Spain has become one of Europe’s cheapest power markets

https://janrosenow.substack.com/p/spain-just-became-one-of-europes

by marc__1 • 2 months ago

185 198 2 months ago

janrosenow.substack.com

alecco3• 2 months ago

Damian Cortinas, chair of ENTSO-E’s board, told the Financial Times that “the issue is not about renewables” but about the grid’s ability to manage “fast voltage variations” that can destabilise the system. Unusual oscillations triggered a cascade of plant disconnections, and grid managers lost control. The real lesson is not that Spain has gone too far on wind and solar,

YES THEY DID, they went as far as making nuclear power plants shut down due to negative prices so their reliable stable power wasn't a pacemaker anymore and it blew up in their faces. And this was a topic on TV shows with several experts alerting of this FOR MONTHS before the blackout.

Sure, there are new technologies to stabilize solar and wind's fluctuating outputs but they are no just plug and play. Those are very, very complex systems that take years to set up properly. While there are nuclear power plants are just there collecting dust because the EU pressured Spain to make them unprofitable to maintain so they would be shut down.

Luckily, the US-Israel-Iran war made the EU leadership turn and now they want nuclear. I hope it's not too late.

jfernandezr• 2 months ago

Spain's blackout was exactly 1 year ago, no other blackouts since. And the mix of nuclear stayed almost the same.

That was not a stabilization problem per-se, but the companies that had to do the stabilization just didn't although the were being paid for that. Please read the final report.

m101• 2 months ago

No blackout for a year: nothing to see here.

People didn’t do what they said they’d do: No problem with the system it’s the people that didn’t do what they said they would do.

alecco3• 2 months ago

The government refused to protect nuclear plants when prices went negative for a long time, so of course they were turned off because the companies were losing money. That was the obvious plan all along.

And no more blackouts because now they are running nuclear 24/7 to keep things stable.

And again, it's not completely Spain's government fault as it obviously came from the EU and their anti-nuclear stance.

aftbit• 2 months ago

I agree with you on a few points:

1. Stable power grids are much easier with a mix of generation sources that includes substantial rotating mass and baseload generators.

2. Nuclear is awesome from a climate change and energy security point of view, and it would be amazing if it were cheaper or more valued.

When power was primarily generated by thermal plants with big rotating masses, we got frequency control implicitly from the inertia of those generators. When there was a demand spike, the generators handled the millisecond to few seconds regime just by their inertia, while the seconds to minutes regime was handled by plant control systems increasing throttles or starting more peaker plants.

I disagree that renewables themselves are the problem. Cheap solar energy does not have to mean that we shut down all the uneconomical generation sources, nor does it mean that we cannot do FCAS with modern technology.

Battery electric storage systems have actually eaten much of the FCAS market in the USA, where they can respond way more effectively and efficiently than other systems in the 1 to 10 second regime. By and large, we don't store solar energy for use overnight - we store it (or really any energy) for use in smoothing short demand spikes.

I would love to see more nuclear, and more advanced nuclear. Modern designs are safe, effective, and amazingly capable. They just aren't as cheap as paving the world with solar cells or burning natural gas left over as a fracking byproduct.

jonatron2• 2 months ago

Old power station turbines can be repurposed as inertia services via a stability market. Example in the UK: https://www.neso.energy/news/deeside-power-station-begins-wo...

laurencerowe4• 2 months ago

By and large, we don't store solar energy for use overnight - we store it (or really any energy) for use in smoothing short demand spikes.

This really depends on the amount of battery storage installed. In California we now see battery discharging through to the morning.

https://engaging-data.com/california-electricity-generation/

ndr42• 2 months ago

No that's not the case:

  However, several officials and energy experts have rejected the idea that renewables are to blame. EU energy commissioner, Dan Jørgensen, stated that there was "nothing unusual" about the electricity mix at the time of the blackout, and that the outage was not due to a "specific source energy". [1]

[1] https://en.wikipedia.org/wiki/2025_Iberian_Peninsula_blackou...

fundatus• 2 months ago

made the EU leadership turn and now they want nuclear

They don't _actually_ want nuclear, luckily it's just lip service. Because it doesn't solve the problem surfaced by the US-Israel-Iran war: You'd still be dependent on other countries for your (nuclear) fuel needs.

madspindel• 2 months ago

You'd still be dependent on other countries for your (nuclear) fuel needs.

