The greater production of renewable energy increases the hours of cheap electricity per day


The dependence of fossil fuels is called into question again in Europe, as a consequence of the russian invasion from Ukraine. The European Union has drawn up a plan to reduce this subjugation by two thirds, with more diversification of the oil and gas supply and one consumption reduction, but also with more renewable energies that are also cheaper. In Spain, aside from the exceptionality of the current situation, the effect of the implementation of the wind and photovoltaic in the system it is already beginning to be noticed with an increase in the hours of the day in which electricity has a lower price.

Until now, the 5 in the morning It was the most affordable time, according to wholesale prices, due to the low demand at that time and the high wind energy production. But since last year, this also happens to the 5 in the afternoonthanks to the injection photovoltaic in the ‘mix’ of electricity generation, according to data from the Operator of the Iberian Energy Market (OMIE). “That the entry of renewables modifies the price formation of the market is evidence that can already be seen and that will continue for years to come. The volatility has come to stay,” said the president of that organization a few weeks ago, Carmen Becerril.

Between 2020 and 2021, the installed capacity of photovoltaic solar energy increased by 3,363 megawatts (MW), to a total of 15,369 MW (in recent months it has increased by 150 MW more). The Government’s objective, reflected in the National Integrated Energy and Climate Plan (PNIEC), is to reach 39,000 MW in 2030 and raise the current 28,597 MW of wind power to 50,000. Both energy sources also have the advantage of being seasonally complementary: in summer it is very windy and in winter it is very sunny, which allows the exchange of one for the other.

“The sooner we develop the renewablebefore they will be reflected in the energy prices of the wholesale market. At this time they are already setting energy prices for more hours of the day and more days of the week and this reduces consumers’ electricity bills”, assured the European Commissioner for Energy, Kadri Simson, a few weeks ago during his visit to Spain. The price of energy in the so-called ‘pool’ is one of the three receipt components, along with taxes and tolls and charges. “And in the medium term, Spain is very well positioned to offer consumers affordable prices“, he added.

Thus, despite the current situation with a market completely “broken” by the war, the futures market is advancing and at much cheaper pool prices in Spain than in other European countries for the coming years. In 2023, it marks an average of 150 euros per megawatt-hour for Spain, while France stands at 210 and Germany 170. And from that date the difference widens. If in 2024 and 2025, the Spanish figure is 90 and 60 euros per megawatt-hour, respectively, in France it is 120 and 100 euros, and in Germany, 120 and 90 euros.

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But while this situation benefits consumers, it works against producers, when a “cannibalization” problem occurs because the more demand renewables are able to cover in an hour, the more likely it is that the price will reach zero and not signal investment. “If the hours in which the price is very cheap are dedicated to to stock and you put that energy in the hours where there is no direct production of renewables, the price does not drop as much at 5 in the afternoon, but it would drop more in the hours without sun, which is when there is more demand”, explains the general director of the Union Spanish Photovoltaic (UNEF), Jose Donoso. For this, it is necessary regulate storage to put a price on that technology: “Until now it had not been urgent because there is one backup demand great with other technologies (gas) that guarantee supply, but in a couple of years it will be necessary to provide price guarantees”.


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