[Energy Shock] The Tragedy of Spain, a 'Decarbonization Role Model,' as Electricity Prices Triple in One Year

Wind Power Generation Down 20% Year-on-Year
Power Shortages Worsen in UK and Germany with High Wind Shares
France, with High Nuclear Share, Has Electricity Prices "Half of Germany's"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Spain, known as a leading eco-friendly energy model country in Europe, has fallen into a severe power shortage due to a combination of soaring natural gas prices and a decrease in wind power generation. The energy crisis is also intensifying in countries like the UK and Germany, which hastened the reduction of thermal power generation based on Spain's energy policy model. Critics point out that the rapid decarbonization and nuclear phase-out policies, pursued without eco-friendly energy fully replacing conventional energy, are triggering a global energy shock.

On the 17th (local time), the Iberian Electricity Market (OMIE), the institution that announces electricity prices in Spain, reported that the wholesale electricity price in Spain reached a record high of 227.45 euros (about 312,000 KRW) per megawatt-hour (MWh). This is more than three times the average price of 64.61 euros in October last year.

The main reason for the electricity price surge is that wind power, which was relied upon amid the recent spike in natural gas prices, failed to perform adequately. According to the Wall Street Journal (WSJ), wind power generation in Spain this year has dropped by more than 20% compared to the previous year due to abnormal weather conditions reducing the strength and frequency of winds.

Spain has been regarded as a model country for decarbonization policies in Europe. Spain reduced the share of coal-fired power generation from 36% in 2000 to 5% currently. Instead, it expanded the shares of wind power and natural gas power generation to 20% and 31%, respectively.

In response to the electricity price surge, the Spanish government is making every effort to stabilize electricity prices but is struggling. According to the local media El Pa?s, the Spanish government temporarily abolished the 7% tax imposed on power companies earlier this month and drastically reduced the energy tariff from the existing 5% to 0.5%. Spain, which had lowered the share of nuclear power to 20%, is having difficulty expanding additional power production.

The UK and Germany, known as leading countries in decarbonization and nuclear phase-out, are also experiencing soaring electricity prices. According to the BBC, the UK's average wholesale electricity price last month soared to 331 euros per MWh, more than seven times the 47 euros in the same month last year. During the same period, Germany's average wholesale electricity price also surged by more than 50% from the beginning of the year to 126 euros per MWh. Similar to Spain, the energy crisis is worsening due to a sharp decline in wind power generation. As of last year, the share of wind power generation was 22% in Germany and 24% in the UK.

France, where nuclear power accounts for more than 75% of power production, has been less affected by the surge in natural gas prices and the decrease in wind power generation compared to other countries. France's average retail electricity price is known to be 0.13 euros per kilowatt-hour (kWh), about half the level of Germany's 0.33 euros.

This content was produced with the assistance of AI translation services.