AleaSoft Energy Forecasting, June 4, 2024. In May, prices in most major European electricity markets were higher than in April, slowing the falls of recent months. The Iberian market abandoned the position it had held for three consecutive months as the market with the lowest prices, a position that was taken over by the French market. Photovoltaic energy registered records in all markets, historical records in some cases or records for the month of May in others, while wind energy production fell in most of them. Gas and CO2 prices increased compared to April.
Solar photovoltaic, solar thermoelectric and wind energy production
In May 2024, solar energy production increased in the main European electricity markets compared to the same month in 2023. The Portuguese market registered the largest increase, which was 42%, followed by increases of 33% in the Italian market and 32% in the Spanish market. In the case of the Spanish market, solar photovoltaic energy production and solar thermoelectric energy production are included. In the German market, the rise was 11%, while the French market had the smallest increase, 2.0%.
During May 2024, the analyzed European electricity markets continued to break photovoltaic energy production records. The German and French markets registered historical records for generation using this technology compared to the same month in previous years, with 8680 GWh and 2435 GWh, respectively. On the other hand, the Iberian and Italian markets reached historical records for photovoltaic energy production, with 5007 GWh in Spain, 3203 GWh in Italy and 517 GWh in Portugal.
The year‑on‑year increases in photovoltaic energy production were favored by the increase in the installed capacity of this technology during the last twelve months. According to Red Eléctrica data, photovoltaic capacity in Mainland Spain increased by 4542 MW between May 2023 and May 2024. In the same period, the Portuguese market added 923 MW of new capacity to the system.
In all markets analyzed at AleaSoft Energy Forecasting, solar energy production in May also exceeded that of April, in line with the increase in solar radiation. In this case, the German market had the largest increase, 30%. In the rest of analyzed markets, the increases ranged from 1.5% in the French market to 26% in the Spanish market.
Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, Red Eléctrica and TERNA.
Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, Red Eléctrica and TERNA.
Wind energy production declined year‑on‑year in most major European electricity markets in May 2024. The French market registered the largest decline, 25%, followed by a 22% drop in the Spanish market. In Germany and Portugal, declines were 6.6% and 4.7%, respectively. On the other hand, the Italian market registered a 10% increase compared to the same period in 2023.
According to Red Eléctrica, 771 MW of wind energy were installed in Mainland Spain between May 2023 and May 2024. On the other hand, according to REN, installed capacity in Portugal increased by 6 MW between May 2023 and May 2024.
Compared to April 2024, wind energy production of May also declined in the analyzed markets, in this case across the board. The French market had the largest drop, 42%, followed by the German market, with a drop of 36%. In the Spanish, Italian and Portuguese markets, the decreases were 12%, 11% and 7.8%, respectively.
Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, Red Eléctrica and TERNA.
Electricity demand
In May 2024, most major European electricity markets registered higher electricity demand than in the same period of 2023. The Dutch market reached the largest increase, 6.5%, followed by the Belgian market’s increase, 3.3%. The Portuguese and British markets registered the smallest increases in demand, by 0.5% and 0.8%, in each case. In the Spanish, French and Italian markets, demand increased by 1.6%, 1.8% and 1.9%, respectively. In contrast, the German market registered a year‑on‑year decline in demand of 5.4%.
In May 2024, average temperatures were higher than in the same month of 2023 across much of Europe, with increases ranging from 0.6 °C in Italy to 2.6 °C in the Netherlands. The exceptions were Portugal, Spain and France, where average temperatures were lower by 1.0 °C, 0.3 °C, and 0.2 °C, respectively.
In the comparison of electricity demand of May 2024 with that of April, most analyzed markets registered decreases. In this case, the French market registered the largest drop, 12%, followed by a drop of 8.3% in Great Britain. In the Belgian and German markets, declines were 5.8% and 5.6%, respectively. The Iberian market registered the smallest declines, 2.3% in Portugal and 1.9% in Spain. The Italian and Dutch markets were the exception, with demand increasing by 2.2% and 2.3%, respectively, compared to the previous month.
In May, average temperatures continued to rise, being higher than in April in all analyzed markets. The Dutch market registered the largest increase, 5.2 °C. In the remaining markets, average temperature increases ranged from 1.4 °C in Portugal to 4.9 °C in Germany.
Source: Prepared by AleaSoft Energy Forecasting using data from ENTSO-E, RTE, REN, Red Eléctrica, TERNA, National Grid and ELIA.
