Is it all about supply? Demand-side effects on the Spanish electricity market following Covid-19 lockdown policies

A key characteristic of electricity prices is their sensitivity to changes in supply and demand. In this sense, the Covid-19 lockdown policies modified electricity consumption patterns at both business and household levels, affecting the shape and position of the electricity demand curve and, thus, leading to a direct effect on electricity prices. However, could this demand-side effect be greater than other supply-induced effects? Is it persistent over time? This paper uses a synthetic bidding approach and concludes that the strict lockdown phase had a strong, immediate - but not persistent - effect on the Spanish electricity price. Furthermore, a high share of renewable energy and a reduction in fossil fuel and emission prices have also proven crucial in driving prices down, though lockdown policies had more impact on prices.