HE electricity market It left behind the exorbitant increases during the worst period of the energy crisis. After historical highs, the price is following a moderate trend. HE price electrical environment Last year it remained at 87 euros per megawatt hour (MWh); This is the lowest level in three years; This is almost half the inevitable 2022’s 167 euros, but still well above the previous decade’s average of 45 euros.
Following the decline of prices reaching historic highs and the extreme volatility exacerbated by Russia’s military invasion of Ukraine, the electricity sector is anxiously experiencing the opposite phenomenon. r after levelsRecord prices exceeding 700 Euros per MWh Once the level reached at the beginning of the war was reached, the number of market crashes increased rapidly over the past year and The price drops to zero euros.
Wholesale market with electricity companies and traders They buy and sell energy to be consumed the next day, setting different prices for each hour of the day and multiplying the hours that had zero prices last year. all year round A total of 109 watches were used with a brand new price, this is the record of the last decadeIn addition to hundreds of hours at a discounted price of less than one euro, according to analysis by Francisco Valverde, an expert consultant on the energy market, with data from the Iberian Energy Market Operator (OMIE).
Last year, more than a hundred hours of trading took place in the electricity market at zero prices. It was only four hours in 2022and they all gathered in the early hours of New Year’s Eve, almost approaching the new year. Until then and Not a single watch has been recorded at zero price in almost a decade. To see that the electricity market had previously fallen to zero euros, you have to go back to 2014, when there were 177 hours in total for the entire year.
More renewable energy, less price
The electricity market, also known as the pool, divides prices into one marginal system Requiring the latest and most expensive technology to meet demand also determines the price of others. Some so-called non-marginal production technologies (renewable energy, nuclear and hydropower) enter the market at a zero price, so when the production of these energies is sufficient to cover the entire planned consumption, the price remains at this zero euro. This is what happened in those 109 hours of 2023.
The massive deployment of new renewable energy sources in the last two years, faster than expected, especially in the case of new photovoltaic plants, is causing the number of hours during which the wholesale electricity market collapses to rapidly increase. There is a growing difference between hourly prices of the same day. Spain managed to produce more than half of its electricity with renewable energy for the first time in 2023, becoming the leading source of generation ahead of wind energy, nuclear and gas power plants.
There are warnings from the electricity sector, and particularly the renewable sector, about the impact on business of this ‘cannibalisation’ of electricity prices. Cannibalization, because, the companies warn, it is precisely the growth of renewable energy sources that is endangering the profitability of existing and future green installations due to the decline in electricity prices, which could result in a halt to investments in new developments. lack of incentives and uncertainty.
Energy companies also warn that the market’s drop to zero represents an alarm signal about some shortcomings in the system, given that some of the production could be offloaded or saved if there was sufficient storage capacity (batteries) or more interconnections with the rest of Europe. Choose times of the day when there is less production and thus avoid sudden fluctuations in price.
Changes depending on the season of the year
Compared to the decades-old trend that the lowest prices are always concentrated at night due to reduced business activity and reduced energy consumption, the daily price chart in the last two years shows a different behavior depending on the season of the year. In the months with more daylight hours, particularly between April and September, the cheapest electricity prices are now clearly concentrated in the central hours of the day due to the impact of greater generation from power plants on price formation. and the self-consumption boom.
On the contrary, in autumn and winter – especially between November and January – the lowest prices relative to the average market price continue to be recorded at dawn, with fewer working hours at some times of the year due to the lesser predominance of solar energy. due to light and the usual high production of wind energy during these months.
Combination of moments of reduced demand and the increasing weight of renewable energies mixture The decrease in electricity production in Spain causes these events to occur more frequently. Zero price hours are concentrated mainly on weekends and holidays due to low electricity consumption. For example, on Sunday, November 5, electricity was accumulated for 16 consecutive hours, the highest in almost a decade. According to Francisco Valverde, an expert consultant on energy, this many hours at zero prices have not been recorded since February 8, 2014, when a total of 17 hours were collected.
There is just Two days in the history of Spain where the electricity market was marked by zero prices throughout the day consecutively on March 29 and April 1, 2013, in the middle of Holy Week of that year. However, given that the electricity price of the regulated electricity tariff at that time was determined through special auctions held every three months, which determined the price of the entire electricity tariff, the development of the wholesale market did not have a direct impact on consumer bills. quarter.