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Spain has become one of Europe’s cheapest power markets

janrosenow.substack.com

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Re: Spain has become one of Europe’s cheapest power markets

#111

Post by izacus »

miohtama wrote: post #29
pyrale wrote: post #27

The author's point is that Spain's electricity is very cheap compared to other European countries thanks to its great electricity mix, etc. The reality is that Spain's electricity is cheap because it is relatively insulated from Europe's core network, because its interconnections with other countries are limited. In financial words, there is a spread with the rest of Europe because the ways to arbitrage that spread a…

Hmm. Everyone should just disconnect Germany, let them freeze, and enjoy cheap electricity?

[dead]

Re: Spain has become one of Europe’s cheapest power markets

#112

Post by tialaramex »

PowerElectronix wrote: post #104
pyrale wrote: post #27

The author's point is that Spain's electricity is very cheap compared to other European countries thanks to its great electricity mix, etc. The reality is that Spain's electricity is cheap because it is relatively insulated from Europe's core network, because its interconnections with other countries are limited. In financial words, there is a spread with the rest of Europe because the ways to arbitrage that spread a…

To add to this, Spain gets it gas from Algeria, the rest of europe gets it from Russia and the middle east. So yeah, It's easy to have better prices when your gas is comparatively free from disruptions.

Sure, Algeria does have gas pipelines to Europe. Two of them actually. The smaller one goes to Spain and Spain as we see in this article has lower electricity wholesale prices.

But er, the bigger Algerian pipeline goes to Italy, a country with notoriously high energy prices. So if Algerian gas was the secret that's actually a big problem for you.

Re: Spain has become one of Europe’s cheapest power markets

#113

Post by alecco »

crote wrote: post #83
alecco wrote: post #71

Earlier quoted context omitted.

The government refused to protect nuclear plants when prices went negative for a long time, so of course they were turned off because the companies were losing money. That was the obvious plan all along. And no more blackouts because now they are running nuclear 24/7 to keep things stable. And again, it's not completely Spain's government fault as it obviously came from the EU and their anti-nuclear stance.

Wait, so not giving unprofitable power plants subsidies to keep operating at a loss is "anti-nuclear"? And sure, it is a Really Good Idea to contract additional intertia to keep the grid stable. But why shouldn't that be done on the open market? Why pay a fortune for spinning a reactor's turbine at idle load when running a gas peaker plant's turbine at idle works just as well for a fraction of the price?

You can run nuclear (or gas or whatever) at a minimum to keep the network stable. Read my comments. Solar and wind are very unstable and unless you have the latest generation hardware (costing hundreds of millions) you need some stable source.

Re: Spain has become one of Europe’s cheapest power markets

#114

Post by zdragnar »

throwaway_2626 wrote: post #96
hunterpayne wrote: post #92

Earlier quoted context omitted.

The article is a mix of facts and figures on the supply side. However, the real reason for the current cheap prices is the lack of demand. Spain's economy isn't doing well and they have hurt their tourism industry with politics. That's most of the reason for the temporarily cheap power that they mostly import from their neighbor. Being dishonest about their energy policy is pure politics.

Spain's energy policy could easily be improved, but saying that Spain's economy isn't doing well is disingenuous. In terms of GDP, it's one of the countries with the fastest growth in the EU [1]. Also, our economy is becoming more diversified, precisely thanks to lower energy prices that attract industries that previously gravitated towards Germany and Eastern Europe. [2] I'm curious about how politics have hurt tour…

It's easy to win the fastest growing award when it has been doing so poorly before. Youth unemployment is at a near twenty year low of 24%, down from recent years around 30%.

As for politics hurting tourism, there's some formal policies restricting airbnbs and placing higher tourism related taxes on over-encumbered areas, but I think most of the detraction is the anti-tourism protests from locals, which were quite large in 2024-2025. You'd have to consider local sentiment as "politics" for the statement to really be true, I think.

Re: Spain has become one of Europe’s cheapest power markets

#115

Post by tialaramex »

mhh__ wrote: post #102
tialaramex wrote: post #101

Earlier quoted context omitted.

> when was the last time you heard someone talking about how cheap renewables are and discuss the CfD schemes All the time? Every single HN discussion about this ends mentioning CfD, often as if it's some secret nobody knows about even though the CfD strike prices are often headline news when they're agreed.

I've basically only just seen this stuff started to be discussed critically in the media in fairly recent years. not including $work discussions with energy traders.

> in fairly recent years

Although this financial instrument dates from late last century, its use in energy markets is much newer, the UK began using CfDs for electricity about a decade ago.

So, yeah, if you recall conversation about wholesale electricity prices back in 2010 they wouldn't have mentioned CfDs for the same reason they didn't mention the effect of Russia's invasion of Ukraine, it hadn't happened yet. Back then renewable electricity generation schemes were subsidised very differently.

