Electricity in Spain and Portugal has reached extreme prices – only 1 euro / MWh, on the spot markets / At the same time, in Romania it is 69 euro / MWh

The cheapest electricity in Europe is sold on the spot markets in Spain and Portugal. For over a month and a half, prices have fallen so much that, days in a row, energy is traded at extremely low values, reaching an average level of just 1 euro on Wednesday. This tendency to keep prices at extreme levels is influenced by large productions of renewable energy, especially photovoltaics.

Analyzing the evolution of prices on the European markets, from the last month, we can see that electricity in France is also starting to be traded at lower and lower levels, up to 20 euros / MWh less than the levels on other markets.

Lower prices in western Europe / Romania is among the most expensive

While in Spain and Portugal, electricity was sold for 1 euro, on the other spot markets, the average was around 70 euro/MWh. Only in France and the countries of northern Europe were they somewhat lower on Wednesday, around 50 euros / MWh.

On the day-ahead market in Romania, electricity was traded at 69 euros/MWh on Wednesday.

For several days, this has been the trend, with extremely low prices in Spain and Portugal. For example, over the weekend, a MWh was traded, on average, for 2 euros in Spain, 10 euros in France, 38 euros in Germany and 46 euros in Romania. The most expensive market is that of Italy, where 1 MWh is sold up to 20 euros/MWh more than the average in other countries.

Electricity in Spain and Portugal was also sold at extremely low prices in late February – early March for almost two weeks. Otherwise, transactions on the Spanish market are made at an average level of 40 euros / MWh.

The more green energy increases, the lower the prices

Electricity prices in Spain have fallen to near zero as wind and solar farms produce more energy than ever in the Mediterranean area, Bloomberg reported nearly a month ago.

While the sharp drop in prices is good for consumers as it will be reflected in household bills, lower long-term levels risk hurting investment in renewable capacity as Europe is in full transition to a green economy.

In the midst of the energy crisis, on the spot markets a MWh of electricity had reached record levels of over 550 – 600 euros/MWh.

​The energy crisis, caused by Russia’s manipulation of gas supplies and invasion of Ukraine, has led to major changes in energy markets in Europe in a short time. First of all, the desire to get rid of Russian dependence as quickly as possible has led to record increases in renewable sources, the goal being the replacement of gas and coal, but also large decreases in consumption, emerges from the latest reports of the Agency for the Cooperation of Energy Regulatory Authorities (ACER).

But while the production of renewables has increased, the demand for electricity has decreased, leading to sharp price drops.

Thus, as demand decreases and sources are diversified, prices also decrease. And even bigger discounts are expected in the coming period.