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AleaSoft, March 3, 2021. The natural variability of the wind energy production is good news for the pumping stations and for all the energy storage technologies (batteries, green hydrogen…). During the periods of high wind energy production in late 2020 and early 2021 is when the pumping stored more energy. This fact is not only good news, it is also an indicator of the storage that will be needed in the future during the energy transition.

AleaSoft - Pumping hydro power statios

Never so much wind energy was produced for three months in a row before. Between December 2020 and February 2021, the wind farms of the Spanish peninsular territory produced 20 643 GWh of electricity, values that represent a historical record for the peninsular wind energy. This fact led to very low prices in the Iberian electricity market MIBEL for much of these months. In fact, the average price of MIBEL in February was the lowest on the European continent after almost seven years.

The reversible hydroelectric plants

The pumping stations, that is how they are commonly known, have the ability to pump water to a higher location consuming energy from the electricity system and release it again later generating electricity. So, effectively, they are considered an energy storage technology.

The profitability of the energy storage technologies is that the price difference between the moment of consuming electricity (buying) and generating electricity (selling) is large enough to cover the losses during the storage and production. In the case of the pumping stations, the efficiency between the energy consumed and that generated is around 70%.

For this reason, the presence of the wind energy in the electricity mix is a very attractive aspect for the pumping plants. Not only due to the fact that with high wind energy production the market prices tend to be lower and it is advantageous for the pumping stations to consume the excess production that may exist, but also that the inherent variability of the wind resource will cause that periods of high wind energy production and low prices alternate with others of low wind energy production and high prices when it will be advantageous to sell the stored energy and make up for the possible lack of production in the electricity system.

AleaSoft - Electricity generation wind energy pumping hydro SpainSource: Prepared by AleaSoft using data from REE.

Thus, the wind energy production records of the recent months led to an increase in energy storage and production by the pumping stations. Although there were no historical records, the electricity consumption by the pumping stations of the peninsular territory between December 2020 and February 2021 reached 1931 GWh, values that were not reached since the first quarter of 2016. On the production side, the pumping stations generated 997 GWh during these three months, values that were not registered since the spring 2016.

In general, the pumping consumption and production peaks coincide with the episodes of high wind energy production.

The energy storage and the increase in wind energy capacity

Without a doubt, the increase in wind energy capacity proposed in the NECP is good news for the pumping stations. Since more wind energy will mean more possibility of storing and producing electricity in the reversible plants, and more wind energy capacity will require more energy storage capacity to be able to manage its variability.

But the increase in wind energy capacity is not just good news for the pumping stations. It is also so for all the storage technologies, batteries, green hydrogen or other still very experimental technologies.

Information and analysis of the energy markets in Europe

At AleaSoft a new webinar on the “Prospects for the energy markets in Europe. Spring 2021” is being organised. The webinar will be held on March 18 and it will have the participation of speakers from EY (Ernst & Young). During the webinar and the subsequent analysis table, the prospects for the markets in the spring of 2021 will be analysed, the financing of renewable energy projects, the importance of the PPA, the main novelties in the regulation of the energy sector and the business opportunities abroad will be discussed.

In previous webinars organised by AleaSoft, relevant and interesting topics for the professionals of the energy sector in Europe were discussed. From the PPA, from the point of view of both the renewable energy producer and the consumer, the financing and the bankability of the renewable energy projects, the account audits and the due diligence, and the renewable energy auctions. In many of these topics, the need to have long‑term prices forecasts with good quality, scientifically based and with hourly price granularity in the thirty‑year horizon of the forecast was highlighted.

At AleaSoft mid‑term European electricity markets prices forecasts reports are also available, which provide a vision of the prospects for the coming months and years, taking into account the most up‑to‑date scenarios for the evolution of the economy. In addition to the hourly forecasts for the next three years, a forecasts with stochasticity report is available, which includes the probability distributions of the monthly, quarterly and yearly products included in the forecast horizon and a monthly simulations report that includes 1000 simulations of prices.

In a complementary way to the forecasts reports, the Alea Energy DataBase (AleaApp) is a tool that compiles the data of the main variables of the energy markets, facilitating their visualisation and the analysis of their historical evolution.

Source: AleaSoft Energy Forecasting.