In recent months, an idea has been repeated that may sound contradictory to many households: Spain has some of the lowest wholesale electricity prices in EuropeBut the electricity bill for an average family remains high. Data from market operators and European bodies confirm this apparent paradox and help us understand what is really happening with electricity in our country.
At the same time, the Spanish electricity system is experiencing a moment of profound transformation towards a model dominated by renewable energiesThis transition has made it possible to lower the cost of generation, but it has also brought to the table important challenges: managing a more decentralized system, the need for more networks and storage, and an open debate on how the European electricity market should be reformed.
Spain, among the cheapest wholesale markets in Europe
Data collected by organizations such as Ember and daily records from OMIE and ESIOS show that Spain has established itself as one of the countries with the cheapest wholesale electricity on the continent.In 2025, the Iberian market ranked as the fifth cheapest in Europe, behind only the Nordic countries (Finland, Sweden and Norway) and France, which also ended the year with contained values.
While the Nordic markets moved around the 40 euros per megawatt hour (MWh)Spain and Portugal recorded an average close to € 65 / MWhIn the context of the energy crisis of recent years, with record peaks following the invasion of Ukraine and the gas price surge, these levels represent a considerable relief for the competitiveness of the Spanish electricity system.
The trend has intensified in 2026. In the first days of February, the average daily price on the Spanish market has fallen to around €4,23/MWhAccording to OMIE, this was thanks to strong renewable energy production. In Portugal, the average value during the same period reached... € 0,34 / MWh, reflecting that the Iberian Peninsula is going through a period of extraordinarily low prices.
This price reduction is not temporary: Atlantic storms and the increase in wind and solar power plants They have allowed large amounts of green electricity to be fed into the grid, putting downward pressure on the market clearing price. At certain times, levels have been recorded negative prices of -0,42 €/MWh, which forces producers to pay to inject their energy.
The role of renewables and a more decentralized system
The key to these low prices lies in the Spanish electricity mix, with a very high penetration of renewable energiesWind power, photovoltaic solar Hydropower has become the backbone of the system and allows electricity to be generated at much lower costs than conventional fossil fuel technologies.
The Director-General of the International Renewable Energy Agency (IRENA), Francesco La Camera, has emphasized on several occasions that Spain's commitment to renewable energy creates jobs, wealth, and lowers the cost of electricity.From his point of view, part of the public debate focuses too much on the risks and not enough on the fact that, today, Spain has one of the lowest electricity prices in Europe in the wholesale market.
This model also relies on an increasingly more decentralized, with multiple dispersed sources of generation: large wind and solar farms, cogeneration plants, microgrids and, increasingly, photovoltaic self-consumptionThe downside is that managing a network with so many injection points and so much variability is more complex than operating a system based on a few thermal or nuclear power plants.
The Camera insists that Renewable energy sources can supply electricity with high levels of securityprovided the system has adequate control, reserve, and coordination mechanisms. According to his interpretation, the challenges experienced in recent months have not weakened Spain, but rather have served to strengthen its network management capabilities in a context of accelerated energy transition.
From a geostrategic point of view, this advance also reduces the European dependence on imported gas and oilFor the EU, strengthening indigenous sources such as hydropower, wind power And photovoltaics is not only an environmental issue, but also one of autonomy and competitiveness in the face of an unstable international environment.
The peninsular blackout and the operation in “safe mode”
The road ahead is not without its challenges. The peninsular blackout of April 28, 2025, known as the “electrical zero,” put the process to the test. resilience of the Spanish system in a scenario of high renewable penetrationAlthough the incident caused concern among consumers, IRENA states that It has not damaged Spain's international image and that, on the contrary, it has sparked interest in responsiveness and learning ability.
Ongoing investigations point to a overvoltage problem with multifactorial originThe committee, headed by the Ministry for Ecological Transition, pointed to shortcomings in voltage control capabilities: some of these resources were either not properly programmed or did not respond as expected. The result was a massive system failure that left millions of users without power for a significant period.
