Day-ahead market

Energy on the day-ahead market stood at 237 TWh in 2022 (155 TWh on the spot market without bilaterals), an increase of 8.4 % compared to 2021. 65.5 % of the energy was traded on the spot market and the remaining 34.5 % 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 2022 was 167.52 €/MWh, again setting a new record high and exceeding last year's price of 111.93 €/MWh. The price is 50 % higher than last year. Prices were high during the first months of the year, reaching an all-time high in March, when the price of gas peaked for the first time due to the outbreak of the war in Ukraine. The high fuel prices, which have a direct impact on the price paid by consumers on the regulated tariff in Spain, led to the implementation of measures to contain them. In mid-June, RD-L 10/2022 was introduced to cap the price of gas on the Iberian wholesale market. This ensured that in August, following the unavailability of the Nord Stream pipeline, the new gas price peak was not reflected on the Iberian peninsula with a new maximum on the wholesale market, as it was in the rest of Europe.

Evolution of prices in the day-ahead market

Until August, average monthly prices were the highest in history, and since September, they have been the second highest, lagging behind those recorded in 2021. The start of the conflict pushed up prices, which were averaging 200 €/MWh at the beginning of the year. Although, initially, it did not seem that the record highs registered on December 23, both daily (383.67 €/MWh) and hourly (409.00 €/MWh at 19 and 20 h), would be exceeded, they were surpassed on Monday, March 7 and, subsequently, on Tuesday, March 8, which continues to be the day with the highest daily (544.98 €/MWh) and hourly (700 €/MWh at 20 h) prices in the Spanish wholesale market. This led to a new monthly high of 283.39 €/MWh on the day-ahead market in March.

In the last months of the year, the gas cap, the mild temperatures and the lack of dynamism in the Chinese economy meant that prices stabilised below those of last year, reaching the lowest monthly value since August 2021 in December, despite having the second highest prices for December in history. On December 31, the minimum annual daily price was recorded (2.65 €/MWh), which is the lowest value since February 21, 2021. On the same day, 3 hours were recorded with a price of 0, a fact that had not occurred since 2014, specifically since March 4.

Taking into account the structure of generation in the day-ahead market, an important factor in price formation, it can be seen how its impact this year is less noticeable at the global level, as during the first months it was the price of gas that fixed the evolution of the price of electricity, as it has done so since the middle of 2021. April is the most renewable month. Subsequently, with the entry into force of RD-L 10/2022, the trend in the wholesale price of electricity decoupled from the price of gas, as mentioned above, so that a new peak in the wholesale market was avoided in August, with the last two months of the year suggesting a drop in prices as a result of the greater participation of renewables.

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 structure for 2022 was 53.3 %, which is lower than the previous year's figure of 62.6 %. Only in April and in the last two months of the year was more renewable energy used than in 2021. Nuclear has seen its share fall by 2.2 percentage points as more power is again being handled by bilateral contracts this year. The share of combined cycles has increased by 15.8 percentage points, while that of coal has increased by 1.4 percentage points. Practically all other technologies have reduced their share, except for solar photovoltaic, which has increased by 1.4 percentage points. This reduction in the share of renewables has contributed to the rise in prices.

Another factor influencing the price is reserves. This year's low rainfall and low reserves, which have been closer to the historical minimum reserves than to the average except in December, also contributed to the increase in prices.

The market price increase during most of 2022 has been mainly due to higher fuel prices and emissions. European natural gas prices have been high all year. After the upturn in December 2021 due to the reduction in the supply of Russian gas, the price stabilised below 100 €/MWh for the first few months, but the start of the armed conflict and the measures taken against Russia caused the price to soar, reaching its first maximum in March (144 €/MWh). The rest of the months it remained between 100 and 110 €/MWh, but from summer onwards, the partial closure and then the unavailability of the Nord Stream caused prices to rise again, eventually surpassing the March peak in August (239 €/MWh). Since then, the price has declined due to full reserves, mild temperatures, and the slowdown in the Chinese economy. The increase in European gas has been greater than that of MIBGAS, as the latter can be supplied with LNG, so prices have been more decoupled this year. The price of coal has also been higher year-on-year, reaching its highest price in March and remaining at high levels until October, when prices decreased, although not reaching the levels seen at the beginning of the year. The price of Brent crude oil has been higher than the previous year, reaching annual highs in June that were very close to those recorded in 2012.

As for the price of emissions, these have also been higher than last year but have remained fairly stable. The first eight months of the year have remained at an average of 80 €/MWh, with the exception of March, when they fell below this value. The annual minimums are recorded in September and October, slightly below 70 €/tCO2, before rising again in the last two months, returning to an average similar to that of the beginning of the year.

Plotting the structures of the matched 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 63 % of the structure, with renewables accounting for more than 78 %. Observing the structure in the hours of maximum price, it can be seen that it is pumped storage that sets the marginal price, although hydro and combined cycle are the technologies with the highest percentages in the structure (24.1 % and 21.4 %, respectively). During these hours, renewables account for 46 % of the generation structure. However, excluding hydro, which was offered at very high prices due to its scarcity, the percentage would be only 22 %. On that day, the greatest energy matched with prices close to the marginal price corresponds to the combined cycle (86.9 %).

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

European prices have registered the same behaviour as those of Spain until the entry of RD-L 10/2022. Since then, Spanish prices have been among the lowest in Europe, even below those of NordPool for several months. As mentioned above, the cap has meant that the peninsula has not registered a price peak in August, as in most countries in the rest of Europe.

European market prices