AleaSoft Energy Forecasting, July 27, 2023. In the summer of 2023, a huge number of forest fires ravage Mediterranean countries, aggravated by drought, low humidity and high temperatures. The El Niño phenomenon increases the global heat, leading to intense and prolonged heat waves. The Iberian Peninsula undergoes a hot year with above‑average temperatures. High temperatures in warm countries boost the electricity demand. The situation will get worse in the future, especially in summer, and will affect the energy markets.

AleaSoft - Incendio forestal Mediterraneo
In the summer of 2023, forest fires are specially hitting the Mediterranean countries. Italy, Greece, Algeria, Turkey, Tunisia, Portugal… but also Canada, California… Although this is not the first time that these countries face this situation, the combination of drought, low humidity and high temperatures has made the fires even more virulent.

The extreme weather conditions that favour the forest fires propagation are being exacerbated by the increasing consequences of global warming. This year, the situation has been made even more explosive by the additional phenomenon known as El Niño.

El Niño will bring more heat

After the recent triple episode known as La Niña, which lasted for several years, this year, the main phenomenon is El Niño. According to the WMO (World Meteorological Organization), there is a high probability that the phenomenon will continue until winter, but it could even last until spring, 2024. This climatic phenomenon, caused by an increase in sea surface temperature in the equatorial Pacific, will lead to an increase in temperatures throughout the world, with more intense and prolonged heat waves.

Not all El Niño episodes are identical and it is difficult to anticipate what consequences will occur in a particular region of the planet. On average, in the European continent, El Niño causes dry and cold winters in the north of the continent, whereas milder and wetter ones in the southern zone. In fact, seasonal forecasts provided by the NOAA (National Oceanic and Atmospheric Administration) predict an autumn and winter with above‑average rainfall in the south‑western zone of the Iberian Peninsula.

AleaSoft - WMO El Nino La Nina update

2023 a hot year in the Iberian Peninsula

2023 is a year warmer than the average. But, this situation is not a novelty. In recent years, the upward trend of temperatures has been clear. Even in spring, some days of 2023 registered historical record peaks of temperature in March, April and May.

AleaSoft - Temperatures Spain
Since the beginning of the summer, temperatures have kept consistently above average, leading to a hot summer period. With the arrival of the El Niño phenomenon this year, it is highly likely for this scenario of above­‑average temperatures to continue for several months, a clear trend of recent years that will get worse in the future.

The impact of high temperatures in electricity demand

In countries with mild or warm climates, rising summer temperatures lead to increased electricity demand due to higher energy consumption for cooling. Southern European countries such as Spain, Portugal, Italy and Greece clearly show this behaviour.

In Mainland Spain, a typical spring working day with an average temperature below 20 °C usually registers a demand, typically, around 600 GWh. From there, a higher temperature means an increased electricity demand according to a ratio of 25 GWh per degree Celsius. On July 19, 2023, the highest demand was achieved between April and July, coinciding with the highest average temperature day, and registering a 787 GWh demand with 27.9 °C of peninsular average temperature.

Given that the course of global warming is clear and evident, it is necessary to monitor the growing impact in the temperatures, rainfall and weather conditions in general, as a consequence of global warming. These changes must be considered in long-term forecasts of electricity demand, renewable energies production and their effect in energy markets prices forecasts.

AleaSoft - Electricity demand vs temperature Spain

AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe and the financing and valuation of renewable energy projects

AleaSoft Energy Forecasting and AleaGreen organise a series of monthly webinars to analyse the evolution of the energy markets and discuss the most relevant and interesting topics for companies in the energy sector. In the next edition, edition number 36, Pedro González, Director‑General of AEGE (Association of Companies with Large Energy Consumption), will be present in the analysis table of the Spanish version of the webinar to analyse the state of the PPA market for large electro‑intensive consumers.

Registration is already open for edition number 37, which will take place on October 19, and will involve Deloitte to analyse in depth the state of financing for renewable energies projects and the importance of forecasting in audits and portfolio valuation.

Source: AleaSoft Energy Forecasting.