Solar smashes records in June: daytime demand almost fully covered
Solar covered 70% of daytime demand in June, but the pricing system inflates utilities' profits while small producers go under.
English · Original discussion in Spanish · Published
Solar covers almost all daytime demand in June: success or distortion?
Data from Red Eléctrica (ESIOS) paint a historic June for solar PV in Spain. During daylight hours, renewable generation has covered practically all of national demand, even forcing wind turbines to be shut down to avoid excess supply. The figure, however, comes with a controversy over the pricing system and the viability of the model.
The figure that divides: GW or GWh?
The circulating figure –30,000 GW produced versus 38,000 GW of demand– is technically incorrect: it mixes units of power (GW) with energy (GWh). The real ESIOS data show that instantaneous solar power has exceeded 20 GW on many days, and energy generated in the month is around 8,000 GWh. But the sensationalist headline hides a deeper problem: during the central hours of the day, solar covers more than 70% of demand, but at night nuclear and gas continue to set the price.
The utilities' solar business
The sharpest criticism targets the marginalist pricing system. Solar plants, with near-zero marginal costs, receive the same price as gas plants –often above €80/MWh– generating extraordinary profits. The big utilities have filled up with low-cost photovoltaic projects that get paid as if they were expensive thermal plants. Meanwhile, wind power switches off during the day because there is surplus electricity, and some solar farms are already operating with negative prices, having to pay to feed their energy into the grid.
Storage: the big hole in the model
The daytime surplus is not stored. Without large-scale batteries, that energy is lost or exported at a loss. Spain is on its way to becoming Europe's energy supplier, as Elon Musk noted, but the paradox is served: whoever gets free electricity at midday will pay a fortune at night. Meanwhile, electricity taxes (21% VAT, the electricity tax, levies) account for more than a third of the final bill, as consumers point out.
A forecast with reservations
If the pricing system is not reformed and storage is not accelerated, the solar boom could lead to margin cannibalisation and bankruptcies among small producers. The current model, which rewards the big players with inflated prices, has its days numbered. The million-dollar question is whether the Government will dare to touch the utilities' profits or will keep passing the bill on to the consumer.
Data from Red Eléctrica (ESIOS) paint a historic June for solar PV in Spain. During daylight hours, renewable generation has covered practically all of national demand, even forcing wind turbines to be shut down to avoid excess supply. The figure, however, comes with a controversy over the pricing system and the viability of the model.
The figure that divides: GW or GWh?
The circulating figure –30,000 GW produced versus 38,000 GW of demand– is technically incorrect: it mixes units of power (GW) with energy (GWh). The real ESIOS data show that instantaneous solar power has exceeded 20 GW on many days, and energy generated in the month is around 8,000 GWh. But the sensationalist headline hides a deeper problem: during the central hours of the day, solar covers more than 70% of demand, but at night nuclear and gas continue to set the price.
The utilities' solar business
The sharpest criticism targets the marginalist pricing system. Solar plants, with near-zero marginal costs, receive the same price as gas plants –often above €80/MWh– generating extraordinary profits. The big utilities have filled up with low-cost photovoltaic projects that get paid as if they were expensive thermal plants. Meanwhile, wind power switches off during the day because there is surplus electricity, and some solar farms are already operating with negative prices, having to pay to feed their energy into the grid.
Storage: the big hole in the model
The daytime surplus is not stored. Without large-scale batteries, that energy is lost or exported at a loss. Spain is on its way to becoming Europe's energy supplier, as Elon Musk noted, but the paradox is served: whoever gets free electricity at midday will pay a fortune at night. Meanwhile, electricity taxes (21% VAT, the electricity tax, levies) account for more than a third of the final bill, as consumers point out.
A forecast with reservations
If the pricing system is not reformed and storage is not accelerated, the solar boom could lead to margin cannibalisation and bankruptcies among small producers. The current model, which rewards the big players with inflated prices, has its days numbered. The million-dollar question is whether the Government will dare to touch the utilities' profits or will keep passing the bill on to the consumer.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (26 replies).
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