Spain’s Renewable Energy Surge: Record Output Drives Down Electricity Prices

Spain's Renewable Energy

In February, Spanish electricity prices took a nosedive, contrasting starkly with those of neighboring France, plummeting due to unprecedented levels of wind and solar power generation. The day-ahead prices for Thursday settled at a mere $5.20 (4.80 euros) per megawatt-hour (MWh) in Spain, while France saw rates soar as high as $68.86 (63.59 euros) per MWh, according to data from Bloomberg.

Unlike France, which heavily relies on its extensive nuclear power infrastructure for electricity production and typically exports surplus power to nearby nations, Spain has become a net exporter of electricity since February 21. This shift follows Spain’s record-breaking wind and solar power outputs earlier this year, with electricity even being sold to France.

The surge in renewable energy generation in Spain, particularly from solar and wind sources, is projected to reach new highs this month, with expectations of sustained high output into March, as per Bloomberg’s forecasts.

While the plummeting electricity prices have dented the profits of Spanish utility companies, consumers have benefited from reduced retail prices reflecting the lower wholesale electricity costs.

Renewables accounted for over half of Spain’s electricity mix last year, marking a significant increase from their 2022 share. Minister of Energy Transition Teresa Ribera noted that more than half of Spain’s electricity now stems from renewable sources, with total renewable generation surpassing 135,000 GWh in 2023, up from 116,695 GWh in 2022.

Over the past decade, Spain has made substantial investments in solar and wind capacity, with hydropower, once the primary source of renewable energy, now contributing around 10% to the nation’s total generation.

In terms of renewable energy deployment, Spain outpaced its European counterparts last year, securing the second position in onshore wind installations, according to Rystad Energy. While Germany maintains dominance in solar and onshore wind capacity, Rystad Energy highlights Spain’s promising trajectory in these sectors, foreseeing substantial growth in the years to come.