European electricity markets
In the month of May 2024, the monthly average price was 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 €84.50/MWh and €94.88/MWh, respectively. In contrast, the EPEX SPOT market of France and the Nord Pool market of the Nordic countries registered the lowest monthly prices, €27.17/MWh and €27.28/MWh, respectively. In the rest of the European electricity markets analyzed at AleaSoft Energy Forecasting, averages ranged from €30.40/MWh in the MIBEL market of Spain to €66.48/MWh in the EPEX SPOT market of Germany. Thus, the Iberian MIBEL market abandoned the position it had occupied for three consecutive months, between February and April 2024, as the market with the lowest prices.
Compared to April, average prices increased in most European electricity markets analyzed at AleaSoft Energy Forecasting. The exceptions were the French and Nordic markets, with falls of 3.8% and 44%, respectively. On the other hand, the Spanish and Portuguese markets registered the largest percentage rises, 122% and 132%, respectively. The German market had the smallest increase, 6.6%. In the other markets, prices rose between 9.3% in the Italian market and 35% in the British market.
Comparing the average prices for the month of May with those registered in the same month of 2023, prices fell in all analyzed markets. In this case, the Spanish, Portuguese and French markets registered the largest declines, 59%, 60% and 65%, respectively. On the other hand, the British market registered the smallest drop in prices, 9.2%. In the other markets, declines ranged from 10% in the Italian market to 32% in the Belgian market.
As a result of the declines, in May 2024, the Nordic market registered the lowest average since November 2023, while the French market registered the lowest monthly average since July 2020.
In May 2024, the fall in the average price of CO2 emission allowances, a slightly lower average gas price than in the same month of the previous year and the general increase in solar energy production led to a year‑on‑year decrease in European electricity market prices.
On the other hand, the increase in gas and CO2 emission allowance prices in May 2024 compared to the previous month, as well as the general fall in wind energy production in the same period, contributed to the increase in European electricity market prices compared to April.
Source: 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 monthly average price of $83.00/bbl in the month of May. This value was 6.7% lower than the $89.00/bbl reached by the Front‑Month futures of April. However, it was 9.6% higher than that corresponding to the Front‑Month futures traded in May 2023, $75.69/bbl.
During May, concerns about the evolution of the global economy and demand exerted a downward influence on Brent oil futures prices. Inflation and expectations of high interest rates in the United States for longer contributed to these concerns. However, instability in the Middle East, fears about the effects of wildfires on Canadian production and expectations about the extension of OPEC+ production cuts led to a higher average in May than in the same month of the previous year.
As for TTF gas futures in the ICE market for the Front‑Month, the average value registered during the month of May was €32.07/MWh. According to data analyzed at AleaSoft Energy Forecasting, compared to the average of the Front‑Month futures traded in April, €29.04/MWh, in May the increase was 10%. Compared to the Front‑Month futures traded in May 2023, when the average price was €31.73/MWh, there was an increase of 1.1%.
During the month of May, forecasts of higher temperatures and lower renewable energy production, as well as decreases in gas flow from Norway due to maintenance work, contributed to the increase in TTF gas futures prices. Lower liquefied natural gas supplies due to increased demand in Asian markets also exerted an upward influence on prices. In the second half of the month, fears of the cut in Russian gas supplies to Austria in summer also drove prices higher. However, the still high levels of European reserves limited the price increase and the average for May 2024 was only slightly higher than the average for May 2023.
Regarding CO2 emission allowance futures in the EEX market for the reference contract of December 2024, they reached an average price of €73.10/t in May. According to data analyzed at AleaSoft Energy Forecasting, this represents an increase of 11% compared to the previous month’s average, €66.07/t. In contrast, when compared to the average for May 2023, €90.21/t, the average for May 2024 was 19% lower.
Source: Prepared by AleaSoft Energy Forecasting using data from ICE and EEX.
AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe
Alea Energy DataBase is AleaSoft Energy Forecasting’s online platform for the visualization and analysis of data related to energy markets. This platform includes observatories of price and demand for the main European electricity markets, of fuels and of renewable energy production. In addition, it has new observatories of forward curves. These data are a reliable source for both analysts and journalists specialized in the energy sector, as well as for agents operating in the electricity and gas markets.
Source: AleaSoft Energy Forecasting.