Price volatility marked 2024, a year that the Spanish energy market will remember as a turning point, with an increasing share of renewables but little flexibility.

The average annual electricity price was €63.04/MWh, with a historical peak in December of €111.24/MWh and a low in April of just €13.67/MWh.

Hourly price analysis showed peaks as high as €193/MWh, while at times, prices turned negative, reaching -€2/MWh. This extreme volatility signals the structural challenges of the Spanish electricity system.

Carlos Martín Graña, Head of Operations at ENERJOIN, emphasized that “this year, we have learned to live with maximum volatility that seems to be here to stay.”

Differentials of over €100/MWh between hours on the same day or consecutive months reflect a trend that risks the stability of the energy market and the competitiveness of the Spanish economy.

The rise of photovoltaic energy has been one of the main features of 2024, with an average annual solar capture price of €39.59/MWh.

However, the contribution of photovoltaics to the annual base load was only 37.2%, with a peak in April of 63.6%, while in January it was just 8.8%.

“We need much more renewable energy, but above all, storage, and we still don’t know if it is really feasible,” the specialist emphasized in a conversation with Energía Estratégica España.

The lack of storage capacity weakens the system and increases dependence on gas during periods of intermittency, leading to higher energy costs and vulnerability to tensions in international markets.

Gas: The Protagonist and Problem of Energy Policy

Dependence on natural gas has been, and remains, one of the most determining factors in the Spanish electricity market, worsened by the uncertainty arising from the invasion of Ukraine and global market tensions.

“It’s suicidal because energy policy is driving us to depend on gas that we don’t have, making us more vulnerable and increasing our energy costs,” Graña states.

Additionally, he points out that current gas reserves are rapidly declining, and from April onward, Spain will need to compete for liquefied natural gas (LNG) in the global market to achieve sufficient storage levels before the next winter.

He adds, “The situation is very complicated, and the decision to close nuclear plants, as Germany has done, will only worsen the problem by increasing dependence on renewables without adequate backup.”

The gradual shutdown of nuclear plants will start in 2027. Former Minister Teresa Ribera, before becoming a European Commission Commissioner, stated that it is the companies that continue to intend to close the plants due to lack of profitability.

However, there is great concern in the sector about this. In Graña’s words: “Imagine what would have happened this winter, with prices over €100/MWh, if we had shut down 2 or 3 gigawatts of nuclear power.”

This situation underscores the need for immediate and long-term strategies that combine renewables, storage, and potential solutions like small modular reactors (SMRs).

The Spanish energy landscape calls for a deep review of current policies, and the ENERJOIN representative concludes that “the only viable solution is a strong combination of renewables and efficient storage.”