Day-ahead market

Energy in the day-ahead market stood at 248 TWh in 2021 (176 TWh in the spot market without bilateral contracts), an increase of 2.9 % compared to 2020. 71.1 % of energy was traded in the spot market and the remaining 28.9 % through bilateral contracts, the same values as those registered in the previous year. These percentages have remained quite similar since 2015.

Percentage of energy purchased in the day-ahead market and through bilateral contracts

%

The share of energy supplied by market traders who are not classified as reference suppliers grew slightly this year, reaching a market share of 89 % in 2021, compared to 88.2 % in the previous year. The share is very similar to that registered in 2019.

Evolution of purchases in PDBF from Reference Traders (RT) and other traders (OT)

TWh

The average day-ahead electricity market price in 2021 was 111.93 €/MWh, the highest ever, much more than the maximum value registered in 2008 (76 €/MWh). The price is more than triple that of last year's price (which was very low due to the pandemic). This price increase, shown in the graph, which was mainly as of August, actually started earlier with prices already above 90 €/MWh as of the end of May.

The year began with high values in January, but in February they were quite low, the following months, although high, were stable, and as of August, they had been rising steadily, registering a small fall in November and in the last few days of the year.

Evolution of the maximum and minimum prices in the day-ahead market

It can be seen in the graph how the minimum prices were quite high. Worth highlighting was the month of September, whose minimum hourly value was almost 100 €/MWh. In the graph we can see how prices were rising, repeatedly exceeding the maximum registered values until, on 23 December it reached the all-time daily maximum all-time high (383.67 €/MWh) and the hourly record (409.00 €/MWh between 7:00 pm and 8:00 pm).

As of April monthly prices set all-time highs and June registered the all-time monthly maximum since the start of the market. As of June, each month saw a new monthly record high, with the exception of November, finishing the month of December with a monthly record high of 239.16 €/MWh. However, February's price was low, the eighth lowest price ever registered for the month of February.

If we take into account the generation mix in the day-ahead market, an important factor in the calculation of the price, it can be seen that the month of February 2021 was the month with the lowest price, as it was the month with the highest share of renewables and with the lowest share of combined cycle.

Generation structure in the matching process and price of the day-ahead market and of natural gas

The share of renewable energy in the electricity generation mix for the energy matching process for 2021 was 62.6 %, up from 57.6 % the previous year. Nuclear saw its share in the mix reduced by 2.1 percentage points, as this year more energy was again managed through bilateral contracts, whereas during the pandemic much less was negotiated via bilateral contracts (down 1.7 percentage points in 2020 compared to the previous year). The share of combined cycle decreased by 2.1 percentage points, while that of coal increased slightly (0.8 percentage points). Wind and solar increased by 1.3 and 3.1 percentage points, respectively. This scenario would have led us to expect a reduction in prices, however, this was not the case.

Another factor influencing the price is fuel reserves. These were above historical average levels until April. In February, reserves almost reached their maximum levels, a situation that also influenced the fall in prices in that month. In the last few months of 2021, fuel reserves were below the average values, which caused an increase in prices.

The increase in the market price during most of 2021 was mainly due to the increase in fuel prices and for CO2 emissions. The price of European natural gas, after reaching its lowest price ever in May 2020 (during the pandemic), began to rise which led it to repeatedly reach the highest prices since August, with the exception of November, reaching a value of 129.65 $/MWh in December, a value which is much higher than the 19.97 €/MWh in December 2020. The price of coal followed a similar trend, reaching its maximum prices in October, as after the fall in November (stronger than that of gas) prices did not reach the maximum again. The price of Brent Crude Oil, which during the pandemic was also low, reached values that had not been seen since 2002, increasing throughout the year and exceeding the values of 2018, but this was still far from the prices recorded between 2011 and 2014.

With regard to the price of CO2 emissions, a slight fall was recorded from March to May 2020, which was below the values registered the previous year, and then it began to rise and repeatedly beat the all-time monthly maximum prices as of December 2020. The annual price was 120 % higher than in 2020 and 119 % higher than in 2019.

If the energy matching process of the generation mix is represented in a graph showing the times of the day in which the day-ahead market price set the annual minimum and maximum values, it can be seen how these are quite different. Regarding the time of day at which the minimum price was set, it can be seen how wind power was the technology that had an impact on the marginal price (with a percentage higher than 43 %), with renewable energy matched at that time being nearly 80 %. Looking at the mix during the hour of the day in which the maximum price was registered, it can be seen that hydro determined the marginal price, although it was combined cycle that had the highest percentage in the mix (around 35 %). At that time of the day, renewables represented a share of just under 40 % of the generation mix. On that day, the greatest volume of energy matched with prices close to the marginal price corresponds to combined cycle followed by hydro.

The maximum day-ahead price was recorded on 23 December (383.67 €/MWh) and the minimum on 31 January (1.42 €/MWh).

Generation mix in the day-ahead market (DAM) energy matching process in 2021 (annual minimum and maximum hourly price)

European prices recorded the same behaviour as those of Spain, all setting annual and monthly record highs. A comparison between the Spanish day-ahead market price and the European market prices shows that prices in Italy, Spain and the United Kingdom are among the highest in Europe. In February, the prices in Spain were the lowest in Europe.

European energy market prices