In April, the renewable energy sources of wind, sun, and water resulted in historically low electricity prices in Spain, reaching 13.67 euros per megawatt-hour. This record low price was influenced by intense rainfall in hydroelectric areas, leading to a significant decrease compared to previous years. The decrease in electricity prices is beneficial for approximately 8.5 million households and SMEs on regulated tariffs or indexed rates, with the potential for savings when their contracts are due for renewal. In contrast, the highest electricity price in history was recorded in March 2022 during the gas crisis, averaging 283 euros per MWh.
The combination of renewable energy and reduced carbon dioxide emissions in the Spanish electrical system in April marked a significant achievement in environmental sustainability. Lower electricity demand in Spain, attributed to various factors such as decreased industrial activity, improved efficiency in companies and homes, and increased self-consumption, further contributed to historically low prices. This reduced demand has allowed for less production from expensive energy sources, driving down costs for consumers.
While prices in the electricity market have been at historic lows, a recent shift has occurred as prices exceeded 50 euros per MWh in late April. This increase can be attributed to a decrease in compulsory dam releases by hydrographic confederations, which had previously lowered prices significantly. Power generation from gas-fired plants is now influencing prices, particularly during morning and evening peak hours. Future market trends anticipate a gradual increase in prices as demands rise, projecting rates of 29 euros per MWh in May, 43 in June, and 64 in July and August.
Despite the impending price increases in the upcoming months, the continuation of zero or negative prices during peak solar generation hours indicates ongoing benefits. As more solar capacity and self-consumption practices are adopted, these lower prices are likely to persist for several weeks. However, uncertainties remain for July and August, as the impact of these factors on daytime prices remains to be seen. Additionally, Portugal experienced even lower electricity prices in April, averaging 13.23 euros per MWh, reflecting high hydropower reserves and forced releases that further reduced costs.
Amidst the ongoing energy market fluctuations, the record decrease in electricity prices in Spain during the second half of 2023 stands out. This significant drop was the most considerable amongst EU countries, with Spain experiencing a decline of over 30%, second only to Denmark. Denmark’s reliance on wind energy played a crucial role in their cost reduction strategy. Overall, the EU witnessed a slight decline of less than 5% in electricity prices during the same period, reflecting the broader impact of various economic factors on energy costs.
