Electricity in Spain will be cheaper in the 2024-2033 decade than in France and Germany
Electricity prices, as CNMC explains in its report, fell in 2023 in European markets “both spot (spot or daily) and forward.” The context in which this fall occurred was: (1) the fall in gas spot prices in 2023, which last year were in the range of 25-70 euros per megawatt hour, when in 2022 the average spot price in MibGas, e.g. , was in a much higher range, 39-100 euros per megawatt-hour; (2) falling demand for electricity in Europe (-3.4% compared to 2022); and (3) a greater contribution from renewable generation to meet demand (in five major European markets – Germany, France, UK, Italy and Spain – gas production fell by 22% and coal production fell by 32% in 2023). , gaps that have been filled by renewables in all markets).
Thus, the average spot price for electricity (euro per megawatt-hour on the wholesale market) fell by almost fifty points in the Spanish market (-48%), by almost sixty in the German market (-59.6%) and fell by almost 65 in the French market. (-64.9%). In this latter market, the evolution of electricity prices in 2023 was also influenced by the gradual recovery of the stranded nuclear fleet, reflected in an increase in production of forty terawatt-hours (40 TWh). technologies. But the fall in electricity prices in France was also linked, according to the CNMC – pay attention to the data – to an increase of twenty terawatt-hours (20 TWh) in renewable generation. In turn, in the German market, a 4.2% drop in electricity consumption was accompanied by an increase (up to 52%) in the contribution of renewable production to covering demand.
And in Spain?
In the Spanish market, demand has also decreased, the price of gas has also fallen, and “as a factor in the decline in electricity prices, it is worth highlighting,” the CNMC clarifies, “the greater contribution of renewable energy sources to the production structure: 52.2% in 2023 compared to 43 .7% in 2022.” Thus, the average price on the daily Spanish wholesale market was 87.10 EUR/MWh in 2023, compared to 167.53 EUR/MWh in 2022. , so that it does not increase too much), the average price in Spain in the period from March 1 to December 31, 2023 (already quite comparable with European prices) was 84.63 euros/MWh (Germany: 89.85; France: 88.54 ).
That is, in Spain in 2023, electricity was cheaper than in Germany or France.
But, according to National Commission for Markets and Competitionthe gap (positive for Spain) will widen in 2024 and 2025 (look at the chart again) and remains firmly established throughout the decade. And this is so – they note from CNMC – due to the share of renewable energy sources in the structure of the Spanish market, which is much larger than, for example, in the French market.
Annual bulletin of forward electricity markets in Spain (2023 balance sheet)
“The last quotation of the 2024 annual contract with the Spanish underlying asset (as of December 27, 2023) assumed that the average daily market price in 2024 (82.75 EUR/MWh) would be lower than the spot price recorded in 2023 (87. 10 euros/MW), and lower than the prices of equivalent contracts with the basic German (95.72 euros/MWh) and French (94.90 euros/MWh). As of December 27, 2023, Spain’s 10-year forward curve was below the German and French curves for all settlement horizons (see chart). In particular, the price of the 2033 annual contract with the Spanish base was €19.82/MWh and €24.23/MWh lower than the prices of the equivalent contracts with the German and French base respectively, showing that it “consolidates the price spread expectation.” due to the momentum of renewables – due to the weight in the generation mix – of the Spanish market relative to the German and French markets.”
Annual bulletin of forward electricity markets in Spain (2023 balance sheet)