On March 8, 2022, a few days after the start of the Russian invasion of Ukraine, the price per megawatt hour reached its historical maximum in the electricity market, of 545 euros, driven crazy by the price of gas. Two years later, on March 8, 2024, it stood at zero euros for hours. The massive participation of renewables, and especially the onslaught of water and wind, contributed at times to leaving the market without signal. These are known but uncommon situations that anticipate, in the opinion of experts, what is to come: relief for the consumer and also some concern among investors.
National planning, the PNIEC, contemplates a large deployment of renewables for these years. In its latest review, it sets a target of 62,000 megawatts of wind energy in 2030 and another of 76,000 for photovoltaics. The figures are ambitious, especially when compared to the 27,000 MW of wind and 11,500 MW of photovoltaics with which the decade began. In addition, investment interest continues, as demonstrated by the rate of entry of new projects.
That partly explains what happened this month. The hours at zero price have happened and, from time to time, nuclear power plant operators have decided to reduce production due to low market prices. For the first time since the start of the war in Ukraine, the debate about the inefficiency of the market to set a price that reflects real costs changes sides. Electricity producers and not consumers are the ones who now have cause for concern.
Mario Berná, partner of the consulting firm Ingebau, warns that these episodes in which the price of the electricity market remains at zero “will become more and more frequent.” “It is especially dangerous for photovoltaics because prices sink precisely during their peak production hours.” Other technologies such as nuclear, which can close bilateral agreements, or wind, with different production times, are safer.
The truth is that in February renewables contributed close to 60% of electricity production, which is a historical record. Wind, with 31%, was by far the technology that contributed the most, and hydraulics was not far behind, with 14%. Wind has established itself as the great renewable resource, despite the difficulty in developing new offshore wind projects.
“A renewable carom has occurred,” indicates the general director of the UNEF photovoltaic association, José Donoso, to explain what happened. The rain, the wind and the increasingly less negligible solar production have come together punctually. This rare combination offers in advance “a snapshot of what the future will be like,” anticipates Donoso. “It’s the trend. The more renewables there are, the lower the price will be.”
Donoso rejects the idea that renewables can “cannibalize” themselves, but he does believe that the Government should promote measures so that their profitability is not compromised. He advocates recovering new power auctions and trusts that the electric car, large data centers and the general electrification of the economy will help raise demand.
In this flowering of renewables, solar self-consumption is going through a small bump. “At the domestic level it is very stagnant,” says independent consultant Francisco Valverde. The subsidy schemes have ended, which reduces the interest of individuals. “Added to this is the lowering of the price of electricity, which also does not help” in making the decision to install panels, he indicates. The presence of solar panels on roofs is already seen in the wholesale market, where part of the decrease in demand responds to this trend.
