Increase in electricity demand in August 2023 boosts hope in Spain.

August 2023 is shaping up to be a significant period in Spain's energy landscape, as electricity demand has experienced a growth of nearly 3% compared to the same month last year. This increase, which occurs despite the rising prices in the electricity market, suggests that consumers have not reduced their consumption; on the contrary, they have increased it. According to the latest data provided by Red Eléctrica de España (REE), over 18.7 terawatt-hours (TWh) have been consumed so far, nearing pre-pandemic levels and the energy crises of 2021 and 2022. Sector analysts such as Pedro Cantuel from the Ignis group emphasize that this surge in electricity demand is an encouraging indicator that could herald a change in consumption trends. Cantuel points out that this is the best figure since 2019, and although we are still far from pre-crisis levels for the year-to-date, the trend appears to be pointing towards a recovery. This could indicate that the economy is reactivating and that the industry, in particular, is beginning to move past the aftermath of the energy crisis. One of the factors contributing to this increase in electricity demand is tourism, which reaches its peak in August in Spain. The massive influx of visitors drives energy usage in hotels and other associated services, leading to higher consumption. Additionally, the industrial sector is also showing signs of recovery, with sectors such as metallurgy and chemicals reporting increases in their activity, which in turn generates greater electricity demand. However, despite this growth in August, the cumulative demand for the year so far still reflects a modest increase, with a year-on-year growth of only eight-tenths in its gross reading. This figure is a consequence of a warmer than usual winter, which has reduced consumption in the preceding months. Cantuel emphasizes that, although a substantial growth in the year-to-date has not yet been achieved, if the upward trend continues, 2023 could mark the beginning of a period of expansion in electricity demand. Another aspect influencing demand is self-consumption, which has gained prominence in recent years. The proliferation of solar panels in homes and businesses has resulted in an increase in self-consumption, leading to a reduction in electricity demand from the grid. Some estimate that this reduction could range between 8% and 10% during solar hours. Although this figure should be treated with caution, the impact of self-consumption is undeniable and could allow electricity demand in August to recover to levels seen before the price crisis. The optimism among analysts is not solely due to the increase in consumption, but also because most of that electricity comes from renewable sources. In the first eight months of the year, approximately 60% of the electricity consumed in Spain is of renewable origin, and more than 80% is emission-free when nuclear sources are included. This shift towards electrification is not only positive from an environmental standpoint but also presents economic benefits, as the production and consumption of clean electricity can reduce dependence on fossil fuels. Despite this progress, Spain still faces significant challenges in reducing its dependence on fossil fuels. The country's total energy consumption remains approximately 70% dependent on non-renewable sources, primarily oil and gas. Therefore, clear priorities must be established for the coming years, both environmentally and economically. Reducing dependence on oil and gas would not only help decrease greenhouse gas emissions but also have positive implications for the country's trade balance. The current situation in Spain's electricity sector can be considered a crucial moment on the path towards an energy transition. Recent investments in generation capacity, especially in renewable energies, must be supported by a steady increase in demand to ensure the economic viability of these initiatives. The recovery of electricity consumption could be key to a more sustainable and less crisis-vulnerable energy future. The growth of electricity demand in August, in a context where prices remain high, is a sign that consumers are adapting to the new reality of the energy market. This could indicate a shift in mindset towards a more electrified and sustainable future, where renewable energy becomes not just an option but the norm. However, the consolidation of this trend will require a joint effort from both the industry and consumers, as well as public policies to ensure balanced and sustainable development of the energy sector in Spain.