Policy work
The impact of renewable energies on wholesale electricity prices [Banco de España. Analytical Article 9/24q3 ]
Renewable electricity generation capacity is rising significantly in Spain. Given the merit order pricing system used in the wholesale electricity market, this could have profound implications for electricity price dynamics.
• The share of wind and solar energy in total electricity generation increased from 26% in 2019 to over 40% in 2024 H1. In the first half of this year, wholesale electricity prices were more than 40% lower than they would have been had wind and solar generation remained at 2019 levels.
• The model estimated in this article suggests that under the renewable generation deployment scenarios envisaged in the update of the National Energy and Climate Plan, wholesale electricity prices could drop by an additional 50% by 2030.
• In any event, the future behaviour of these prices is subject to considerable uncertainty, influenced by various supply-side factors and how demand responds to the new levels of renewable generation.
Exposure of Spanish firms to imports of critical inputs from China: a survey-based analysis (with I. Balteanu and A. Fernández) [Banco de España. Analytical Article 2/24q4 ]
High trade dependency on China could pose a risk to the Spanish economy in the event of trade disruptions or if geopolitical tensions were to escalate. This article analyses the evidence from a module in the Banco de España Business Activity Survey (EBAE), harmonised with the Banca d’Italia and the Deutsche Bundesbank, asking Spanish firms about their dependence on critical inputs imported from China.
Economic Consequences of a Trade Embargo between Russia and EU [Banco de España. Analytical Article 2/22 ]
A hypothetical interruption of energy commodity imports from Russia could significantly affect the Spanish economy. The difficulty of replacing these products in the short term would reduce the energy supply and compound the current inflationary episode, both of which would weigh on economic activity. However, since Spain is less energy dependent on Russia than other European economies, the effects on the Spanish economy would be notably smaller. Lastly, the impact would be amplified due to the shock propagating through global production chains, with a particularly marked effect on certain sectors of activity. The interruption of exports or imports of other goods would also adversely affect the European economies, although it would have a more limited impact than in the case of energy commodities.
A Cost of Living Index for Spanish Cities (with V. Forte and E. Moral-Benito) [Banco de España. Analytical Article 29/21 ] [Data]
This article presents a price index for Spanish urban areas covering the period 2004-2020. By way of example, according to this index, the cost of living in the two largest cities (Madrid and Barcelona) in 2020 was nearly 20% higher than the average of other Spanish urban areas. Thus, while average private sector wages in Madrid and Barcelona were 45% higher than in other cities, this gap narrows to 21% when wages are adjusted to reflect purchasing power.