Like Canada and in the future also Sweden? Two really hostile countries to be dependent on.

citrin_ru• 2 months ago

Dependency on nuclear fuel is less of a problem because you don't need to re-fuel a station often. Lack of gas creates a much more urgent problem.

nxh76• 2 months ago

Also worth tracking whether consumption is increasing. Rebound Effect can kick in - when energy prices fall most people use more energy, produce/consume more junk, use more heat/cooling etc. Its like dealing with very low interest rates. It can produce a whole lot of brainless behaviour.

crote5• 2 months ago

Some countries are already (accidentally) solving this problem.

The problem there is that they can't upgrade the grid fast enough at the neighborhood level. Combine that with residential electricity contracts where you pay the spot market price, and suddenly you've got a whole bunch of people who want to source or drain electricity at the same time, with a total capacity which far exceeds what their local grid is physically capable of.

The solution is to change a grid connection fee which depends on the peak load, where drawing/supplying a steady 1kW during the day is significantly cheaper than doing 12kW for 2 hours and 0kW for 22 hours. You're incentivized to spread out your load, so you are less likely to fall for needless consumption of "free" electricity.

otherme1232• 2 months ago

And this was a topic on TV shows with several experts alerting of this FOR MONTHS before the blackout.

"Experts" that now are being proved wrong. In Spain we have a good share of "experts" that are practically hired by the electric industry to parrot their interests in TV and other media for months or even years. Half politicians end their career either in Iberdrola or Endesa or Naturgy, the other half in some bank.

PaulKeeble• 2 months ago

The past few years has also had Solar continuing to decrease in price so its increasingly going to be the primary choice. On top of that battery prices have been plummeting too so that now Solar + battery is cheaper than other options like Nuclear and especially Gas. Most of the EU will be running on Wind and Solar in the coming years, its a change that is now rapidly occuring based entirely on the rare economics. Solar and Wind are half the price of anything else.

happosai2• 2 months ago

Not most of EU but geographically large and diverse and low-latitude countries will. Spain has winds from three different sea areas and is known sunny, so they are in a good position.

joe_mamba6• 2 months ago

Well that' doesn't always scan. Austria has a lot of wind, sun and hydro so its energy prices should be in line with Sweden, Norway, Denmark amongst the cheapest in Europe, and yet it's routinely amongst the more expensive in the EU.

pydry4• 2 months ago

1/5th the price of nuclear.

Probably when combined with batteries it is half the price.

There are some colder areas in northern europe especially where solar doesnt work as well but they also tend to be better served for hydro (which can also store power).

distances2• 2 months ago

Solar works also in the north, except in the winter of course, and it complements wind pretty well. So solar does make economic sense and is actively built in the north too.

badpun• 2 months ago

How much would it cost to build out batteries which cover entire continent's electricy needs for say three weeks (as there can be 2-3 week lulls of no wind and no sun in Europe in the winter)? Cause that sounds like a lot of batteries. Not to mention, if a freak 4 week lull occurs, we'll go back to Middle Ages for a week.

empiricus3• 2 months ago

So sad we could not apply economy of scale for nuclear... The main reason solar and batteries are so cheap is economy of scale.

hn_throwaway_992• 2 months ago

Northern locales though have a much greater energy need for heating in the winter. So the "battery" solutions can often just be cheap heat batteries because there is not so much a thing as "waste heat" - that heat can be used directly without worrying as much about efficiency losses in conversion.

There are already a bunch of examples of Northern locales using these heat batteries - just heat up a big block of something when energy is cheap and solar/wind are overproducing, then use a network of insulated pipes to distribute that heated water.

mhh__13• 2 months ago

You have to think about these things as a portfolio rather than just by minimum price.

