AleaSoft is publishing a series of articles on the Spanish electricity market to celebrate its 20th anniversary as a leader in the field of the forecasts for the energy sector. After analysing the market in the years before the crisis and during the crisis, this time the analysis focuses on the years after the crisis, starting in 2015.
Spanish electricity market prices
The trend of the price of the MIBEL market of Spain from 2015 was increasing, except for the fall in 2016, unlike the last years of the 2009‑2014 period when it remained very stable. From 2015 to 2018, the average prices were above €50/MWh almost every year, except in 2016, which with an average of €39.67/MWh was the minimum for this period. In 2019, until October 30, the average price was €49.64/MWh.
The first signs of the recovery of the crisis were seen in 2015, when the electricity demand increased compared to the previous year for the first time since 2011, being one of the main factors in the rise in market prices. The increase in the demand and the fall in the hydroelectric energy production favoured the rise of almost 20% of the price of the electricity market.
During the following year, 2016, the price plummeted to €39.67/MWh, down 21% following the steps of the prices of the CO2 emission rights, the Brent and the gas, that fell in similar proportions. This annual price, which was even lower than the prices of a large part of the crisis period, was also influenced by a rise in the renewable energy production of 7.5%, mainly the hydroelectric energy production, by 27%, with 2016 being the year of the greatest hydroelectric energy production in this period.
Already in 2017, the jumps given by the prices of the Brent, the gas and the coal and by the thermal gap caused the price of the MIBEL market to resume values above €50/MWh, reaching €52.24/MWh.
The year 2018 was marked by the significant increase in the price of the CO2 emission rights to €15.94/t of annual average, the highest since 2009. This behaviour, supported by the prices of Brent, gas and coal, offset the 84% rise in the hydroelectric energy production and the renewable energy production in general, bringing the electricity market price to €57.29/MWh.
In the first nine months of 2019, the average price decreased by 9.9% compared to the average price of the same months of 2018, thanks to the decrease in gas, coal and Brent prices, the decrease in the coal energy production and the increase in the production with renewable energies, mainly the solar photovoltaic and solar thermal energies.
Although in the last four years and so far in 2019 there were no zero hourly prices, the minimum value for this period was the hourly price of €2.30/MWh, which was first obtained at hours 6 and 7 of January 10, 2017, and then repeated at other times of January, February and May of the same year. The maximum hourly value since 2015 was reached at hour 21 of January 25, 2017 and was €101.99/MWh.
As for the coupling between Spain and Portugal, in this period it was greater than in the years of the crisis, with a total value between 2015‑2018 of 94%. In this stage, 2015 was the year with more coupling, when during the 97% of the hours the same price was registered in the markets of both countries. Another aspect that benefited the Spanish electricity system was the electricity interconnection with France by the East of the Pyrenees, which began operating on October 5, 2015. In 2016, the coupling between Spain and France was 30% and remained over 24% the following two years.
The emergence of a new electricity market, the European continuous intraday market (XBID), which began its operation on June 12, 2018, constituted at this stage an important step for the advance in the coupling of the European electricity systems to achieve a single and integrated European market.
Electricity market price and inflation
During the years of the recovery of the economic crisis in Spain, between 2015 and 2018, the consumer price index (CPI) increased 3.5%. This increase was basically between 2016 and 2018, because between 2015 and 2016 there was a slight decrease in the CPI of 0.2%.
Between 2015 and 2018, the price of the Spanish electricity market registered an increase of 14% which, once corrected the effect of the inflation, drops to 10%.
At the end of this series of AleaSoft articles on the evolution of the Spanish electricity market, now looking at the entire history of the market, from 1998 to 2018, the price increase was 129%, from €25.06/MWh in 1998 to €57.29/MWh in 2018. Taking into account that during these twenty years the accumulated price inflation stands at 55%, the real price growth of the electricity market was 48%.
If we try to smooth the year‑to‑year fluctuations due to the variations in the production with renewable energies and the temporary fluctuations in the fuel prices, looking at the trend in the annual average price and correcting for the inflation of the consumer prices, the price increase of the market is around 18%.
Electricity demand of Mainland Spain
With the economic recovery since 2015, the electricity demand of Mainland Spain regained its growth trend at a more moderate pace compared to the increase in GDP. For that year, the demand recovered by 2.0% compared to the previous year, while the GDP had a recovery of 3.6%, being these the highest growths recorded between 2015 and 2018. In 2016, the growth in the demand had a small deceleration, increasing only 0.7% compared to the previous year, while in 2017 the increase was 1.1%. In the analysed period, the year 2018 was the one with the lowest growth in demand and GDP, being 0.4% and 2.6% respectively.
So far this year, until September 2019, the demand decreased by 2.0% compared to the same period last year.
Despite the recovery in the demand growth, in 2018 it continued to be 4.6% lower than the one registered in 2008, while the GDP exceeded the index registered for that same year in 2017. During the period from 2015 to 2018, the electricity demand in Mainland Spain only grew 2.3%, while GDP grew 9.0%. This difference in growth evidences an increase in energy efficiency that was adopted after the economic crisis, leading to a reduction in energy intensity, which is an indicator of the energy use and how efficient a country is when producing goods and services. The energy intensity relates the energy consumption to the GDP, to determine how much energy is needed to produce the country's wealth.
Installed capacity and energy production per technology in Mainland Spain
After the crisis, the pace of installation of new capacity for the generation of electricity in Spain continued to be very discreet. During this period, the fastest growing technology continued to be the wind energy. Between 2015 and 2018, 242.50 MW of wind power capacity were installed in Spain. In the solar energy sector, the growth occurred in the photovoltaic technology, which installed 30.88 MW of new capacity, while no new generation capacity was installed with solar thermal technology. Finally, the third and last electricity generation technology that registered an increase in its installed capacity in the period was the hydroelectric energy, with 19.91 MW. In this way, all the installed capacity during the period analysed in Mainland Spain was of non‑polluting energy.
On the other hand, while the previous technologies increased their presence in the market, other technologies reduced their generation capacity. The largest sample is the coal generation, which in 2016 reduced almost 1 GW of capacity, specifically 932.15 MW. It is followed by the nuclear energy, whose installed capacity decreased by around 460 MW. However, this reduction in this period is symbolic, since it is the Santa María de Garoña nuclear power plant, which stopped in 2012 and that received the refusal of the renewal for its exploitation authorisation on August 1, 2017. It is therefore on that date that the decrease in installed nuclear energy capacity is recorded, but this plant had not participated in the Spanish generation mix for five years. Finally, the other technologies that declined in generation capacity are the cogeneration and the combined cycle gas turbines, which withdrew 426.39 MW and 385.85 MW from the park, respectively during this period.
In general, during this period the main sources of electricity generation did not change. The fundamental leap is in 2019. It should be noted that so far in 2019, Spain installed more than 2 GW of electricity generation capacity from renewable sources. Of this figure, more than 1.5 GW are of solar photovoltaic energy. The vertiginous increase of this technology is due to the fact that the cheapening of the photovoltaic installations made this technology profitable to operate in the market, as well as the impulse to the renewable energies of the Integrated National Energy and Climate Plan (NECP) and the Royal Decree regulating the electricity self‑consumption.
The production of electricity with each technology in this period has a behaviour similar to that of the installed capacity. Very little change in general, except for the removal of coal, which is the most appreciable change. Regarding the generation with nuclear energy, it is observed that in spite of decreasing the installed capacity, the generation does not vary appreciably in these years because, as previously stated, it was a plant that was stopped for several years.
