During 2022 the real worry was not pandemic numbers but the surge in energy prices. A paradox emerges: electricity often hits records, and bills arrive like clockwork. Photovoltaic output keeps climbing with no signs of slowing, and notable gains have been recorded in Spain. From January 1 to the present week, photovoltaic generation reached 20,954 GWh, surpassing the entire previous year and setting a fresh benchmark.
To place that figure in perspective, it is more than double the production level of 2019 and nearly triple what was produced in 2018. Yet heat alone is not the ally of solar panels, as sustained irradiation is essential. The sun blazes, but hours of radiation matter less if panels struggle with efficiency. A key driver behind the surge is the growth in installed capacity across the sector.
With this month’s REE data, photovoltaic solar capacity stands at 16,959 MW, challenging hydroelectric power which sits at 17,094 MW. Wind energy leads with 29,535 MW and combined cycle plants with 26,250 MW. In other words, solar is approaching 15 percent of the nation’s installed power mix. Renewables now account for two-thirds of the country’s generating capacity.
In September 2021, REE reported 13,829 MW of installed photovoltaic capacity, so the growth to date is substantial. The total capacity of neither hydropower nor combined cycle plants has shifted much, while wind capacity has expanded more modestly, leaving a gap of about 1,443 MW with 28,092 MW installed for wind.
In other words, photovoltaic solar energy is the fastest growing segment and may soon become the third major generation source by installed power. Hydropower has faced some stiff years, and as of January 1, REE recorded 12,162 GWh generated by dams, which is almost half of the 21,320 GWh produced by sunlight. This comparison highlights the rapid ascent of solar within the country’s energy portfolio.
So why is electricity so expensive?
The question resonates: why is electricity priced so high? The answer lies in a mix of drought affecting hydroelectric output and the broader economics of energy markets. Gas-fired combined cycles produced 47,080 GWh, followed by wind with 40,647 GWh and nuclear at 39,201 GWh. Solar photovoltaics sat in fourth place in this ranking.
Even though renewables now account for roughly two-thirds of generating capacity, fossil fuels still play a crucial role in the mix. The ongoing challenge is producing and storing renewable energy efficiently, especially when demand spikes. A gas price cap helped soften bills at times, but the overall cost environment remains sensitive to fuel prices and supply disruptions.
The European Union is exploring approaches to harmonize energy costs by aligning them with the most expensive inputs in the market. The energy puzzle is influenced by global events, and shifts in supply have a direct impact on consumer prices. It is a reminder that energy policy and market design matter for stability and affordability across Europe and beyond.
The classic Hanlon principle about explanations can apply here: avoid attributing malevolence where missteps and miscommunications suffice. The energy challenges in Europe illustrate how policy choices and market dynamics intertwine with physical realities like drought and weather patterns.
Reference article: Forocochoelectricos report from 2022 on record electricity and the dominance of solar generation in Spain. Attribution: Forocochoelectricos, 2022.
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