At first it was gas and wind. The drop in the price of the first and the good tone of the second caused, at the end of February and beginning of March, a sudden landing in the wholesale price of electricity. It was, however, only the appetizer of what was to come: the rains and snows that fell in the second half of March relieved the reservoirs and triggered hydroelectric generation, with the waterfalls producing night and day at knockdown prices. The cherry on top of two months that already make up the longest historical streak of low prices in the Spanish electricity market. A collapse that, in equal parts, has tempered the electricity bills of millions of homes and triggered the fear of renewable developers.
The week between February and March was the cheapest in history, breaking a record that dated back to the spring of 2013. The milestone, however, did not last long, barely a month: on the first of April, the average price It went to 4.4 euros per megawatt hour (MWh). Nothing, if compared to recent history: in March 2022, the Russian invasion of Ukraine had just begun and with gas already through the roof, the wholesale price of electricity was around 300.
Although the decrease has been significant throughout Europe, the Spanish case is unique: the 20 euros on average in March are the lowest figure since May 2020, with Spain confined due to the pandemic. A trend that has continued in these first two weeks of April, in which the forced opening of floodgates in many hydroelectric reservoirs has sunk electricity prices in practically all sections of the day, flattening the curve even at peak hours. consumption (breakfast and dinner). Everything, zero and neighbors. What has never been seen since the spring of 2013, when the installed solar and wind power was infinitely less than now, but - as now - the rains put the hydroelectric plant to work on a piece-rate basis.
When it is time to evacuate water, it is the hydrographic confederations - with safety criteria - and not the electricity companies - with economic criteria - who decide that the reservoirs must be released and, consequently, power the turbines that generate energy. In March and so far in April, waterfalls have increased their production by more than 140% compared to the same period of the previous year and are already hot on the heels of wind energy as the first generation technology. Something unthinkable at the beginning of the year, when the drought was still hampering the generation.
This torrent of hydraulic energy, together with the contagion effect from the rest of Europe - where negative prices have been a common currency for months - have brought the first values below zero in history to the Spanish wholesale market. The barrier was crossed on April 1, but since then it has been repeated several times. Without going any further, in the daytime hours of this same weekend, in which water, sun and wind come together with a demand that, although it is beginning to show timid signs of recovery, continues well below pre-crisis levels. .
These bargain prices have a very positive reading for consumers who are in the regulated market or who, even in the free market, have a rate indexed to the wholesale market: even with the increase in VAT on electricity, which in March already returned to Usual 21%, the vast majority are paying the same as in previous months. But also a cross: more and more voices warn that, if they are sustained over time - something unlikely: they will rise as summer approaches - they will end up putting a dent in the necessary investment in renewables.
In addition to putting downward pressure on the price, the flood of renewable production has had a great impact on the structure of the peninsular electricity market. Combined cycle plants (in which electricity is obtained by burning natural gas) have drastically reduced their contribution, to just over 7%. Its presence has been, in short, practically limited to one area: that of covering the gap between supply and demand in each time slot, without barely entering the daily auction. A rarity in historical terms. Since February 1, the consumption of this fuel in thermal power plants has accumulated a drop of almost 40% compared to the same period of the previous year, according to figures provided to this newspaper by Enagás.
“The extraordinary increase in renewable generation has relegated large conventional generation plants to adopt a residual role,” summarize the ASE group consultants in a recent market report. This low utilization ratio of combined cycles is likely to continue in the coming months: the recent rainfall guarantees, in his opinion, “an extra hydraulic reserve fund of 4,000 gigawatt hours (GWh) for the summer compared to the year last, which would mean reducing the generation forecast for combined cycles by more than a third” in the hottest months of the year.
Nuclear reactors have also been affected by this perfect storm, forced to reduce the volumes of energy they pour into the grid for a purely economic reason: at the prices of recent days, the numbers do not work out. With several reactors at half gas, or directly stopped, the generation of Spanish reactors accumulates a year-on-year drop of more than 30% in the last month and a half. According to the current closure calendar, the first to definitively lock it will be one of the two in Almaraz, in Cáceres.
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