It is interesting to analyze what has been, so far, the impact of the war in Iran on electricity prices. Last February, the electricity market drew attention for its singularly low prices: 16.4 euros/MWh on average, more typical of the spring months, with moderate temperatures and high solar radiation. In this month of March, in the absence of the last few days, it has been around 47 euros/MWh, a ridiculous level compared to the 238 euros registered in March 2022 after the Russian invasion of Ukraine. Much of the current containment in prices is explained by the spectacular increase in photovoltaic capacity: from 15 GW of installed power four years ago we have gone to 41 GW. Solar photovoltaics is today the technology with the highest installed capacity in Spain, after exponential growth in the last decade. Taking into account that we currently have a peak annual hourly demand of 40 GW, photovoltaics is, theoretically, capable of supplying the entire peninsular electricity demand during sunny hours. Consequently, it is a rare day when the market does not mark prices close to zero between 10:00 and 18:00. The outbreak of war in Iran has been a sad reminder of the importance of advancing our energy independence. The first consequence has been the acceptance that nuclear power plants must extend their life as long as they can meet technical safety requirements. The nuclear debate is complex, both from a technical and economic point of view, but it seems sensible to accept that the 40 years initially planned cannot be considered an insurmountable limit. Likewise, high natural gas prices increase the value of electricity storage. During the month of March, the divergence between prices during the hours with photovoltaic production and those in the afternoon/night, when the reference is set by natural gas, has widened. In the course of just over two hours, the price can increase by more than 100 euros/MWh. The challenge is no longer to generate more renewable energy, but to capture more value from existing generation. The profitability of photovoltaic investments is not associated with the average price of the electricity market, but rather with the specific price of photovoltaics. In 2024 and 2025, despite recording similar average prices (around 65 euros/MWh), the average income per MWh received by photovoltaic producers fell from 43 to 38 euros, the latter level being very close to the 35 euros that are estimated to be necessary to guarantee the profitability of new photovoltaic projects. In this context, the hybridization of photovoltaic plants with storage systems is no longer a marginal operational improvement, but rather an instrument of defense against the structural cannibalization of prices. Irene Peña and Arturo Rojas are professors at Afi Global Education.
