The light price climbed in midsummer to its highest levels of the year at the wholesale electricity market, where utilities, distributors, and traders trade power. Data show that the next day’s electricity purchase and sale averaged 96.05 euros per megawatt hour (MWh), up 6.2 percent from July, reaching a peak not seen since February at 133 euros. This overview comes from the Iberian Electricity Market Operator, Omie.
Often referred to as the wholesale market pool, the sector felt the heat in the middle of summer. The greater reliance on gas-fired plants and the comparatively smaller contribution from wind typical of summer, combined with drought affecting hydroelectric generation, helped support higher prices but they remained well below last year’s energy-crisis peaks. The average price in August 2022 was around 155 euros per MWh, about 69 percent higher than this summer.
During August, electricity demand in Spain fell by 1.1 percent, according to data from Red Eléctrica de España, the system operator. This decline occurred despite occasional rises in consumption during heat waves and heavy air conditioning use this season, and it represented a 1.3 percent drop compared with the previous year when temperature and working hours were not adjusted for. Prices were still driven by the balance of consumption and production during peak hours, with a 1.5 percent jump observed between 20:00 and 22:00 when demand peaked.
burning gas
Electric utilities and REE increased gas-fired generation to meet intense demand and to limit the reliance on other production technologies. Gas-powered combined cycles rose to become the country’s main source of electricity in August, contributing alongside nuclear plants and delivering a notable share of generation. In August, gas-fired plants accounted for roughly a quarter to nearly a third of total national production as temperatures rose during heat waves, elevating the role of gas in the mix.
The gas sector highlighted the strategic role of combined cycles in ensuring supply security and preventing interruptions in renewable energy output when other technologies pull back during high-demand periods. The August rise in natural gas prices, coupled with higher CO2 emission rights costs, pushed electricity prices higher. The wholesale gas market, Mibgas, moved from about 25 euros at the start of the summer to around 40 euros per MWh at various points in August, with CO2 rights approaching 90 euros per tonne.
Analysts from Grupo ASE noted that on days with high volatility, high temperatures, and low wind, the higher cost of gas supported electricity generation and lifted market prices. They compared the current situation with Europe’s energy-crisis peak, where prices reached around 500 euros per MWh in August of the previous year, but observed that gas and electricity prices remain well above historical averages.
The wholesale electricity market operates on a marginal pricing system, where the most expensive production used to meet demand sets the price for all. This means an increase in gas-powered generation raises overall costs, and the evolution of wholesale prices directly influences bills for households under regulated tariff schemes known as the voluntary price for small consumers (PVPC).
Sun ‘Sorpasso’
Solar plants confirmed during the summer that wind remains the leading renewable energy source, but solar output increased substantially. After a 35 percent rise in solar production last month, photovoltaic installations in August again produced more than wind power for the third consecutive month. Photovoltaics accounted for 18.6 percent of national production in August, slightly above wind energy at 18.3 percent.
The rapid commissioning of new solar facilities is a key factor in the growing contribution of solar to the country’s energy mix. In the broader market, solar capacity rose by nearly 23 percent last year, adding more than 4,100 MW of new capacity, bringing total operating solar capacity to about 22,380 MW. This places photovoltaic as the third-largest installed technology in the country after wind and gas-fired plants.
These solar generation figures do not include data on increased self-consumption, where solar output has doubled over the past year and continued to expand, albeit more slowly this year. The renewables sector recognizes that the pace of new plant installations is slowing as electricity prices ease and public subsidies wind down. The growth shows uneven effects across customer classes: large industrial facilities remain robust, while residential expansion shows signs of slowing.