Spanish electricity demand plummets by 8.7% in May

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ASE Group| With an extraordinary drop of 8.7%, the daily average of Spanish electricity demand in May was 562 GWh, practically the same as that recorded in May 2021 (560 GWh) at the height of the pandemic. This decrease was more pronounced in the hours of maximum solar radiation (between 11% and 12%) due to the boom in self-consumption installations in both homes and businesses.

The other factor that explains a large part of this drop is the 7.7% reduction in demand from all companies with medium/high electricity consumption in 2023 (from January to April). The most affected sectors are the paper, chemical, iron and steel and food sectors.

Gas accelerates its fall and also declines in the long term

The downward trend in gas prices started at the end of 2022 due to the significant reduction in demand and the high supply of liquefied natural gas (LNG), which have allowed the level of gas reserves to rise. In May, the average daily spot price of the TTF was 31.50 MWh, 59% lower than a year ago. The Spanish spot price (MIBGAS) maintains a slight discount premium and stands at 29.23 MWh.

This reduction in the daily price and the improvement in gas supply expectations have led to a significant fall in the prices of gas futures contracts. Next winter’s contract (TTF WIN-23 Oct 23-Mar24) closes at 42.90 MWh with a fall of 23.3% in the last month and a reduction of close to 50% so far in 2023.

Last winter (from October 2022 to March 2023) gas demand fell by 17.1%, exceeding the best expectations of the European Commission (-15%). Above-average temperatures have required less heating and industry has cut consumption due to the high price signal. Some sectors have reduced their activity (chemical, metallurgy and paper) and others have stopped (fertilisers).

The economic recession in some European countries, such as Germany, and the lower electricity production of combined cycle gas plants due to the strong growth of renewables are also having an impact. Installed solar and wind power capacity in the main European markets (Germany, France, Italy, Spain, Holland, Belgium, Poland and Austria) has grown (42.3% for solar and 12.8% for wind), reaching a total capacity of 300,000 MW.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.