Day-ahead market

Energy on the day-ahead market stood at 237 TWh in 2023 (158 TWh on the spot market without bilaterals), an decrease of 4.9 % compared to 2022. 57.3 % of the energy was traded on the spot market and the remaining 42.7 % via bilaterals, so the spot market got a slightly lower share than in previous years.

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

%

The average price of the day-ahead electricity market in 2023 was €87.1/MWh, half the all-time high recorded last year. The price is down by 48 % compared to last year and 22 % compared to 2021, while it is more than twice the price recorded in the year of the pandemic. The significant fall in the price of gas, the greater participation of renewables and the drop in demand compared to the previous year have led to the fall in the wholesale price. The much lower gas prices have meant that the gas cap mechanism was only applied during the first two months of the year, while in the remaining months the capped price has remained above the actual price of gas, meaning that the cap mechanism did not apply from February onwards.

Prices have been on a downward trend during 2023, however without reaching the values recorded in the years prior to the pandemic. During the year, hourly values of €0/MWh were recorded, which occurred as early as 31 December 2022, and which had not happened since 4 March 2014. While only 3 hours with 0 value were recorded in 2022 on 31 December, 2023 has recorded null values during 109 hours over 23 days. On 5 November, a maximum of 16 hours with a 0 value were recorded, and on 1 January a total of 13 null value hours were recorded. The remaining days have less than 10 hours with null values, and 5 days have only one hour with a null value.

The highest hourly price in 2023 was €220/MWh, recorded at 8 p.m. on 24 and 30 January, and on 16 October.

Evolution of prices in the day-ahead market

The minimum annual daily value was recorded on 4 November (€1.51/MWh), which is lower than the minimum recorded on 31 December 2022 (€2.65/MWh), but still above the €1.42/MWh recorded on 31 January 2021. The previous minimums were registered in 2013 and 2014. The annual maximum daily value was recorded on 21 February, with a value of €151.43/MWh, far from the maximum recorded on 8 March 2022 (€544.98/MWh).

The maximum monthly price was recorded in February (€133.47/MWh). The monthly prices from February to June were the second highest in history, second only to the records registered in 2022 for the same months. Monthly prices from July to October and December were the third highest in history, after the values recorded in 2022 and 2021. November recorded the fourth highest price ever, but it is also the lowest monthly value of the year (€63.45/MWh), while January was the second lowest in the year.

Taking into account the generation mix in the day-ahead market, an important factor in price formation, it becomes evident that a higher share of renewables in the coupling structure influences a lower price and, conversely, a lower share increases the wholesale price.

November, the month that saw the highest percentage of renewables in the coupling structure, was the month with the lowest monthly price. The next month with the highest share of renewables was December, although this month had the third lowest price, not the second, which corresponds to January. If only wind and solar are taken into account, the highest share of both occurred in November and subsequently in January and December, which is consistent with the price level. This is because in December had a large share of hydro, but since reserves were low, it did not have the same effect on prices.

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 market coupling in 2023 was 69.3 %, which is higher than the previous year's 54.1 %. All months of the year saw more renewable energy coupled than in 2022. Nuclear increased its share by 1 percentage point. The share of combined cycles has decreased by 16.1 percentage points, while that of coal has decreased by 2.7 percentage points. The share of wind has increased by 7.7 percentage points, and the share of solar by 8.1 percentage points. (7 p.p. for photovoltaic and 1.1 p.p. for thermal). Pumped-storage has increased its share by 1.2 p.p. This increase can be explained by a greater use of pumped-storage to avoid renewable energy spills.

Another factor influencing the price is reserves. This year, despite the higher availability of hydro resources compared to last year, the low reserves, which have been below the historical average all year, have had the opposite effect on prices.

The price of fuels is another influencing factor. This year, the reduced use of the combined cycle and the containment of gas prices has meant that both prices are more decoupled than in previous years. The price of gas fell sharply from the end of 2022 before stabilising in 2023. It rebounded in September and October. This rise in prices was due to supply concerns due to instability in the Middle East, a labour dispute at Australian liquefied natural gas exporting plants and a pipeline leak in the Baltic Sea, coinciding with a higher demand for gas due to lower temperatures. The European gas price turned out to be $13.11/MMBtu, which is a third of the price recorded in the previous year. The price is also lower than the 2021 average, however, a similar value could only be found as far back as 2008. The MIBGAS price for 2023 was around €39/MWh, 3.5 times lower than last year's price. The price of coal was also lower this year compared to last year and 2021. The Brent price closed at €82.62/barrel, down from €99.82/barrel last year. Geopolitical concerns, slowing economic growth and measures to curb inflation have led to this decline, although the production restrictions agreed by OPEC+, as well as additional cuts by Russia and Saudi Arabia, prevented further declines.

As for the price of emissions, these were 4.4 % higher than last year, but have remained fairly stable. In the first ten months of the year, the price of emissions remained between €80 and €92/tCO2. However, a downward trend in prices became apparent from July onwards, reaching values of 68.5 €/tCO₂ in December.

Plotting the structures of the coupled generation in the hours in which the day-ahead market price marked the annual minimum and maximum, it can be seen that they are very different. In the hours of minimum price, wind power accounts for almost 50 % of the structure, with renewables accounting for more than 85 %. Observing the mix in the hours of maximum price, it can be seen that it is pumped-storage that sets the marginal price, although wind is the technology with the highest share in the mix (37.0 %). During these hours, renewables accounted for 51 % of the generation mix. However, excluding hydro, which was offered at very high prices due to its scarcity, the percentage would be only 43 %.

Generation structure in the minimum and maximum price hours of the day-ahead market

Prices in Europe have been much more stable in 2023, with an annual average below €100/MWh in most countries, with the exception of the United Kingdom and Italy (€108.03/MWh and €127.24/MWh, respectively).

The lowest average annual price, of €56.44/MWh, corresponded to the Nord Pool market. For the remaining countries analysed, values range from €87.10/MWh in Spain to €96.86/MWh in France. All prices are lower than last year. Spain is the country with the smallest variation (48 %), as the gas price cap mechanism has been in force since June 2022, so prices have not risen as much, and France has seen the biggest price reduction (64.9 %).

European market prices