What the PVPC Is and Where Your Electricity Price Comes From

The PVPC is the electricity tariff whose price is set by a formula published in the official gazette rather than by a company, and it changes every hour of the day. Since 2024 it no longer tracks the day-ahead market alone, and energy is only one part of what you end up paying.

What the PVPC is

The PVPC — the voluntary price for the small consumer — is Spain’s regulated electricity tariff: the only one whose price is decided not by a company but by a formula published in the official state gazette. That formula lives in Royal Decree 216/2014, last amended in June 2023, and it is applied by the reference retailers, the companies the rules designate to offer this tariff.

Two things set it apart from any commercial offer. The price changes every hour of the day, and it is known before that hour arrives: Red Eléctrica, as system operator, is required to calculate and publish the components of the production cost before 20:15 on the day before supply, for each of the 24 hours of the following day, and those values are firm for billing. By early evening, tomorrow’s price is no longer a forecast.

That is where an app like PrecioLuz earns its place: as soon as the figures are out, it sends you tomorrow’s average, how it compares with today, and the cheapest stretch for your zone.

Who can be on it

Since 1 January 2024 the door has been narrower. Only supply points belonging to individuals or micro-businesses can take the PVPC, connected at voltages no higher than 1 kV and with contracted power of 10 kW or less in every time period. Contract more power than that, even in a single period, and the free market is your only option.

It is also a minority tariff. At 31 December 2024 there were around 8.4 million consumers on the PVPC, and only 28.5 % of household consumers were still on it, according to the retail market supervision report published in July 2025 by the CNMC, Spain’s energy and competition regulator.

It is no longer a copy of the day-ahead market

This is the part almost no article keeps current. For years, the energy component of the PVPC simply mirrored the next day’s wholesale market. Royal Decree 446/2023 changed the formula, with effect from 1 January 2024, to index it partly to the forward markets: the futures contracts through which electricity is bought months or years ahead.

Two coefficients split the weight between the two signals. In 2026, now in its definitive form, the one weighting the day-ahead and intraday markets is 0.45 and the one weighting the forward market is 0.55. The path was gradual: the forward signal weighed 25 % in 2024, 40 % in 2025, and rises to 55 % this year, leaving the remaining 45 % to the day-ahead and intraday signal.

That basket of futures is not a single product either. It is made of 54 % annual product, 36 % quarterly and 10 % monthly, all baseload contracts with financial settlement traded on the organised market OMIP. Each is averaged over a different window: the six months before settlement starts for the annual one, the three months before for the quarterly, and the previous month for the monthly. The result is a smoother price, less exposed to a week of runaway market — and less able to make the most of a cheap one.

Damping volatility has a cost, and it has been measured: the CNMC calculated that in 2024, the first year of the new methodology, the forward component added an average of 6.44 €/MWh compared with the old formula.

What has not changed is the granularity. The decree still states that the production cost “shall take a different value for each hour h”. The PVPC still moves hour by hour; what shifted is the reference its level comes from.

The energy is only part of the price

The PVPC is built by adding three blocks: the cost of producing the energy, the peajes — the tolls paid for access to the transmission and distribution grids — plus the system cargos, and the retail supply costs.

The peajes are what you pay for using the grid, and their methodology and values are approved by the CNMC, the national regulator. The cargos are energy policy costs set by the government: for 2026, the order approving them assigns 42.74 % to the specific payment scheme for renewables, cogeneration and waste, 39.21 % to the tariff deficit, 17.51 % to the non-mainland territories and 0.54 % to other items.

A very common confusion starts here. The peak, flat and off-peak bands apply to the peajes and the cargos, not to the market component, which has its own price for each of the 24 hours. But since tolls and charges travel inside the PVPC, the bands are felt in the bill anyway: in the peak band the regulated part of the energy term is by far the dearest of the three, while off-peak it is close to symbolic.

Taxes sit apart and on top: the decree itself states that PVPC prices exclude the taxes levied on electricity consumption and supply. The Special Electricity Tax applies to the sum of the power term and the energy term — its ordinary rate is 5.11269632 %, with the resulting amount not allowed to fall below 1 euro per MWh for household use. Meter rental is added separately, outside the base of that tax, and VAT is calculated last on everything above, electricity tax included. Today electricity is taxed at the general 21 % rate, restored on 1 June 2026 after a temporary cut to 10 %.

PVPC, the free market and the wholesale price

The wholesale market is where supply and demand for the next day are matched. It is run by OMIE, the market operator: bidding closes at 12:00 mainland time, preliminary results are published from 12:55 and confirmed as firm at around 13:05. Since 1 October 2025 trading runs in quarter-hour periods, 96 of them on a normal day, while the PVPC that Red Eléctrica publishes is still hourly, with 24 values a day. That wholesale price is not what you pay: it is the raw material of the first block.

On the free market, by contrast, the price is agreed between the parties in a contract, fixed or indexed, and comes from no published formula. That is the difference that matters: the PVPC is calculated the same way for everyone, and the method is written down.

If you have solar panels the distinction matters even more: the surplus of a consumer on the PVPC is valued at the hourly price of the day-ahead and intraday markets, minus imbalance costs, not at the PVPC you pay to consume. PrecioLuz shows that wholesale price alongside surplus compensation and PrecioLuz shows that wholesale price alongside surplus compensation and flags the hours when the surplus turns negative: since 28 May 2026 the floor for clearing prices in the European day-ahead market has been −600 €/MWh, so prices below zero are not a textbook hypothesis.

Today's PVPC, hour by hour

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