European Electricity Market Plunges: Renewable Energy Boom and Negative Prices

During the last week of March, European electricity markets saw widespread price drops, with the Iberian MIBEL market hitting record lows for the eighth consecutive week. Spain even recorded its first-ever negative electricity prices on April 1st. This was driven by decreased demand and a surge in renewable energy production, particularly wind and solar. Portugal and France set March records for wind energy generation. However, solar power generation fell in most markets, except for Germany, which saw an increase. AleaSoft forecasts a rebound in solar production for Germany, Spain, and Italy next week, while wind power is expected to rise in Germany and France but decline in the Iberian Peninsula and Italy. Electricity demand fell in most markets, except for France, Portugal, and Great Britain. AleaSoft predicts further price declines in most markets during the first week of April, but the MIBEL market is expected to recover slightly due to lower wind generation. Brent crude oil remained above $85/bbl, TTF gas futures stayed below €28/MWh, and CO2 emission rights held above €60/t. Low electricity prices pose challenges for renewable energy developers who relied on overly optimistic price forecasts for financing.