The record highs in the Iberian electricity market do not stop happening. In the midst of a heat wave in Spain and in a context of record gas and CO2 prices, the week of August 9 made history.
The price on August 12, of €115.83/MWh, once again exceeded the historical maximum for the fourth time in a row. Also that day at 8p.m. the highest hourly price was reached since the end of 2010.
Once again, electricity prices in the MIBEL market of Spain and Portugal steal the headlines. The historical record of daily price has been broken in 2021 so far seven times, of which the last four are concentrated consecutively in the week of August 9. The most recent record was €115.83/MWh for August 12.
Not only was a daily price record reached, but the price at 8pm on August 12, of €130.00/MWh, is the highest price since the €145.00/MWh that was reached at 9pm on December 26, 2010. The prices at 9pm and 7pm on August 12 are the next in this ranking, with values of €128.77/MWh and €128.37/MWh respectively.
These price records occur at a time when Spain is going through a heat wave that causes an increase in electricity demand. In turn, production with renewable energy is at relatively low levels. This scenario forces the use of higher-cost generation technologies in order to meet demand. So a higher market price is inevitably to be expected.
But in this case there are more factors leading to the rise in prices. In Spain, the backup generation technology is the combined cycles gas turbines (CCGT). The price offered for these plants depends on gas and CO2 emission rights prices. Precisely these two variables in recent months showed a growing trend and set historical records in recent days.
The CO2 emission rights prices set their historical record on July 5, with a value of €57.77/t and the settlement price of the session on August 10 was €57.34/t, very close to said record.
TTF gas set its historical record in the spot market at the beginning of 2018, but also the price on August 11, of €44.40/MWh, is the highest in the last three years.
This value is very close to the €44.66/MWh with which the TTF gas futures market settled for the M+1 in the ICE market in the August 10 session, which is the historical maximum since October 2013 For their part, the MIBGAS market prices peaked in January 2021, and after an apparent recovery in February, they also began an upward trend that has reached the August 10 session with a price of €43.58/MWh, a value very similar to that of TTF gas.
The situation of high gas and CO2 prices did not only affected the prices of the electricity spot market, but also reflected in the electricity futures markets. In the session of August 10, the product of the calendar year 2022 of Spain reached its maximum price, both in the OMIP market and in the EEX market, with prices of €81.50/MWh and €81.20/MWh respectively.