AleaSoft Energy Forecasting, July 2, 2024. Interview by Milena Giorgi from Energía Estratégica España with Oriol Saltó i Bauzà, Associate Partner at AleaGreen.
Coinciding with the first days of summer, Milena Giorgi from Energía Estratégica España interviewed Oriol Saltó i Bauzà, Associate Partner at AleaGreen, to analyze the prospects for the Spanish electricity market in the coming months, as well as investment in renewable energies in the long term.
With the beginning of summer, what are the expected trends in the Spanish electricity market?
As we anticipated, the situation of very low prices that we have experienced in the Iberian electricity market was greatly facilitated by the very typical conditions of spring, which is the time of year with the lowest demand in the Iberian Peninsula, and with a very high hydroelectric energy production.
As we enter the summer, with an increase in electricity demand due to the increase in temperatures and lower hydroelectric and wind energy production, prices are rising as expected. In June, the average price of the electricity market in Spain stood at €56.08/MWh, while it had been €30.40/MWh in May and €13.67/MWh in April. The price captured by photovoltaic energy also rose to €34.57/MWh in June, while it had been €12.74/MWh in May and €5.50/MWh in April.
What are the implications of the high temperature projections?
Especially in the markets located in the southern part of the continent, but also increasingly in the other countries further north, the temperature increase in summer leads to a very significant increase in electricity demand for cooling, with consequent upward pressure on prices.
How could this affect renewable energy investments?
The situation of very low prices this spring alarmed the energy sector. But we already warned at the time that this situation was very particular to spring conditions.
These were worsened, on this occasion, by the fall in demand that we have been experiencing since 2022 as a result of the energy price crisis.
It cannot be ruled out that in the springs of the next two or three years, depending on rainfall above all, a similar situation could arise, until demand begins to rise steadily.
This will happen as all sectors of the economy are electrified and decarbonized. But investments in renewable energy must have a 20 or 25‑year vision.
When we look at the long term, the price trend is clear and forecasts do not show a recurrent situation of very low prices like the one we have experienced this spring, so investments in renewable energy continue to be profitable in the long term.
What are the price estimates for this summer?
As expected, the price trend has already started to change.
High temperatures, increased demand and higher gas prices point to a summer with clearly higher numbers than those of spring.
Forecasts point to high prices during the summer, although lower than in the previous summer.
Weekends and holidays will most likely continue to register negative or near‑zero prices, but in the overall summer months, average prices will clearly rise.