The average price of electricity in the wholesale or ‘pool’ market, reference for the regulated tariff or PVPC, is on track to close 2023 below 100 euros/megawatt hour (MWh) for the first time in three years, confirming its stabilization despite to still be far from pre-pandemic levels.
According to the history prepared by EFE, the MWh has been paid on average, until now, at around 87.3 euros, so although there is a week left until the end of this year, the forecast is that it remains well below 210 euros of 2022, when the Russian invasion of Ukraine, high temperatures and inflation marked a turbulent year for energy markets.
More renewables
The tensions of the ‘pool’ have been reduced coinciding with more promising prospects in Europe after its latest ‘shocks’ -COVID and the war in Ukraine-, and greater confidence in the security of supply of the Twenty-seven, which in these months They have once again reconciled positions to carry out packages of key measures.
This 2023 has also been a record year for renewables, which have generated more than half of all electricity in Spain.
As of December 22, wind power is the leading technology in the national electrical system, with 61,719 gigawatt hours (GWh), 23.6% of the total, compared to the 52,746 GWh of nuclear power, in second position with the 20.2%.
For its part, photovoltaic solar has produced 14.1% of the electricity until that same day, with 36,792 GWh, 33.9% more than on the same dates in 2022, and shortens the gap with combined cycles, third with 44,996 GWh, 17.2% of the total.
After 2022 in which they emerged as the first technology given their capacity to support the system in episodes of high demand, as happened that August, the month with the most expensive electricity in history (308 euros/MWh), the cycles, which They use gas in the production process, they fell by 33.3% this year.
The advance of renewables has continued this December and only in the first fortnight its generation grew by 62% in a year-on-year comparison, point out the ASE Group experts.
However, this increase has not caused a sharp drop in the price of electricity, as seen a month before, due to the increase in exports to France and Portugal and the rebound in demand.
Price analysis
The 87.26 euros/MWh registered until this Sunday leave the pool at its lowest annual average since 33.94 euros in 2020, an exercise that is difficult to compare due to the impact of the coronavirus in which gross peninsular demand decreased by 5.1%, the highest negative variation since 1990 (beginning of the historical series), even greater than that experienced after the 2008 crisis.
If 2023 ends like this, the levels would be 58.5% below the 210.2 euros/MWh of a year before, and would be 22% lower than the almost 112 euros/MWh of 2021.
Even so, the MWh continues without falling to the levels of previous years: 47.68 euros in 2019; 57.29 euros in 2018; 52.23 euros in 2017, and 39.66 euros in 2016.
The ‘pool’ reached its annual maximum on Tuesday, February 21, 151.43 euros/MWh, while its minimum, 1.51 euros/MWh, arrived on Saturday, November 4, in the middle of the ‘Domingos’ storm.
The MWh fell below ten euros on nine other occasions: Thursday, November 2, 4.42 euros; Wednesday, November 1, 4.53 euros; Tuesday, January 17, 4.58 euros; Sunday, November 5, 5.03 euros; Friday, November 3, 5.76 euros; Sunday, January 1, 6.15 euros; Saturday, October 28, 6.45 euros; Saturday, November 11, 8.73 euros, and Sunday, January 8, 9.02 euros.
The minor fluctuations in the energy markets, resistant to the outbreak of war between Israel and the Islamist group Hamas, have kept the ‘Iberian exception’ without applying for practically the entire year, since February.
The ‘gas cap’ intended for electricity generation did not come into operation until six times in the middle of that month, a trend that would be recovered (and consolidated) in its final stretch.
The mechanism, which was launched in the ‘energy island’ of Spain and Portugal in the session of June 14, 2022 after approval from Brussels, will expire on December 31.
Looking ahead to the first stages of 2024, the futures markets are falling, so the forecast “will not be bullish but bearish and containment in any case,” says EAE Business School professor Víctor Fermosel.
In fact, the operator OMIP reflects how electricity futures for next year as a whole have gone from the 124 euros/MWh they marked in October to 80.4 euros.
Among the factors that can influence there will be events such as “cold waves, droughts, wind shortages and demand peaks, against which it is more difficult to fight”, to which are added international conflicts and inflation control “without drowning “. Consumption”, says Fermosel.
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