As of the 17th, the daily average price of Spain’s wholesale electricity market for December is 115.33 €/MWh. This is 10.4% higher than last November’s price (104.43 €/MWh) and 59.8% higher than the price from a year ago (72.17 €/MWh).

According to analysts from Grupo ASE, the drop in temperatures during the first part of December has increased electricity consumption. Gas combined cycle plants (CCG) have gained prominence because the nuclear fleet has been reduced, and wind power generation has been lower than usual.

Since international gas prices are high, the increased presence of CCGs has driven up electricity prices in Spain, which have reached their highest level in 22 months.

Electricity demand increases by 4%

Grupo ASE analysts point out that weather forecasts had already indicated the likelihood of a colder winter in the Northern Hemisphere due to the La Niña effect.

They now suggest that, although weakly, Europe and Spain might already be feeling its effects through increased energy demand for heating, compared to the last two winters, which were particularly warm.

So far in December, electricity demand has averaged 712 GWh/day, 4% higher than last year. It also exceeds the five-year average by 2.2%.

This increase in consumption in December will cause 2024 to close with a slight demand increase of 1% compared to the previous year, thus ending a three-year streak of consecutive declines.

Combined cycles increase production by 91.5%

In the first part of December, CCG generation reached an average of 123 GWh. This is an extraordinary increase of 91.5% compared to the same period last year. Additionally, it is the highest figure since October 2022 (212 GWh/day).

Grupo ASE analysts highlight several factors:

• Wind generation was 24.5% lower than last year during the first half of December.
• The two reactors at the Ascó nuclear plant are shut down, reducing Spanish nuclear generation by 20%. Ascó I is in a planned outage, and Ascó 2 should have rejoined the system after a planned outage, but was delayed by an incident.
• Hydroelectric generation has dropped by 35%, as there has been less rainfall and reservoir levels are lower than last year.
• Electricity demand has increased by 4%, requiring an increase in the volume of electricity generated.

Throughout this year, high renewable production had relegated CCGs to cover peak demand during the highest-demand hours.

However, in November and December, lower nuclear availability and reduced wind generation have led to CCGs entering almost every hour of the day.

Photovoltaics have increased by 31%, but the low radiation in December reduces its contribution to just 10% of the mix.

Thus, gas combined cycles lead the mix in the first part of December with 25.8% of electricity generation, surpassing wind (23.1%).

With lower renewable contributions and reduced nuclear output, CCGs have set the marginal prices in the daily market, pushing electricity prices higher.

Forecast for the end of the month: below 100 €/MWh

Our forecasting models estimate that electricity prices will be below 100 €/MWh next week, thanks to the expected moderation in demand and the forecasted increase in wind generation.