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Summer of records in the energy sector

AleaSoft, July 23, 2021. During the summer of this 2021, news of several records in the energy and fuels markets were already published. Many records are related to each other. At AleaSoft, a review of the main historical highs registered to date is made.

Although the summer of 2021 is not over yet, it can already be heralded as a record‑breaking season in the European energy markets. On July 21, the historical record of the daily average price was reached in Spain, with a figure of €106.57/MWh. But it can be said even more, three of the four days with the highest daily average prices in the entire history of the electricity market of Spain are in the week of July 19, from Tuesday to Thursday, all with values above €100/MWh.

AleaSoft - average daily price spanish electricity marketDaily price of the electricity market of Spain
Source: Prepared by AleaSoft using the Alea Energy DataBase (AleaApp) with data from OMIE

The hourly price record was not broken, however, there are records beyond the daily average price: if the weekly average price is analysed, thus eliminating the effects by day of the week, weekends and labour days, the week with the highest average price in Spain to date is that of July 5, with an average price of €93.51/MWh.

The highest priced month in the history of the market also occurred this summer. June 2021 had an average price of €83.30/MWh. However, a few days before the end of July, it is very likely that this record will be broken again, since the average price for the days until July 23 is €92.61/MWh, and the AleaSoft‘s forecasting indicates that the average for the whole month will be around the same value.

These market records occurred at a moment when, although the demand increased due to the rise in temperatures, it was not exceptionally high, as electricity prices were. The price records are more due to the combination of more factors, among which we find other records of this summer.

The generation with combined cycle gas turbines is the current support for generation with renewable and nuclear energy in Spain. This technology has a double dependence on international markets, on the one hand, it obviously depends on the gas price, which is its primary fuel and, on the other hand, it depends on the CO2 emission rights price. When observing the behaviour of these prices in the market, it turns out that both also set highs this summer.

The TTF gas, the reference gas at the European level, had an average price in June 2021 of €28.79/MW, which is the highest monthly price in the last eight years. In the case of Spain, the MIBGAS market registered a monthly average price for June of €28.67/MWh, a figure that was not reached since September 2018.

In the case of CO2 emission rights, the price set on July 5, reaching €57.77/MWh, constitutes the highest price in the history. In addition, the average price of last June is also the historical record for the highest monthly price, of €52.80/MWh.

AleaSoft - daily prices fuels co2 emission rightsDaily prices of fuels (left axis) and CO2 emission rights (right axis)
Source: Prepared by AleaSoft using the Alea Energy DataBase (AleaApp) with data from EEX and MIBGAS

AleaSoft always warns that extreme market events occur in a temporary manner and are not sustainable in the long term. The records and headlines that the market is generating do not necessarily represent its trend in the mid and long term. That is why it is increasingly important for all agents in the sector to have long‑term prices forecasting that is coherent and offers information on the behaviour of the market variables, beyond headlines and records. Only in this way it will be possible to carry out a correct management of investments, projects and facilities that minimises risks.

One way to keep up to date with what is happening in the markets and to understand their behaviour in a deeper way is the free webinars that are regularly organised at AleaSoft. The next appointment is October 7, where, in collaboration with speakers from Deloitte, the situation of the markets in the recovery from the crisis will be analysed, one year later. The registration to attend this webinar is already open. In addition, the recordings of any of the previous webinars can be requested at any time.


Source: AleaSoft Energy Forecasting
Long term forecasting

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