Analysis first half of 2024

European electricity market prices fell in the first half of the year while renewable technologies registered all time records

AleaSoft Energy Forecasting, July 2, 2024. In the first half of 2024, prices fell compared to the previous six months in most major European electricity markets. On a year‑on‑year basis, the decline was widespread. The Spanish market registered the lowest price in this period. In almost all markets the average price for the first six months of 2024 was the lowest since the first or second half of 2021. Half‑yearly photovoltaic energy production was the highest ever in all markets, a milestone also reached by wind energy in some cases. Electricity demand increased year‑on‑year in most markets, while gas and CO2 prices declined.

Solar photovoltaic, solar thermoelectric and wind energy production

In the first half of 2024, solar energy production increased compared to the same period of the previous year in all major European markets. The Portuguese market registered the largest increase, which was 24%, followed by the Italian market, with 15%. In Spain, where solar photovoltaic energy and solar thermoelectric energy are included, and in Germany, the increase was 13% for both markets, while the French market registered the smallest variation, with an increase of 5.3%.

When comparing to the second half of 2023, solar energy production in the first half of 2024 also increased in all analyzed markets. The largest increases were registered in Germany, with 24%, and Portugal, with 22%. Italy and Spain had rises of 13% and 10%, respectively. Similarly, the French market registered the smallest increase, 2.4% in this case.

Moreover, in all analyzed markets, half‑yearly solar photovoltaic energy production was the highest in history. Germany generated 32 713 GWh using this technology, while in Spain it was 21 067 GWh, in Italy 13 909 GWh, in France 11 340 GWh and in Portugal 2198 GWh.

On the other hand, according to data from Red Eléctrica, in June 2024 solar photovoltaic capacity in Mainland Spain was 1140 MW above the capacity installed at the end of 2023. In the same period, the increase in solar photovoltaic capacity in Portugal compared to the capacity installed at the end of December 2023 was 502 MW.

AleaSoft - Monthly solar photovoltaic thermosolar energy production electricity EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, Red Eléctrica and TERNA.
AleaSoft - Solar photovoltaic production profile EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, Red Eléctrica and TERNA.

Wind energy production increased in most major European markets in the first half of 2024 compared to the first half of 2023. The exception was the Spanish market, where generation using this technology was 0.3% lower during this period. In the remaining markets, the Portuguese market registered the largest variation, with a 16% increase, followed by the 11% increase in the Italian market. In France and Germany, the increases were 7.3% and 7.1%, respectively.

Compared to the last six months of 2023, wind energy production for the first six months of 2024 also rose in most markets analyzed at AleaSoft Energy Forecasting, except for the French market, where it declined by 1.8%. Portugal registered the largest increase, 7.0%, followed by increases of 6.5% and 4.8% in the Spanish and Italian markets, respectively. On the other hand, the German market registered the smallest increase, 0.1%.

Wind energy production in the first half of 2024 was the highest of any half year in history in the German, Italian and Portuguese markets, with 73 788 GWh, 12 616 GWh and 7286 GWh, generated respectively. In the case of the Spanish and French markets, it was the second highest in each case, with values of 31 574 GWh in Spain and 24 550 GWh in France.

Likewise, according to data from Red Eléctrica, up to June 2024, wind energy capacity in Mainland Spain increased by 379 MW compared to the capacity installed at the end of 2023. In the case of Portugal, the increase was 6 MW in the same period.

AleaSoft - Monthly wind energy production electricity EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, Red Eléctrica and TERNA.
 
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Electricity demand

During the first half of 2024, electricity demand registered year‑on‑year increases in most major European markets. The largest rise, 2.1%, was that of the Belgian market, followed by those of the Portuguese market, 1.9%, and the Dutch market, 1.2%. The Italian and Spanish markets registered the same increase, 0.7%, while the British market registered the smallest increase, 0.2%. On the other hand, the French and German markets registered decreases of 0.4% and 1.7%, respectively.

Compared to the previous six‑month period, the markets of Germany, Great Britain, Belgium and France registered increases in electricity demand of between 0.2% in the German market and 7.0% in the French market. In contrast, the markets of Portugal, Spain, Italy and the Netherlands registered declines ranging from 0.2% to 7.9%.

Average temperatures rose year‑on‑year in the first half of the year in most analyzed markets. Increases ranged from 0.1 °C in Great Britain and Spain, to 1.3 °C in Germany. In contrast, temperatures in Portugal and France were 0.1 °C lower than in the first half of 2023.

Compared to the second half of 2023, average temperatures fell in all markets, with decreases ranging from 3.0 °C in Germany to 4.9 °C in Italy.

AleaSoft - Monthly electricity demand EuropeSource: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, Red Eléctrica, TERNA, National Grid and ELIA.

