New coronavirus cases likely to hit Spanish energy demand

LONDON (ICIS)–Spain’s recent spike in coronavirus cases may mean its recent recovery in power and gas demand will not last through to autumn months, which may reverse front month and front quarter price increases.

As lockdown restrictions have eased in the country, demand for both gas and power use has grown.

Daily Spanish power demand stood at 30.4GW during week 31 (27 July – 2 August) this year, 1.8GW above the same period last year. Demand in August to-date has reached 28.8GW, equal to the same time last year.

Spain exceeded its power use between 24-30 July, according to ICIS models that allow for temperature and calendar effects. This is the first time this has happened among the five countries assessed (Italy, France, Germany, Spain, UK) since 10 March.

Gas demand also recently reached normal seasonal levels. Demand averaged 99 million cubic metres/day (mcm) between 27-31 July, 8mcm above the average for the same period last year.

Growing power and gas demand was supported by the end of the nationwide lockdown in June, foreign arrivals to Spain and high temperatures.

On 15 July, the front quarter power contract had closed at €41.80/MWh but had increased to €42.675/MWh by 5 August.

Similarly for natural gas, the PVB Q4 ‘20 contract saw its premium to the TTF increase from €0.413/MWh on 15 July to €0.713/MWh on 5 August.

RISING CORONAVIRUS CASES

A new spike in coronavirus cases in all of Spain’s 17 autonomous regions is likely to put a dent in the country’s rising demand levels.

On Wednesday, the Spanish health ministry reported that 1,772 new coronavirus cases were diagnosed in the past 24 hours – up from 1,178 on Tuesday and 968 on Monday.

Last month, the Catalonian city of Lleida was ordered back into a localised lockdown.

The recent spike in cases and subsequent quarantine measures are likely to also further damage the tourism industry, which will impact recent power and gas demand recoveries.