The brutal escalation in the price of energy products has not only brought with it the most obvious: an unprecedented blow to the pocket of consumers and an unprecedented reaction from the Government in the form of aid to weather the storm. Despite the fact that, as it is a basic supply, a large part of the energy consumed does not fluctuate based on its price, the recent increase in its price has caused an unprecedented reduction in the consumption of electricity, natural gas and petroleum products.
The trend is especially pronounced in the business sector and, very particularly, in industry. In both cases, the reaction to prices has been instantaneous: the rise has led to greater process efficiencies, lower production, or—in a handful of cases—a fuel switch. In homes, the reaction has been less, largely because the options were too: from a threshold, it is difficult to reduce energy consumption without a drastic change in habits.
In the short term, the continuation of this drop in energy consumption seems guaranteed: until March, the comparison will be established with a period of 2022 in which the war had not yet finished shooting up prices and had not led the authorities to accelerate the deployment of savings plans. From then on, everything will depend on what happens with prices: if the downward path of electricity, gas and fuel in recent weeks continues and the economy does not suffer, companies will start consuming again and households will have one less incentive for efficiency. If they go up again, the incentive for households to reduce their consumption will be less and the industry will once again give up new orders.
Less than a week before the end of the year, the electricity demand accumulates a decrease of 2.2% compared to 2021, when consumption had not yet recovered —not even remotely— the level prior to the coronavirus pandemic. If corrected for temperature and working hours, two fundamental determinants of consumption, the demand for electricity accumulates an even greater year-on-year decrease: 3.2% compared to 2021, almost one point more, according to the latest data from Red Eléctrica de España (REE ) consulted by this newspaper. Furthermore, the fall has increased over the months, especially since the start of the war and after the summer, when the Government launched its first energy saving plan.
This will be the year with the lowest consumption since 2020, when the confinement and the economic crisis caused by the pandemic caused a forced landing in electricity consumption (-5.5%). Although without reaching the year-on-year drop at that time, the drop in electricity consumption caused by the strong rise in prices will be around 7% in 2022 compared to the two years in which the most electricity was consumed in Spain (2008 and 2018). .
Apart from the health crisis, which caused an unprecedented adjustment in electricity consumption, we must go back more than a decade to find a lower demand than in 2022. Not even the gradual advance of electrification —increasingly more cars , more heating and more industries are betting on this source of energy, to the detriment of natural gas and diesel, a necessary movement to advance in the decarbonization of the economy— have been enough to counteract the trend, in which the rise of self-consumption in households and companies are also beginning to have an impact.
“Demand reacts little to limited price changes, but not to drastic increases,” explains Luis Atienza, former president of REE. “There is greater awareness and greater surveillance of superfluous consumption, small decisions that respond to greater awareness and prices. In addition, business demand and, especially, industrial demand, which is the one that has fallen the most, is much more elastic than domestic demand”. The data supports his analysis: companies with medium and high consumption have reduced their demand by 5.2% in gross terms and up to 6.9% in terms adjusted for calendar and temperature. In the specific case of manufactures, the decline is even greater: 9.5% gross and 10.8% adjusted.
Unlike industrial processes that consume gas, those that require electricity have no way to replace it with other types of energy: “The only way is to stop accepting some orders; produce less”, remembers Atienza.
Conventional gas demand —households and companies— is headed for its lowest annual level in two decades, according to data from the system’s technical manager (Enagás). The just under 229 terawatt hours (TWh) to be consumed this year is almost 21% less than last year, an unusually high number for a year-on-year comparison. In addition to the greater efficiency forced by prices, the decrease can also be attributed to the lower burning of gas for heating —it has been a warmer year— and to the substitution of fuel in the industry —typically, by diesel or fuel oil—.
Where it has increased, and a lot, the consumption of natural gas is in the combined cycle plants. These plants, which burn fossil fuel to obtain electricity, have been operating at full capacity this year. So much so that they have become the main source of energy in Spain for the first time in a decade, ahead of wind and nuclear.
To a large extent, this temporary increase in the consumption of gas to produce electricity responds to two factors that will disappear in the coming months: the drought, which has put a good number of hydroelectric plants out of business; and the increase in exports to France due to the nuclear strike and, to a lesser extent, due to the Iberian exception. Even with this increase in the gas used by the combined cycles, only one of the last four years (again 2020, marked from beginning to end by the pandemic) resulted in lower consumption.
Apart from the two years in which mobility restrictions drastically reduced the movements of Spaniards —and, consequently, refueling—, 2022 is on track to be the year with the lowest demand for gasoline and diesel A since 2016. Until October —the last month for which the Corporación de Reservas Estratégicas de Productos Petrolíferos (Cores) has records—, the service stations dispensed almost 1.8 million metric tons of diesel, 454,000 of 95 gasoline and slightly less than 26,000 of 98 gasoline. In total, 2.28 million tons of automotive fuels, 4% less than in the same period of 2019, the last fully comparable year.
“Consumption has not only not recovered the levels of 2019, but it is going down again both compared to previous months and compared to the same month last year, when there was still less mobility due to the pandemic,” says Inés Cardenal, from the Spanish Association of Petroleum Product Operators —the sector’s employers—, which blames both high prices and lower economic growth. “Drivers are using the car less and taking more care when traveling.” The cheaper public transport, with state, regional and municipal subsidies, could also be pushing families to leave the car at home and opt for cleaner and cheaper alternatives.
In addition to the endless climbing on the monoliths – the Spanish never paid as much to fill the tank of their car as in 2022; the Government had never before been forced to implement a universal aid of 20 cents per liter to alleviate inflation—other factors play a role. Although at a slower pace than in other large European countries, the electric car is beginning to make its way in sales. Also plug-in hybrids, which are not a panacea, but which also require less fuel in their daily use. In addition, other things being equal (power, weight…) all new vehicles, even those with pure combustion, consume significantly less than the older ones, which are gradually leaving the car park.
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