The MIBEL electricity market ended July with an average price of €51.46/MWh for Spain and Portugal, for a 17% year-on-year price drop. Compared with June, however, the price rose 9%. Market coupling between Spain and Portugal saw identical prices in 99.2% of hours, up from 98.8% in June.
Lower gas and coal prices, compared to July 2018, were the main driver for the fall according to Aleasoft, but renewable energy production rose too. Solar set a monthly record of 948 GWh in July and an hourly record of more than 4 GWh during the month while wind production rose 28% and 21% in Spain and Portugal, respectively, year on year.
The maximum hourly price reached in the month was €60.10/MWh in Spain, on July 12 at 2pm – the only time the price exceeded €60/MWh in July. At that point the Portuguese market decoupled and remained at €58.39/MWh.
According to data published by Red Eléctrica de España, last month it was combined cycle gas turbines that produced most in mainland Spain, followed by the nuclear energy.
European electricity markets
In all the main electricity markets in Europe prices increased from June to July. At the top, the markets in which the price grew most were the ones usually more sensitive to meteorology: the EPEX SPOT market of Belgium, with a price rise of 37%; the EPEX SPOT of France, with 29%; and the Nord Pool of Nordic countries, with a 26% increase. Just behind was the EPEX SPOT market of Germany, with an increase of 22%. The rest of the markets posted around 9% price growth but the N2EX market of Great Britain stood out with the lowest growth – less than 3%.
The price increase in European markets followed the same trend as an increase in the price of CO2 emission rights, which rose 11% on the average price in June. The market price followed the temperatures, hence the most weather-sensitive markets registered the most notable price increases. Although at the end of June there was a heatwave on the continent, during the hot weather of the second half of July slightly higher temperatures were recorded and the situation worsened due to the unavailability of nuclear plants in France because of environmental restrictions on refrigeration. On average, between June and July the temperature increase was 2 degrees Celsius.
Comparing July with a year earlier, the price drop was significant in all markets. The fall was 17-32% and reflected gas and coal prices which last summer were in an upward race towards maximums recorded in September. Last month the trend was clearly downward with several historical lows exceeded.
Coinciding with the drop in fuel prices, wind energy production last month was clearly higher than that seen in July last year. According to AleaSoft’s estimations, in the whole of the main European markets the year-on-year increase in wind energy production last month was around 36%.
Regarding the average price level last month, the EPEX SPOT markets were around €39/MWh, while the Nord Pool market again registered the lowest price: €35.15. The British N2EX market saw an average price of €45.68/MWh and the other, traditionally more expensive markets of Spain, Portugal and Italy were around €52/MWh.
Brent, fuels and CO2
The Brent oil futures price for October on the ICE market continued to oscillate throughout July between $61.59 and $66.69/bbl. This market was conditioned by multiple factors that affected prices in both directions. Interruptions caused by Hurricane Barry in the U.S., a production cut by OPEC+ nations and a new escalation in tensions between the West and Iran after a failed attack on a British tanker affected on the offer side. Demand side continued to suffer from the risk of a weakening global economy due to the trade war between the United States and China.
TTF gas futures on the ICE market for September registered a strong upward trend during early July, settling on July 12, at €13.87/MWh, its highest settlement price since May. After the increase, however, futures resumed the previous downward trend and fell to €10.48/MWh at the end of the month, their lowest value since the product began being traded.
API 2 coal futures prices on the ICE market for September were on the rise for most of July, reaching $63.60/t on the 23. That sudden escalation occurred after a prolonged downward trend and was completed with a rise of more than $9/t in less than 30 days. After that increase, prices fell back below $59/t on the last two days of July, although they remained above the settlement values of the beginning of the month.
CO2 emission rights futures prices on the EEX market for December were traded above €26/t throughout July and settled on the 23 at an historical high of €29.30/t.
The behavior of electricity futures for the last quarter of the year in Spain and Portugal, on the OMIP and EEX markets for Spain as well as the OMIP market for Portugal, left a net variation during July of almost no relevance. In both countries the price at the end of the month showed a slight decrease of less than €1/MWh compared with the level at the start of July. However, that difference did not do justice to the futures behavior in the period concerned. Although they began and ended the month with practically the same value, during the first fortnight they had an increasing trend, leaving maximums above €60/MWh, a price which had not been exceeded during all of June. Then, in the second fortnight the price decreased.
The behavior of the electricity futures price for next year in the same countries was more noticeable. After maintaining an upward trend that cooled at the end of the month, the product for Spain reached €57.45/MWh on the OMIP market and €57.38/MWh on the EEX market. In Portugal, on the OMIP market, the futures price for 2020 reached €57.80/MWh. All those maximum figures were reached on July 23 and in all three cases they represented the maximum price reached for each product this year.
Regarding the futures of France and Germany on the EEX market, for the product of the fourth quarter of 2019 it occurred almost the same as for Spain and Portugal: they closed the month with net variations of less than €1/MWh, but with maximums in the central period that exceeded the threshold – respected throughout June – of €60/MWh for France and €50 for Germany. However, it is worth noting the difference in the case of Germany was positive, but in any case of only 1.9% compared to the price at the beginning of the month.
The futures for 2020 in France and Germany on the EEX market had an increasing trend during July which seemed to disappear but left a maximum price in 2019 for the future in both countries: €55.12/MWh in France and €53.12/MWh in the case of Germany.
Mainland Spain, demand, wind and PV energy
Two historical records for PV energy production occurred last month: instantaneous production above 4 GWh and a monthly production of 948 GWh, representing year-on-year growth of 6.3%. That result displaced the previous level of 930 GWh seen in July 2013. The increase was possible thanks to new installed capacity of 659 MW up to June 30. Solar thermal energy production decreased 10% compared to the same period of the previous year. Solar energy production as a whole ended up exceeding its hourly production record at the same time as PV, with 6 GWh. However, the total generation volume of solar energy fell 1.7% in July in year-on-year terms. Currently, all monthly records for generating electricity with solar are in July, with the other two established in 2015, when 890 GWh of solar thermal energy and 1,778 GWh of total solar production were recorded.
Electricity demand, which was 22,775 GWh in July, increased 2.7% on July last year. To date that was the second month of the year with the highest demand after January, also it was above the demand registered during each month of last year. The rise was partly due to a year-on-year increase of 0.6 degrees Celsius in July.
Combined cycle gas turbine production continued to dominate the electricity mix in Spain, with 7,048 GWh last month for an increase of 216%, compared with July 2018. Production with that technology contributed 32% of the energy mix in July, beating nuclear for the second consecutive month, something which was difficult to foresee a year ago, when in July 2018 it represented only 11% of monthly production.
Nuclear energy production increased by 15% in July, in year-on-year terms. The registered value was 5,131 GWh, which represented 23% of the generation mix. Throughout July all nuclear power plants were in operation.
July wind energy production remained one step ahead of the same period of the previous year for the fourth consecutive month. In that ascending streak, growth was pegged at 28% in mainland Spain.
Hydroelectric energy production fell by 48% compared to the previous July. There has also been a decreasing monthly trend that began last February, resulting in a 5.4% decrease during July compared to the previous month.
Hydroelectric reserves at the end of the month have been, since May, below the levels of the corresponding months of last year, decreasing by 24% last month on July 2018, according to data from the Hydrological Bulletin published by the Ministry for Ecological Transition. The reserves currently have 10,442 GWh, which represents 45% of total capacity.