Europe | Silent revolution: electricity prices are dropping
Published on Monday, April 8, 2024
Europe | Silent revolution: electricity prices are dropping
Lower gas prices, reduced demand and an increased use of renewable energies are the key factors driving a reduction in wholesale electricity prices across Europe. Futures contracts are pointing towards a stabilization of prices in the medium term.
Key points
- Key points:
- In the first two months of 2024, wholesale electricity prices stabilized in Europe, at average levels between 40 and 70 euros/MWh, far from the high, volatile prices seen in 2023 and especially in 2022. Notably, Spain hit a European low of 20 euros/MWh in March, a level not seen since mid-2020.
- This fall in electricity prices is underpinned by market fundamentals: reduced gas prices, lower demand and increased production from renewables and hydropower.
- In Spain, the dynamics mirror those seen across Europe, where gas prices significantly impact the wholesale electricity market. However, Spain enjoys a unique advantage in renewable energy technologies, partly attributed to its favorable geographical location.
- Wind, hydro, and solar energy collectively constitute nearly three-quarters of Spain's electricity mix. This dominance of renewable sources, alongside a decrease in demand, has substantially diminished the role of combined cycle technology as a marginal source in the energy market, dropping from nearly 25% in February 2023 to just 4% a year later.
- Futures suggest that European wholesale electricity prices may hover around current levels in the upcoming years. In any case, a “stable” regulatory framework will be needed to ensure predictability and confidence and to place Europe in a strategic and competitive position on a global scale.
Documents to download
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Press article (PDF)
Joxe_Mari_Barrutiabengoa_Pilar_Mas_Revolucion_silenciosa_bajan_los_precios_de_la_electricidad_en_Europa_Expansion_WB.pdf Spanish April 8, 2024
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- Topic Tags
- Energy and Commodities