The National Commission for Markets and Competition (CNMC) still needs to publish your final report to clarify responsibilities. Meanwhile, opposing positions remain: Red Eléctrica defends its programming and maintains that the incident could have been avoided if all the obligated power plants had provided the promised voltage control; the electricity companies, for their part, attribute the problem to a system operator planning error already an excessive proportion of intermittent renewables compared to synchronous technologies such as hydropower, combined cycles and nuclear.
As a direct consequence, Red Eléctrica has begun operating in safe mode or reinforced modeThis implies using combined cycle gas turbines more frequently to ensure grid stability and, at certain times, restricting the entry of renewables. This reinforcement, while providing security, It has an economic cost. which ultimately impacts the system's adjustment services.
For La Camera, episodes like this are not exclusive to the renewable energy era. The executive recalls Italy's great blackout in 2003, when A tree falling on a power line in Switzerland left about 56 million people without electricity for about 13 hours....at a time when the role of green energy was minimal. His message is clear: Electrical systems have always had vulnerabilitiesAnd the current challenge is to adapt the networks to a reality in which renewables are increasingly prominent.
Very low electricity prices… but high household bills
Despite this context of cheap electricity in the wholesale market, the experience of many consumers is very different. Eurostat statistics reveal that, adding taxes and adjusting to purchasing powerAn average Spanish household (with a consumption between 2.500 and 5.000 kWh per year) faces the ninth most expensive electricity bill in the European Union, above the EU average and even above that of Portugal.
The regulated PVPC tariff is a good indicator to understand why. In 2025, the The average monthly bill for a typical user with PVPC (Voluntary Price for Small Consumers) was 69,34 eurosThis is the highest figure since its creation in 2014, surpassed only by the exceptional years of the energy crisis: 2022 (€105,48/month) and 2021 (€79,11/month). The start of 2026 has maintained this upward pressure, despite occasional drops in the wholesale market.
In January 2026, the wholesale electricity price closed at around € 71,67 / MWhThis represented a reduction of nearly 8% compared to the previous month, thanks to the boost from wind and hydropower in the final days of the month. However, the PVPC bill of an average home barely went down to the 71,17 Eurosonly 3,7% less than in December. In practice, consumers don't fully perceive the advantage of having such a cheap wholesale market compared to other countries.
Furthermore, the regulated cost structure and technical adjustments They started 2026 with new increases. The tolls and charges updated as of January 1st, and the 7% tax on electricity generationAccording to estimates from consumer associations, this implies a an increase of around 4,1% in billsThis applies to both the regulated and free markets. In addition, many free market tariffs have automatic CPI-linked revisions, with increases of around 3%.
In parallel, the new PVPC methodologyThe introduction of a stable price component from futures markets has had an ambiguous impact. In 2024, this change increased the regulated bill by around 5,2%, while in 2025 the effect was reduced to 0,3%. In January 2026, the presence of futures allowed to reduce the bill of an average household by about 2,7 euros compared to what he would have paid if only daily market prices had been used.
Renewable energy spills, saturated grids, and underutilization of cheap energy
One of the great paradoxes of the Spanish electricity system is that the abundance of cheap renewable energy It's not always possible to take advantage of this. The inability to export a large part of the surplus, coupled with grid limitations, is forcing an increasing reliance on what is known as... technical pourThat is, to disconnect part of the green generation because the grid cannot handle any more energy.
According to various estimates, Nearly 7% of the renewable electricity produced in Spain is wasted For this reason. The problem is aggravated by the administrative and physical saturation of network nodesThe CNMC has delayed the publication of new capacity maps until May, and under current security criteria it is considered that Around 90% of connection points are saturated.
The practical effect is that Only around 12% of connection applications for new renewable projects receive authorization.The consequence is twofold: on the one hand, the incorporation of more cheap generation into the system is slowed; on the other, industries and households are unable to fully benefit from the available green electricity, which could lower the price in the market more and for a longer period.
This bottleneck comes at a time when renewable energy investors are facing additional riskssuch as the possibility of increasingly frequent periods of zero or even negative prices. Without sufficient network reinforcement and accelerated storage deployment, the system risks to discourage new investments precisely when they are most needed to consolidate that leadership in low prices.
