Wind energy is the electricity generation technology with the most installed power in mainland Spain and the second that has contributed the most to the generation mix in recent years, exerting a downward influence on market prices. This technology, together with combined cycles, has taken coal out of the mix, has helped to reduce GHG emissions from the electricity sector and is set to continue to be a protagonist of the energy transition in the coming years together with photovoltaics.
Wind energy was already present in the electricity generation mix of mainland Spain when the electricity market was liberalized in 1998, and since then it has experienced significant growth that has led it to be the electricity generation technology with the most installed power in the Spanish mainland since October 2019, to be the one that contributed the most electricity to the mix in 2013 and to remain in second place in this ranking continuously, year after year, since 2016, behind nuclear power. The contribution of wind power to the generation mix in 2020 stood at 22.5%, the highest up to that time.
AleaSoft – Spanish peninsular installed wind power Source: Prepared by AleaSoft Energy Forecasting with data from REE. Data from 2021 to November.
AleaSoft – Spanish peninsular electricity generation mix Source: Prepared by AleaSoft Energy Forecasting with data from REE.
Influence of wind energy production on electricity prices
The prices of wind energy offers to participate in the electricity market are lower than those of other technologies, such as thermal ones. This is due to the fact that their variable costs are lower, in some cases they have government aid, they depend on the wind, which is an uncontrolled natural resource, and for now the energy storage systems have not been sufficiently developed, so their cost opportunity is practically nil and they need to bid at lower prices to ensure that their offers match. This, together with the high capacity existing in the Spanish mainland system, causes electricity market prices to be highly correlated with wind energy production and its volatility. When wind energy production is high, prices tend to fall, reaching values ??very close to or equal to zero in a few hours, especially when electricity demand is lower. In the case of low wind energy production, prices tend to increase because thermal power plants are required to meet the demand for electricity.
AleaSoft – Spanish peninsular wind power production prices Source: Prepared by AleaSoft Energy Forecasting with data from OMIE and REE.
2021 values ??are not included to facilitate identification of causalities
AleaSoft – Spanish peninsular wind production prices 2021 Source: Prepared by AleaSoft Energy Forecasting with data from OMIE and REE.
AleaSoft – Wind production price ratio Spain peninsular Source: Prepared by AleaSoft Energy Forecasting with data from OMIE and REE.
AleaSoft – Relacion produccion eolica prices espanna peninsular 2019 Source: Prepared by AleaSoft Energy Forecasting with data from OMIE and REE.
AleaSoft – Weekly Spanish peninsular price wind production ratio Source: Prepared by AleaSoft Energy Forecasting with data from OMIE and REE.
AleaSoft – Weekly Spanish peninsular price wind production ratio 2019 Source: Prepared by AleaSoft Energy Forecasting with data from OMIE and REE.
Wind power and international electricity exchanges
European electricity markets are physically interconnected and coupled with each other in the internal electricity market. This allows energy to flow from markets with lower prices to markets with higher prices, thus obtaining more balanced prices and prioritizing production with the least expensive and most efficient technologies. If the electrical interconnections between the different countries had unlimited capacity, the prices of the entire continent would be the same.
Taking into account the depressive effect of wind energy on prices, when wind energy production is high, electricity exports from Spain increase.
AleaSoft – Exports of the Spanish peninsular wind production Source: Prepared by AleaSoft Energy Forecasting with data from REE.
AleaSoft – Relacion produccion eolica exports Spain peninsular Source: Prepared by AleaSoft Energy Forecasting with data from REE.
AleaSoft – Weekly Spanish peninsular exports wind production ratio Source: Prepared by AleaSoft Energy Forecasting with data from REE.