European electricity markets

In the first half of 2024, the half‑yearly average price remained below €70/MWh in most major European electricity markets. The exceptions were the N2EX market of the United Kingdom and the IPEX market of Italy, with averages of €76.22/MWh and €93.46/MWh, respectively. On the other hand, the MIBEL market of Spain registered the lowest half‑yearly price, €39.13/MWh. In the rest of the markets analyzed at AleaSoft Energy Forecasting, averages ranged from €39.25/MWh in the MIBEL market of Portugal to €69.97/MWh in the EPEX SPOT market of Germany.

Compared to the previous half year, in the first half of 2024 average prices fell in almost all European electricity markets analyzed at AleaSoft Energy Forecasting. The exception was the Nord Pool market of the Nordic countries, with an increase of 9.7%. On the other hand, the French, Spanish and Portuguese markets registered the largest declines, 44%, 54% and 55%, respectively. The rest of the analyzed markets registered price declines ranging from 18% in the British market to 28% in the Belgian market.

Comparing average prices in the first half of 2024 with those registered in the same half of 2023, prices fell in all analyzed markets. The Iberian and French markets registered the largest declines, 56% and 58%, respectively. On the other hand, the Italian market registered the smallest decline, 31%. In the rest of the markets, price declines ranged from 33% in the German market to 45% in the Belgian market.

These price declines resulted in the price for the first half of 2024 being the lowest since the first half of 2021 in the British, Spanish, French and Portuguese markets. In the case of the German, Belgian, Italian and Dutch markets, the half‑yearly average price was the lowest since the second half of 2021.

In the first half of 2024, the decrease in the average price of gas and CO2 emission allowances compared to the previous half, the general increase in solar energy production and the increase in wind energy production in almost all markets led to lower prices in the European electricity markets compared to that period.

When comparing to the first half of 2023, the decrease in the average price of gas and CO2 emission allowances, the increase in solar energy production and the increase in wind energy production in almost all analyzed markets also favored the year‑on‑year decrease in prices in European electricity markets, despite the increase in demand in most of them.
AleaSoft - Monthly electricity market prices EuropeSource: Prepared by AleaSoft Energy Forecasting using data from OMIE, EPEX SPOT, Nord Pool and GME.

Brent, fuels and CO2

Brent oil futures for the Front‑Month in the ICE market registered a half‑yearly average price of $83.42/bbl in the first half of 2024. This value was 1.2% lower than that of the Front‑Month futures of the previous half year, $84.40/bbl. On the other hand, it was 4.3% higher than the corresponding to the Front‑Month futures traded in the first half of 2023, $79.97/bbl.

During the first half of 2024, concerns about economic evolution and their effects on global demand led to lower prices compared to the previous six‑month period. Inflation levels and expectations of longer periods of high interest rates in the United States contributed to these concerns. However, instability in the Middle East and the conflict between Russia and Ukraine, as well as OPEC+ production cuts, exerted their upward influence on prices, contributing to their year‑on‑year increase. In addition, in May, wildfires in Canada raised fears about supply from this country. In June, expectations of increased demand due to summer vacation travel also had an upward influence on prices of these futures.

As for TTF gas futures in the ICE market for the Front‑Month, the average price registered during the first half of 2024 was €29.70/MWh. Compared to the price of the Front‑Month futures traded in the previous half year, €38.45/MWh, the average decreased by 23%. Compared to the Front‑Month futures traded in the same half of 2023, when the average price was €44.34/MWh, there was a 33% decrease.

In the first half of 2024, despite supply concerns due to instability in the Middle East, declines in gas flows from Norway and problems at liquefied natural gas export plants in the United States and Australia, high levels of European reserves led to lower TTF gas futures prices compared to those in the first and second half of 2023. However, in the second half of the first six‑month period of 2024, increased demand for liquefied natural gas in Asian markets caused a decline in supply to Europe. In addition, fears of disruption of Russian gas supplies to Austria next summer increased concerns about supply to refill reserves for the coming winter. This contributed to a recovery in monthly average prices, although the average for the first six months of the year was lower than those of previous six‑month periods.

Regarding CO2 emission allowance futures in the EEX market for the reference contract of December 2024, they reached an average price of €65.68/t in the first half of 2024. This price was 23% lower than the average of the previous half year, which was €85.11/t. Compared to the average for the same half of 2023, which was €93.53/t, the average for the first half of 2024 was 30% lower.

AleaSoft - Prices gas coal Brent oil CO2Source: Prepared by AleaSoft Energy Forecasting using data from ICE and EEX.

AleaSoft Energy Forecasting’s analysis on the prospects for energy storage

AleaStorage is the division of AleaSoft Energy Forecasting that provides solutions for energy storage and hybridization of renewable technologies, such as wind energy or solar energy, with storage systems, such as batteries. AleaStorage’s reports include estimating revenue from batteries and storage systems, optimizing operation and developing strategies to maximize revenue.

Source: AleaSoft Energy Forecasting.
 

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