Meanwhile, operational decisions stemming from the blackout, such as operations in safe mode with more combined cycles and more restrictions on renewable generationThese additional costs are ultimately passed on to consumers, who end up financing the system's stability even in a context of abundant cheap energy.
A marginalist market under scrutiny and the debate on reform
The design of the European electricity market, based on the principle of margin or "energy only"This system has been called into question following the price crisis of 2021-2023. In this system, all technologies that match their energy on the market They charge at the price of the last power plant needed to meet demandwhich is usually the most expensive: typically a combined cycle gas turbine.
This architecture functioned relatively stably during years of cheap gas, but the war in Ukraine and international volatility exacerbated its fragility. Between 2021 and 2023, Electricity prices rose steadily until they tripled the average of the previous decade., dragging down the cost of living for households and the industrial competitiveness of the EU.
Spain and Portugal launched the so-called “Iberian Exception”A temporary mechanism that capped the price of gas used to produce electricity. This measure, along with the increased use of renewables, allowed to contain wholesale prices in the Peninsula compared to the rest of EuropeFrance, for its part, applied specific schemes for historical nuclear power, such as the ARENH and later the VNU, with the aim of mitigating the effects of marginalism.
Even so, the basic market structure remains intact and Europe remains exposed to future crisesThe underlying criticism is that, although renewables have much lower production costs, the current design It allows expensive fossil fuel technologies to continue setting the final price. in too many hours, with a direct impact on the bills of families and businesses.
In parallel, the principle of “technological neutrality” The principle that inspires much of European regulation is increasingly being questioned. Treating all kilowatt-hours as equivalent—regardless of whether they come from coal, gas, nuclear, wind, or solar—ignores that Each technology has very different economic, environmental, and geostrategic effectsIn a context of climate emergency and dependence on imported fuels, it is becoming increasingly difficult to justify that the system is neutral with respect to different sources of generation.
Storage, networks and the future of the electricity system
If Spain wants to consolidate its position as one of the countries with the cheapest electricity in Europe And for that reality to reach consumers' wallets more clearly, the consensus among experts involves reinforcing three pillars: storage, networks and regulatory reform.
In a system with more than half of the generation coming from wind and solar photovoltaics, the large scale batteries And other storage solutions become essential. Large-scale batteries, pumped-storage hydroelectric plants, and green hydrogen-based solutions make it possible to absorb surplus energy when wind and sun are plentiful, and return it to the grid when production falls or demand rises.
Compared to rigid technologies, such as nuclear power, storage offers flexibility and stabilityIt reduces renewable energy curtailment and allows for the integration of more clean energy without jeopardizing the system's balance. This requires a regulatory framework that recognizes its systemic value and that it remunerates it adequately, through specific auctions and capacity payment schemes.
Electrical networks are the second major link. Without increased transport capacity and improved distribution planningSpain will continue to waste some of its cheapest electricity. Strengthening the most congested grid nodes, digitizing the network, and allocating capacity more equitably are necessary steps to address this. avoid bottlenecks and facilitate the connection of new renewable projects.
Finally, the discussion on market reform points towards long-term auctions For renewables and storage, this would allow for stable pricing that truly reflects the low costs of these technologies. In this way, consumers could benefit from more predictable contracts, less affected by gas market volatility, and investments would benefit from a more secure regulatory environment.
In parallel, there are plans to review the use of the hydroelectric plantswhose extensive regulatory capacity gives them significant power to influence prices. A more refined market design could reduce potentially inflationary behavior and better align the operation of these power plants with the general interest.
Against this backdrop, Spain presents itself to the rest of Europe as a advanced energy transition laboratoryIt combines very low wholesale prices, a strong renewable energy rollout, and, at the same time, serious challenges in terms of networks, regulation, and passing the savings on to household bills. What happens in the Iberian electricity market in the coming years will be key to determining whether the fact that Spain has one of the lowest electricity prices in Europe It also ends up being a tangible reality for families and businesses, and not just a wholesale market statistic.
