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Spanish February spot halved on massive precipitation, hydropower production

Eylert Ellefsen
Archived blog post. This blog post has been transferred from our previous blogging platform. Links and images may not work as intended.

(The picture is of the famous Almudena Cathedral in Madrid.)

Spanish spot prices were nearly halved in February, dropping 32 €/MWh on the back of exceptionally high hydropower output, reduced consumption and lower SRMC for gas.

The drop in February spot prices was mainly triggered by record-high precipitation and hydropower output, but lower consumption due to higher temperatures and ongoing Corona lockdown measures contributed as well.

Weighted against average levels, hydropower and reduced consumption had an equal impact of about 45% each on the price fall, with lower fuels costs contributing to about 10% of the reduction.

Key hydrology factors calculated by EQ

  • The February ’21 precipitation level was close to the highest ever (ref. chart with scenarios for the period 1980-2021 below)
  • But notice that precipitation has been at 2021 levels or somewhat higher several times in February over the last 10 years
  • Yet, February ‘21 precipitation is about 5,500 GWh higher than average for the long-term period (216%)

Precipitation and production compared to historical numbers

Iberian net precipitation energy (GWh) for February 2021. Plotted climate scenarios for 1980-2019 for comparison.

We have compared Iberian hydropower production for February ‘21 with actual net production data since the year 2000, pumped storage not included. In this perspective, we see that production was higher than this year in 2001 and 2014 – which both came out nearly 3,000 GWh higher than the 20-year average.

Iberian hydropower production (GWh) for February. Plotted historical February-production from 2000 and onwards for comparison.

Using EQ’s historical database, which is available via our web and data feed, we can easily summarise February ‘21 numbers:

Summary of net precipitation energy and production for 2021 compared to the averages.

Despite the high hydropower production, hydro reservoir levels rose significantly during February: By end of the month, the total Iberian reservoirs levels stood at 85% compared to a historical average of 59%, which translated into 5.4 TWh more than normal.

See our Spanish Hydrology-webpage (login required) for more details.

Spot prices

Furthermore, the 30 €/MWh drop in spot prices was the biggest observed month-on-month change over the past last 10 years – which, in a market perspective, represents "forever" (see chart + table below).

Spanish daily spot prices in February compared to the average spot price of January.
Spanish spot prices in January and February 2021.

As noted above, the extreme price drop cannot be explained by hydropower only – lower consumption and SRMC for gas-fired also played a role. We have used data from EQ’ vast database to create this overview of price drivers:

Overview – price drivers in Spain and Portugal for January and February 2021.

Key takeaways for this are:

  • The 2,818 MW increase in hydropower production was compounded by an equally sharp drop in demand (2,826 MW)
  • Natural gas production decreased to compensate for higher hydropower production, and the net exchange with France switch from imports to strong exports. The main price-driver are consumption + hydro and SRMC for gas

In more detail, the 2,826 MW drop in demand may be explained by higher temperatures (3-4 deg. milder in January than February) and new stronger Covid-related lockdown measures.

We estimate the impact of temperatures on demand is about 60%, while lockdown measures contributed to about 40 %.  For Portugal, the distribution between these factors was nearly 50/50.

The price impact from fuels is mainly related to lower gas prices (-3.5 €/MWh as monthly average difference), while the EUA-price turned out higher (+5.1 €/t).

The SRMC impact for a gas-fired plant with an efficiency rate of 55% we estimate to be about 4 €/MWh, which we for simplicity estimate to a price-impact of about 3.5 €/MWh.

Bases on monthly averages, we have made the following simplified overview of the effects of the various price drivers impacting February spot prices:

Effects of the various price drivers impacting February spot prices in Iberia.

The price impact of lower consumption was nearly the same as from higher hydropower output, based on average monthly numbers, by about 14 €/MWh each.

Closing words

Thanks for reading this blog post. If you have any questions or suggestions or would like to know more about how we may help you with your data sourcing, forecasting or any other matter, please get in touch at

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