The energy crisis, which seemed to have been resolved, still leaves some blows with abnormally high prices in the electricity and gas segment. Without the current spotlight that it had during 2021 and 2022, the electricity market is leaving a month of November with the megawatt/hour above 100 euros for many days. Added to this situation is the increased cost of gas, which, in turn, also impacts the creation of the ‘pool’, regardless of its own residential or business consumption. The explanation for these prices has several aspects. And the sum of all of them leaves the most expensive month of the year—for now—in the wholesale electricity market. Among these factors, the intermittency of renewables stands out, something that has already been warned about; a lower input of nuclear energy, which undergoes recharging cycles; and an entry of natural gas into the electricity mix which, on top of that, is experiencing its own price surge in recent weeks due to its own peculiarities. Related News 1,206 million in standard turbines If Iberdrola awards Siemens Gamesa another mega contract for its wind farm in the North Sea Xavier VilaltellaIn these conditions, November has had nine days above €100/MWh, and some days have been among the ‘top 10’ of 2024. Specifically, counting until last Friday, the average price was just 100 euros on average. In this way, it surpasses August, which remained at €91/MWh, or January, which was third with 74 euros. And it is out of comparison with the month of April, where very favorable weather conditions for renewables left the average for the month at €13/MWh. However, now, and under the radar of current events that these days look at the effects of DANA and the controversies over Teresa Ribera in Europe, the reality is that consumers will pay more again. The situation in November is being complicated. The CEO of Aleasoft, Antonio Delgado, explains to ABC that “since November 4, the daily prices of the Spanish electricity market have exceeded €100/MWh, reaching levels close to €120/MWh on some days. This increase is due to several factors. First of all, since November 4, the Ascó I nuclear power plant has been on a scheduled shutdown to refuel, which has reduced nuclear production. This issue is a warning to sailors of what may happen from 2027 when the closure of the nuclear park begins and the first Almaraz nuclear reactor is removed. This will mean that gas gains weight as a backup technology, at least until storage gains weight in the composition of the electricity mix. But this issue is not going as fast as expected and, for this reason, everyone is looking at the evolution of renewables. Something that has a direct impact. Delgado explains that “wind production has been low in recent days, which has led to greater use of combined cycles to cover demand.” Added to this is that, although gas prices have decreased compared to a few days ago, they are still above €40/MWh – and have reached 46 euros -, a level that we had not seen this year until beginning of October.”The forecastOn what is to come, and with a view to winter, the CEO of Aleasoft explains that “the evolution of market prices will depend largely on wind and hydroelectric production, whose levels are usually higher at this time of year and can help moderate prices. Temperatures will also influence, which will condition the level of demand. On the other hand, gas prices will continue to be a key factor, since their evolution generally marks the upward trend in the market. Related News standard Yes The businesses of energy companies Spaniards in the US, in suspense Raúl Masa Iberdrola, Acciona Energía and Repsol have made important green bets in North America. When it comes to gas, Ignis energy analyst, Pedro Cantuel, recalls that «today it is very expensive. Practically double that before the crisis. I find it difficult to explain the current situation. It is true that there is a lot of uncertainty about how demand is going to behave. In Germany they are having problems with their coal plants these days and gas consumption in their electricity sector has skyrocketed due to low wind power. These things always put pressure on prices and more so in winter. Furthermore, Cantuel details, “speculation is still very present in the European gas market, with investment funds with very strong positions betting on high prices. Despite having high reserves, the above, together with the uncertainty of a cold winter, keeps the market tense, a market that depends on LNG, another factor of instability. We will see in the coming weeks how demand evolves in Central Europe, the fundamental key to seeing price moderation. We need moderation in demand and stability in supply. “The temperatures will set the prices.”
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