April 24, 2024

Hydro levels drive surge in negative prices in Iberia

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In the last weeks, Spain saw a huge surge in the amount of energy stored in its hydro reservoirs, which by the middle of April reached around 14 TWh of stored energy. This amount is close to the Spanish average power demand across 20-25 days.

Across recent weeks, renewable penetration in Iberia has even exceeded 70%, driving an increasing occurrence of zero and negative prices across the Iberian Peninsula: indeed, Spain and Portugal saw negative prices on Day-Ahead Market for the first time at the beginning of April 2024. This price dynamic probably further fuelled the increase of energy stored in Spanish hydro reservoirs – currently higher than the entire hydro energy stored in Switzerland, Italy, France and Greece put together.

Iberian hydro flexibility represents an important source of competition for flexible power assets, so it must be properly considered in investment valuation. The availability of these huge hydro reservoirs also enables seasonal energy storage of wind and solar generation. They provide important support for the ambitious RES targets of both Spain and Portugal, which are both aimed at increasing RES penetration above 80% by 2030.

Hydro levels drive surge in negative prices in Iberia