what about you? Did you know what type of contract you had last year when we saw the bill increases? Did you know whether you belonged to the free market or the regulated market in Spain?
Share this article so that other people can understand the electricity market in Spain, I’m sure they’ll thank you.