Abstract
The COVID-19 pandemic is having a strong impact on the economies of all countries, negatively affecting almost all sectors. This paper compares Spanish electricity and natural gas prices in the first half-year of 2020 with the prices expected for that period at the end of 2019. The half-year of 2020 selected coincides with the period of greatest impact of COVID-19 on Spanish society. Expected prices and their future probability distributions are calculated using a stochastic model with deterministic and stochastic parts; the stochastic part includes mean-reverting and jumps behaviour. The model is calibrated with 2016–2019 daily spot prices for electricity and with day-ahead prices for natural gas. The results show large monthly differences between the prices expected at the end of the year 2019 and the actual prices for the half-year; in May 2020, wholesale electricity prices are found to be EUR 31.60/MWh lower than expected, i.e., 60% lower. In the case of natural gas, the prices in the same month are EUR 8.96/MWh lower than expected, i.e., 62% lower. The spark spread (SS) is positive but lower than expected and also lower than in the same months of the previous year.
Highlights
The COVID-19 pandemic has caused a strong economic impact in all countries
We run 10,000 simulations for the first half of 2020, i.e., 182 days, under the real-world probability. This simulation is based on the fitted model starting from the figures for the end of 2019
The energy demand has declined, and prices fell in the wholesale markets
Summary
The COVID-19 pandemic has caused a strong economic impact in all countries. This in turn has strongly affected energy demand and prices. COVID-19 is having a great impact on energy systems around the world, decreasing investments and threatening to slow the expansion of key clean energy technologies [1]. According to [2], in the first months of 2020, the world’s natural gas markets have experienced the largest demand negative shock ever recorded in their recent history because of the COVID-19 pandemic and because of mild winter temperatures in the northern hemisphere early in the year. The timeline of COVID-19 is the following [3]: On 31 December 2019, China reported a cluster of cases of pneumonia where a novel coronavirus was eventually identified. On 12 January 2020, China publicly shared the genetic sequence of COVID-19. On 11 March 2020, the WHO determined that COVID-19 could be characterized as a pandemic
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