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Portugal has withstands a dramatic surge in electricity prices after last week’s grid collapse decided to temporarily cut electricity imports from Spain, which caused power outages across the Iberian Peninsula.
Portugal’s wholesale electricity prices were nearly five times the Spanish electricity prices earlier this week as Lisbon stopped imports from its neighbors. Usually, both countries pay roughly the same for power.
The Iberian Peninsula will serve as an “energy island” where Portugal imported a fifth of its electricity from its neighbors last year, but the power wipeout that began in Spain on April 28th created tensions between the two countries.
In the aftermath of a power outage that is still unknown, Portuguese Energy Minister Maria da Graza Carvalho said her country has suspended electricity imports from Spain “as a precautionary measure.”
Five days after the blackout, on Saturday, her country’s electricity prices began to far exceed the electricity prices of her neighbors. The gap peaked on Tuesday. Spain’s average wholesale price was 10.24 euros per megawatt hour, while Portugal’s leap came to 47.92/MWh euros.
Price increases don’t immediately collide with most households and businesses paying prices set on long-term contracts.
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Portuguese grid operator Ren told the Financial Times that the decision to “close imports” from Spain was “made to ensure the security of Portuguese national electrical system.”
Imports remained suspended on Wednesday. The price gap narrowed when Ren resumed limited inflows from Spain on Thursday. According to Iberian market operator Omie, the average electricity price in Spain was 16.76/mWh in Portugal, but 41.86/MWh. Ommy’s “coming day” prices on Friday indicated the gap should be even narrower.
Ren said the import capacity will be limited to 1,000 megawatts per day, until May 12th.
The grid operator emphasized that the electricity “trade” had been suspended, but transnational connections remained open to promote the technical balance of the Iberian system “if necessary.”
Energy Minister Carvalho told FT: “A comprehensive, phased plan to completely normalize energy trade between the two countries is currently under development with the dual purpose of ensuring operational security and market stability.”
Spain and Portuguese power systems have been integrated since the 1980s. In recent years, Lisbon has benefited from the rapid deployment of Spanish solar power plants, providing access to a wealth of inexpensive electricity.
“Portuguese is behind in solar power compared to Spain,” said Joan Pecious Lopez, professor of electrical engineering at the University of Porto. “The electricity produced in Spain is cheaper than the one produced in Portugal, so why not make a profit?”
It is common for spots to have zero electricity prices in Spanish afternoons. Because this country produces so many solar power.
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Armindo Monteiro, head of CIP, Portugal’s main business lobby, said his country “should not live in electrical isolation,” and argues that access to low-cost Spanish power has made it economically competitive. “But we need to look back at the appropriate and necessary security conditions for the current level of dependency,” added Monteiro.
Minutes before the blackout last week, Portugal had imported 35% of its electricity from Spain, according to Ren. Lopes said Portugal uses some of its electricity to raise water with hydroelectric plants called “water batteries.”
After the power outage, Portugal was able to use these hydroelectric plants to restore power on its own. Spain had to resort to France and Morocco via interconnections with those countries to bring the system back online.
