Decoupled: how Spain cut the link between gas and power prices using renewables

Spain has significantly lowered its wholesale electricity prices by decoupling them from volatile fossil fuel costs through the expansion of wind and solar capacity. In the first half of 2025, Spain's wholesale prices were 32% lower than the EU average, with the share of hours where prices were tied to gas costs dropping from 75% in 2019 to 19% in 2025. However, a blackout on April 28, 2025, led to a 'reinforced mode' of grid operation that increased reliance on gas for stability services. This resulted in the cost of grid balancing doubling in May 2025 and renewable curtailment tripling from 1.8% to 7.2% between May and July 2025. The report highlights a lag in investment in battery storage and grid-enhancing technologies, noting that Spain's 120 MW battery fleet is only the 13th largest in Europe despite being the 4th largest power market. To address this, Spain is implementing reforms, including adding eight synchronous compensators to the mainland grid and expanding its battery storage pipeline.

• Spain's rapid expansion of wind and solar power has significantly reduced the impact of expensive fossil fuels on wholesale electricity prices. The proportion of hours where electricity prices were tied to the cost of gas fell from 75% in the first half of 2019 to 19% in the first half of 2025, a 75% reduction. Consequently, Spain's wholesale electricity prices in the first half of 2025 were 32% lower than the EU average.
• The growth of renewables has decreased Spain's dependency on fossil fuel imports and reduced vulnerability to price volatility. Between December 2019 and June 2025, Spain added over 40 GW of wind and solar capacity. This growth avoided 26 billion cubic metres of gas imports costing €13.5 billion between 2020 and 2024. The Central Bank of Spain estimated that wholesale prices in the first half of 2024 would have been 40% higher if wind and solar generation had remained at 2019 levels.
• Following a blackout on April 28, 2025, Spain increased its reliance on gas for grid stability services, leading to higher costs and increased renewable curtailment. In May 2025, the cost of technical restrictions markets (grid balancing) rose to €24/MWh, accounting for 57% of the final electricity price, compared to an average of 14% in the year prior. Renewable curtailment tripled from 1.8% in the previous two years to 7.2% during May-July 2025.
• Spain has underinvested in grid infrastructure and clean flexibility solutions compared to its European peers. From 2019 to 2024, Spain invested 30 cents on grids for every €1 spent on renewables, while the European average was 70 cents. Additionally, Spain's battery storage fleet of 120 MW is the 13th largest in Europe, despite Spain being the 4th largest power market.
• Spain is pursuing post-blackout reforms to integrate clean flexibility and reduce gas dependency for grid services. This includes an amendment to the grid development plan to add eight synchronous compensators to the mainland grid at an estimated cost of €750 million, which is expected to yield annual savings of €200 million. Spain also has a growing battery storage pipeline with 2600 MW announced and 340 MW permitted.

APA

Rosslowe, D. C., & Petrovich, D. B. (2025). Decoupled: how Spain cut the link between gas and power prices using renewables. Ember. https://ember-energy.org/app/uploads/2025/10/Decoupled-how-Spain-cut-the-link-between-gas-and-power-prices-using-renewables-PDF.pdf

Chicago

Rosslowe, Dr Chris, and Dr Beatrice Petrovich. Decoupled: how Spain cut the link between gas and power prices using renewables. Ember, 2025. https://ember-energy.org/app/uploads/2025/10/Decoupled-how-Spain-cut-the-link-between-gas-and-power-prices-using-renewables-PDF.pdf.

Wikipedia

{{cite report |last1=Rosslowe |first1=Dr Chris |last2=Petrovich |first2=Dr Beatrice |title=Decoupled: how Spain cut the link between gas and power prices using renewables |publisher=Ember |date=2 October 2025 |url=https://ember-energy.org/app/uploads/2025/10/Decoupled-how-Spain-cut-the-link-between-gas-and-power-prices-using-renewables-PDF.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rosslowe2025decoupled, author = {Rosslowe, Dr Chris and Petrovich, Dr Beatrice}, title = {{Decoupled: how Spain cut the link between gas and power prices using renewables}}, institution = {Ember}, year = {2025}, month = oct, url = {https://ember-energy.org/app/uploads/2025/10/Decoupled-how-Spain-cut-the-link-between-gas-and-power-prices-using-renewables-PDF.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }