Spain has become one of Europe’s cheapest electricity markets, with wholesale power prices in the first half of 2025 averaging 32 percent lower than the EU average, according to a new report by Ember analysts Dr. Chris Rosslowe and Dr. Beatrice Petrovich. This marks a dramatic turnaround from 2019, when Spain had some of the continent’s most expensive electricity.
The shift is largely due to the country’s rapid expansion of wind and solar energy, which displaced fossil fuels and reduced Spain’s reliance on volatile gas markets. However, post-blackout challenges in 2025 have highlighted Spain’s lag in grid and battery storage investments, raising concerns about future overdependence on gas for stability.
Spain’s Electricity Prices Decoupled from Gas
In European power markets, the most expensive generator — typically gas or coal — sets the wholesale electricity price. Spain, despite having the third-largest gas power fleet in the EU (28 GW, behind Italy and Germany), now experiences the lowest impact of gas on prices among gas-heavy economies.
In the first half of 2019, fossil fuels determined Spain’s power price in 75 percent of hours.
By 2025, that dropped to just 19 percent of hours, the fastest decline in Europe.
Spain’s average electricity price in H1 2025 was €62/MWh, far below the average cost of generating power from gas, which was €111/MWh (range €87–148/MWh).
For comparison, fossil displacement was much slower elsewhere: the Netherlands (–34 percent), the UK (–32 percent), Italy (–13 percent), and Germany (–12 percent).
Wind and Solar Surge Drove Down Fossil Generation
Between December 2019 and June 2025, Spain doubled its renewable capacity, adding 40 GW of wind and solar — more than any EU nation except Germany, whose power market is twice as large.
In H1 2025, wind and solar covered 46 percent of demand, up from 27 percent in 2019.
Fossil generation dropped to 20 percent of demand, compared with much higher shares in Germany (41 percent), Italy (43 percent), the Netherlands (48 percent), and the UK (32 percent).
Gas generation’s share of demand fell from 26 percent in 2019 to 19 percent in 2025.
August 2025 marked the first month in Spain’s recent history with zero coal-fired power generation, a sharp contrast to August 2015 when coal supplied a quarter of the country’s electricity.
Economic Impact: Billions Saved on Fossil Fuel Imports
Spain’s renewable expansion has significantly reduced fossil fuel import dependency. From 2020–2024, wind and solar avoided 26 billion cubic metres of gas imports, saving the country €13.5 billion — nearly five times the total invested in Spain’s transmission grid during the same period.
The Central Bank of Spain estimates that without renewable growth, wholesale electricity prices in H1 2024 would have been 40 percent higher, leaving consumers and businesses exposed to gas price shocks.
Post-Blackout Reliance on Gas Raises Concerns
Despite these gains, Spain remains vulnerable. Following the April 28, 2025 blackout, reliance on gas for grid stabilisation surged, doubling costs:
Grid services tied to gas accounted for 57 percent of the electricity price in May 2025, up from 14 percent on average before the blackout.
Renewable curtailment rose from 1.8 percent (2019–2024 average) to 7.2 percent between May and July 2025.
This reliance risks undermining Spain’s progress if investments in battery storage, flexible clean energy, and interconnections do not accelerate.
Spain Lags in Grid and Storage Capacity
Although Spain is Europe’s fourth-largest power market, it ranks only 13th in installed battery storage capacity. Analysts warn that without rapid deployment of storage and grid upgrades, Spain risks sliding back into costly fossil dependence during periods of low renewable output.
“Spain has broken the ruinous link between power prices and volatile fossil fuels, something its European neighbours are desperate to do,” said Ember’s Senior Energy Analyst, Dr. Chris Rosslowe. “But boosting grids and batteries will be crucial for breaking free from fossil dependency for good.”
Outlook
Spain’s experience demonstrates how large-scale renewable deployment can deliver cheaper electricity, reduce fossil fuel imports, and insulate economies from gas price volatility. However, the April 2025 blackout was a stark reminder that grid flexibility, storage, and interconnection must grow alongside renewable capacity to ensure long-term stability.
Baburajan Kizhakedath