Electricity in Spain cost €62.5/MWh during 2024, according to Francisco Valverde Sánchez, an energy markets analyst, based on estimates from analysis software.

This figure is 30% below the initial projections, which were around €82/MWh.

In an interview with Energía Estratégica España, Valverde emphasizes that this difference is mainly due to the high number of hours with a €0 value seen in the market this year, driven by the impact of renewable energy and a gas cost that remained more stable than in previous years, without extreme spikes.

The spring of 2024 was a key period for the reduction in electricity prices. The analyst notes that this is due to a recurring phenomenon: “In spring, several favorable factors traditionally align. This year, there was a lot of solar energy, more wind capacity, and a good filling of reservoirs, which allowed us to fully exploit the water resources.”

Reviewing the Pool, this period recorded historically low levels: March €20.31/MWh, April €13.67/MWh, and June €56.08/MWh. These could be repeated in the same period in the coming years, provided there isn’t significant growth in demand, mainly from energy-intensive consumers.

“It’s rare for so many positive factors to align, but when they do, prices drop significantly,” Valverde explains.

He also adds that the difference from 2023 was that this year there was even more renewable capacity installed, especially solar, which contributed to the price drop.

Energy Demand

Data from Red Eléctrica España shows that the national electricity demand for the first eleven months of 2024 accumulated 225,532 GWh, a 0.7% increase compared to the same period in 2023. Once labor and temperature effects are taken into account, demand grows by 1.4% compared to the previous year.

Valverde observes an interesting shift during the year: “Until recently, electricity demand was on the decline, possibly due to increased self-consumption and lower industrial activity. However, in recent months, we have seen a rebound.”

The analyst explains that part of this increase could be linked to projects like the installation of data centers near renewable energy sources.

However, he warns that to encourage greater electricity demand, it is necessary to reduce the taxes associated with electricity.

“Electricity is heavily taxed compared to other fossil fuels. It’s inconsistent that we pay CO2 taxes on electricity but not on fossil fuels. If we want to attract more consumption, we need to make electricity more attractive. For me, the key is lowering prices,” Valverde emphasizes.

Expectations for 2025: Less Volatility and Price Stability

Unlike this year, the consultant does not expect a significant discrepancy between the actual prices for 2025 and the futures projections, which average €68.25/MWh.

“We are starting with a good level of reservoir filling and have more renewables than ever. I don’t think we will see a difference as large as this year’s,” Valverde states.

The expert anticipates that 2025 will be a year marked by greater energy storage integration, though its full impact will not be felt until 2026.

“I expected storage to take off in 2024, but it seems it will be in 2025 when it begins to enter more cautiously. There’s still a lot to be done for it to be truly significant,” he concludes.

Finally, regarding the shift to the hourly market, which will begin in January and March, Valverde Sánchez considers that “it will involve adjustments for companies, but not a major impact in terms of prices. This system provides greater precision in offers, especially for renewables, but it won’t significantly transform the intraday market.”