Spanish hydro power stocks rise to 16 TWh, out-compete gas-fire generation

London — Spanish hydro power stocks rose to 16 TWh in Week 20, or 70% of capacity, amid higher rainfall and are set to continue to out-compete gas-fired generation, environment ministry data showed Tuesday.

"Stocks have risen although not too much and the forecast of rain isn't much for the next days," a Spanish power trader said. "So I guess that is supporting [the June power contract] so it's not seen much lower, since demand is recovering and the heat is coming."

June power prices were only 20 euro cent lower on the day Tuesday morning at Eur27.05/MWh.

Gas-fired generation demand, which competes with hydro, is forecast 37% lower in June amid COVID-19 restrictions and increased renewables, according to gas transmission systems operator Enagas. Gas-to-power demand so far in May (up to May 18) is down almost 44% after it was 26% lower in April. In contrast, hydro output is over 60% higher so far in May and was up 48% in April, while power demand was down 17% on the year. This is as hydro stocks continue to be at a four-year high and resume their seasonal replenishment until June

Demand in Spain has fallen sharply due to measures to limit the spread of the coronavirus pandemic. But as those began to be eased, demand edged higher in mid-April, though it is set to rise gradually this week as peak demand reaches almost 30 GW from a range of 28-29 GW the previous week, according to data from grid operator Red Electrica de Espana.

Stocks rose almost 0.2 TWh in the week to Sunday and widened their surplus to the five-year average to 2.0 TWh from 1.8 TWh the previous week, while the surplus to the 10-year average rose by a similar amount to 1.2 TWh from 1.1 TWh.

Hydro output in Week 20 was slightly lower at almost 0.8 TWh, compared with over 0.8 TWh the week before amid slightly higher demand.

Rainfall during the week to Sunday totaled almost 29 mm, up from around 15 mm last week.