Spot and short-term contracts:

Demand kept decreasing over the summer period of 2023. Both July and August experienced a decrease of 1.3% in electricity consumption compared to the same months last year. The main reasons for this decline can be attributed to lower gas prices and less electricity demand, as well as an increase in renewables production in most markets. As a highlight, solar production in Spain reached higher values compared with the same period of 2022, with 32.9% of electricity generated in July and 35.3% in August.

The Spanish electricity market experienced a significant price volatility in July. Furthermore, the average price in July was strongly lowered to 91.32€/MWh compared to June, and it remained towards a mean value of 96.66 €/MWh in August. The highest prices reached were 117.02€/MWh in July and 134.94€/MWh in August, whereas the lowest were 78.28€/MWh and 28.15€/MWh, respectively. In terms of m-o-m comparison, June-July showed a -1% price difference, while July-August saw prices increase by 6%. Also, large variations have been observed y-o-y, with a significant reduction of 65% for July and 69% in August, mostly as a result of the impact of the Ukrainian conflict (and the resulting gas shortage context in Europe) in the gas compensation price.

Total electricity demand in Spain amounted to 22.6TWh in July and 21.8TWh in August. An increase of 13% can be observed between June-July and decrease of 4% between July-August. However, average demand for the period under study decreased on a yearly basis. July´s demand amounted to 728.3 GWh and August to 702.1GWh, rather lower if compared to 2022 with 754 and 712, respectively.

Regarding power generation typology, the technologies with a higher participation in the mix in July were nuclear 21.7%, CCGTs 21% and solar 19.2%. Furthermore, August showed similar patterns as well, increasing significantly in wind generation around 18.3% of the total generation. CCGTs, nuclear and solar (21.2%, 21%, 19%) were also the main source of electricity production. In addition, 46.2% of the power generated came from renewables in July and 46.4% in August. While generation decreased from 54% to 46.2% in July, it stayed uniform in August.

As for the Spanish gas market (MIBGAS), a decrease was observed in the average price for July, at 29.85€/MWh, and an increase of the trend in August, at 34.1€/MWh, if compared with the month of June, at 31.2€/MWh. Despite the average gas price values for this period, the highest registered in July was 37.96€/MWh, and 43.93€/MWh in August, +27% and +29%, respectively, when compared to the average price.

Regarding CO₂ emissions, EUA Dec23 contract increased only by 0.5% in July 88€/t when compared to June. Nevertheless, the average price was lower during August, at 86.1€/t, including a small decrease of 2% m-o-m with regards to the price of July.

In the case of oil, Brent prices increased by 7% in June-July and 6% in August, with average values of 79.9$/bbl and 84.6$/bbl, respectively. It may not be surprising to see an increase in prices in the upcoming months due to a decrease of in RES output.

Medium and long-term contracts:

As regards electricity futures (OMIP), prices fluctuated similarly to June. Contrary to June, Q4 2023 contract showed a +3% and 4% increase during the months of July and August. Thus, in comparison between them, only a 1% m-o-m increase is forecasted for Q4 2023, with an average price of 116.21€/MWh in July and 117.6€/MWh in August.

Cal’24 contract prices showed a consistent increase in comparison to June’s, reaching 97.89€/MWh in July and 103.39€/MWh in August. However, Cal’25 prices showed an increase of just 0.1% and stronger in August, with +6% reaching, at 77.96€/MWh.

In the case of MIBGas contracts, futures for Q423 traded at a moderate price, averaging 43.22 €/MWh in July and 45.10€/MWh in August, a m-o-m change of -0.3% and 4.34%, respectively. As for Cal’24, the contract closed the month at an average price of 49.92 €/MWh in July and 51.24€/MWh in August. The gas supply chain and the targets set by the EU may be causing part of these variations (see below). Currently, there is a high level of gas reserves in Spain (storages were almost 98% and 99% full at the end of July and August). Not only the increase of LNG previously mentioned, but also the improved capacities towards transmission system operator (TSOs) to lead the shift in gas flow from west to east.

Regarding EU gas storage, it was above 75% in July 2023 following its way to meet the 90% of the target required if these gas injection levels continue, 30^th September as end date. Plus, the extra target to be implemented is to reduce gas demand by 15%. Research estimates a 30% left in case the 90% of gas storage is achieved and the 15% of reduction in gas demand is applied.

To conclude with CO₂, EUADec’23, Dec’24 and Dec’25 contracts showed a slight decrease and closed July and August with an average price at around €87/t, €91.5/t, and €94.2/t, respectively.