AleaSoft Energy Forecasting, November 3, 2023. In recent months, pumped storage power plants have seen a significant increase in their contribution to the electricity generation mix in Spain. This phenomenon highlights some key aspects of the energy transition and how it is changing the landscape of the energy markets in Spain and Europe.
According to Red Eléctrica, between January and October 2023, pumped storage power plants produced a total of 4185 GWh of electricity, compared to 2929 GWh for the same period in 2022 and 2177 GWh in 2021. Since mid-2022, the historical production record for each month of the year has been exceeded virtually every month. So far in 2023, all months except February and October have set historical production records for that month of the year.
Pumped storage power plants generate electricity from reservoir water that has previously been pumped to an upper reservoir. In order to increase their electricity production, the plants have also significantly increased their consumption to pump water. During the first ten months of 2023, 6747 GWh of consumption by pumped storage power plants was registered, in contrast to 4683 GWh in the same months of 2022 and 3523 GWh in 2021.
Analogous to their production, the consumption of pumped-storage plants has registered records in practically every month of 2023 so far. At the moment, with two months left in the year, all months of 2023, except February and June, have been consumption records in their respective months.
Energy storage and the new dynamics of the electricity market
The increase in consumption and generation of pumped storage power plants and their ability to store energy reflects an upward trend in the flexibility and adaptability of these plants to the changing dynamics of the electricity market. This phenomenon is mainly explained by the increasing price volatility in the daily electricity market. High gas prices and the increase in solar energy have contributed to this volatility, allowing a wider range of prices in the day-ahead market. This price variability has allowed pumped storage power plants to consume electricity at times of low prices and, in turn, generate electricity at times of much higher prices.
In particular, the increase in solar capacity in Spain has resulted in greater downward pressure on electricity prices during peak solar irradiation hours. This situation, combined with high gas prices, has increased the need for flexible and efficient energy storage systems such as pumped storage power plants or batteries.
The evolution of the hourly profile of both generation and consumption of pumped storage power plants over the last few years illustrates the change that solar energy is causing in the prices and dynamics of the electricity market. From 2020 onwards, but even more clearly from 2023 onwards, the consumption profile of pumped storage power plants has changed dramatically, consuming virtually all of the electricity during the hours of sunshine. This is a clear reflection of the more competitive prices that arise during these hours thanks to the increase of solar energy in the generation mix.
The hourly generation profile of pumped storage power plants has not changed as much as the consumption profile. The highest generation continues to occur in the early morning hours and during the night. These are the hours with the highest prices on the electricity market, which coincide with hours of high demand and when there is no solar generation.
What is clearly reflected in the evolution of the generation profile is the increase in energy production from pumped storage from 2022 and even more so in 2023.
AleaSoft Energy Forecasting’s analysis on the prospects for energy markets in Europe and the energy transition
Precisely, the upcoming webinar will explore the projections of energy storage as a key component in the transition to more sustainable energy sources. The webinar will feature the participation of AEPIBAL, the Business Association of Batteries and Energy Storage.
The webinar will take place on Thursday, November 16, and is part of the monthly webinar series organized by AleaSoft Energy Forecasting and AleaGreen.
Source: AleaSoft Energy Forecasting.