Spanish windmills owned by Iberdrola SA and Endesa SA may generate a record amount of electricity this week, forcing local power prices to three-year lows, calculations from Bloomberg weather data show.
An Atlantic Ocean storm is forecast to generate winds averaging 17.4 miles an hour across the peninsula. Lighter winds, at 13.6 miles an hour, were enough to break the previous record output four weeks ago. Then, the extra supply cut power prices by 11 percent.
“This will push the spot market lower next week,” Manuel Palomo, a Citigroup Global Markets analyst in Madrid, commented. Palomo covers Spanish generators Iberdrola, Endesa and Acciona SA, which operate most of the country’s wind farms.
Spain and Germany, the world’s biggest wind-energy markets after the US, have shifted the dynamics for wholesale power trading by forcing sellers to read weather reports. Because their fuel is free, wind turbines undercut traditional generators that burn coal, natural gas and oil.
In addition, both countries subsidise rates for the renewable energy and give producers preference to sell in wholesale markets. Utilities that acquire power, from Essen-based RWE AG in Germany to Union Fenosa SA in Madrid, must buy any available wind and solar power before tapping fossil-fuel plants.
After adding 11 percent more wind-power capacity last year, Spain’s one-day production record was broken on January 23, 2009. On that day, winds swelled across the nation, propelling turbines to generate 221 gigawatt-hours, or 27 percent of national demand for homes and businesses.
In Germany, swings in wind speed commonly shift power prices as much as 10 percent.
Prices have already fallen to near three-year lows because they reflect the plunge in crude oil this year. Rates utilities pay for natural gas, Spain’s second-largest fuel for power plants, are commonly linked to oil.