Re: Spain has become one of Europe’s cheapest power markets

#116

Post by jauntywundrkind »

maartenscholl wrote: post #79
pyrale wrote: post #27

The author's point is that Spain's electricity is very cheap compared to other European countries thanks to its great electricity mix, etc. The reality is that Spain's electricity is cheap because it is relatively insulated from Europe's core network, because its interconnections with other countries are limited. In financial words, there is a spread with the rest of Europe because the ways to arbitrage that spread a…

This is an interesting point about energy market balancing but it has causality backwards. Spain simply has a better energy mix than Germany, no matter how big the spread between the countries is as a function of interconnectedness.

Spain also has pretty sensible legislation that is somewhat green. For large public areas the lowest allowed AC setting is 27°C / 81°F. Where-as in America you'll go to a mall and it'll be 65°F. https://www.catalannews.com/politics/item/spain-limits-air-c...

Probably doesn't make a ton of difference. But I found that very respectable. It made me hopeful they have other basic green sensibilities.

Re: Spain has become one of Europe’s cheapest power markets

#117

Post by tzs »

hunterpayne wrote: post #92
maartenscholl wrote: post #79

Earlier quoted context omitted.

This is an interesting point about energy market balancing but it has causality backwards. Spain simply has a better energy mix than Germany, no matter how big the spread between the countries is as a function of interconnectedness.

The article is a mix of facts and figures on the supply side. However, the real reason for the current cheap prices is the lack of demand. Spain's economy isn't doing well and they have hurt their tourism industry with politics. That's most of the reason for the temporarily cheap power that they mostly import from their neighbor. Being dishonest about their energy policy is pure politics.

How have they hurt tourism? According to the data here [1] tourism has been going up every year since 1996 except for a moderate hit during the 2008 recession and a big hit during COVID.

[1] https://en.wikipedia.org/wiki/Tourism_in_Spain

Re: Spain has become one of Europe’s cheapest power markets

#118

Post by jcrben »

XorNot wrote: post #109
scythe wrote: post #74

Earlier quoted context omitted.

>On top of that battery prices have been plummeting too so that now Solar + battery is cheaper than other options like Nuclear and especially Gas. I'm a little bit sad that pumped hydro doesn't get more attention in the discussion. It might be too late for it to matter, with improvements in battery prices and ongoing lithium discoveries. But that only underscores the fact that it should have been allowed to matter tw…

Pumped hydro is objectively worse then batteries. Anyone can install batteries anywhere at a fairly minimal local fire risk. A dam is a major mechanical structure which if it fails will straight up obliterate downstream towns, and as such requires a numerous specialized engineering designs and on going maintenance to retain basic safety.

The depreciation of a dam versus batteries can can weigh the benefits towards dams.

Re: Spain has become one of Europe’s cheapest power markets

#119

Post by koolba »

jauntywundrkind wrote: post #116
maartenscholl wrote: post #79

Earlier quoted context omitted.

This is an interesting point about energy market balancing but it has causality backwards. Spain simply has a better energy mix than Germany, no matter how big the spread between the countries is as a function of interconnectedness.

Spain also has pretty sensible legislation that is somewhat green. For large public areas the lowest allowed AC setting is 27°C / 81°F. Where-as in America you'll go to a mall and it'll be 65°F. https://www.catalannews.com/politics/item/spain-limits-air-c... Probably doesn't make a ton of difference. But I found that very respectable. It made me hopeful they have other basic green sensibilities.

> Spain also has pretty sensible legislation that is somewhat green. For large public areas the lowest allowed AC setting is 27°C / 81°F.

As a red blooded American, this is the funniest thing I’ve seen all weekend.

Re: Spain has become one of Europe’s cheapest power markets

#120

Post by gregwebs »

I think Spain is showing that majority renewables can work, if you are willing to work through the pain. Someone needs to lead the way and figure out how to make it work, so I am glad they are doing it. I do think this article and most information is focused on cheer-leading rather than telling it like it is.

This title of the article is misleading. Spain is one of the cheapest power generation markets, but In the article it states "Spanish households pay above the EU average". Then the reason is stated "Other system costs are rising. The flip side of getting energy cheap is paying more elsewhere to keep the system stable.".

Spain of course also had a blackout and the article states "every country in Europe needs to modernise how it handles voltage stability". I believe that's code for "its harder to manager power transmission grids with renewables". I have been told by a power engineer that read the report on the blackout that the authors are going out of their way not to explicitly blame renewables, but these things that caused the blackout are bigger issues now due to the switch to renewables.

But it makes sense for Spain to continue down this path and not pollute with coal or rely on other countries for gas imports.

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