If you have a steel mill for example you need to be able to basically guarantee a certain level of energy production to run it viably because the risk of there not being any power during adverse weather is enough to make it unviable (you can't just turn these things off). This is the reason why gas and nuclear probably aren't going away (or at least shouldn't).

ViewTrick10022• 2 months ago

If you need predictable price buy futures.

If they increase in price then firm production is stimulated to build to meet the gap.

https://www.next-kraftwerke.com/knowledge/futures-market

scythe2• 2 months ago

On top of that battery prices have been plummeting too so that now Solar + battery is cheaper than other options like Nuclear and especially Gas.

I'm a little bit sad that pumped hydro doesn't get more attention in the discussion. It might be too late for it to matter, with improvements in battery prices and ongoing lithium discoveries. But that only underscores the fact that it should have been allowed to matter twenty years ago. Utilities have slow-walked solar all around the world because of concerns about the grid stability, which has been well within the reach of pumped hydropower to fix since many years ago. In fact major pumped hydropower projects were mostly carried out in the United States during the nuclear power optimism era.

It is a little destructive to construct pumped hydro reservoirs. But it generally isn't as damaging as a conventional hydroelectric dam. The reason lies in the source of the water. In a conventional dam, you need a lot of water flowing in from up high, so you dam a major river near its lower cataracts. This disrupts the migration of fish and animals along the river and impacts the whole ecosystem of the rather large drainage basin upstream, and disrupts the migration of fish. But when a closed-loop pumped storage reservoir is created above an existing lake, usually a much less important stream is selected. Its immediate valley is still inundated, but the area of effect is much less. It does tend to prolong the use of the existing dam, but we are already preserving basically all existing dams.

It might still be appropriate in some places where imports are less affordable like Latin America or it might appeal to protectionists in the West. In general, hydro is usually cheap.

XorNot5• 2 months ago

Pumped hydro is objectively worse then batteries.

Anyone can install batteries anywhere at a fairly minimal local fire risk.

A dam is a major mechanical structure which if it fails will straight up obliterate downstream towns, and as such requires a numerous specialized engineering designs and on going maintenance to retain basic safety.

gregorygoc3• 2 months ago

Don’t underestimate the corrupt politics of some countries, especially Germany. There are individuals actively working against the global cost curve and trying to misallocate the capital to gas at the large scale. Katherine Reiche is the primary example. She’s pushing for building as much capacity for gas plants as possible, instead of choosing battery storage as the cheapest option.

zejn9• 2 months ago

Ha, yes, a lot of deniers/delayers are going on about how Germany "wasted" billion on renewables, when in fact they had a booming solar industry, which got nuked by politicians, who changed the policies, as can be seen in 39C3 video "Recharge your batteries with us".

Was the subsidy system which was in effect in 2010's unsustainable? I think so, yeah. But the changed policies resulted in companies producing solar going bust, and the Chinese firms, which were doing fine, were able to buy out the patents and know how.

So, did Germany waste billions? Yes, but by letting the solar producers go bust.

leonidasrup6• 2 months ago

As much as we could discuss the independence of Katherine Reiche from gas industry, how much new gas power plants could be replaced by battery storage? Not much. The new gas power plants will be the backup of the electric production after Germany shuts down coal power plants. This backup, or call it insurance, is for weeks long times when wind and solar don't deliver enough, the famous German Dunkerflaute. There are research projects for long duration energy storage systems, but building using current battery storage technology for week long Dunkerflaute that occurs once a decade event would be extremely expensive.

You have to have a backup, the devastating effects of week long electric blackout in winter in a future Germany heating homes with heat pumps, would be comparable with a major war.

Will there by push, after the new gas power plants will be build, to use them not only as backup, but as gas peakers? Probably yes, but this dependents on future CO2 emission costs and natural gas costs.

Even the previous government was planing expansions of gas power plants.

https://www.ingenieur.de/technik/fachbereiche/energie/12-gw-...

Personally, I think Germany should have not exit nuclear energy production but expand it, but this error was made in 2000s and Germany has to live with the consequences.

pyrale10• 2 months ago

The author's point is that Spain's electricity is very cheap compared to other European countries thanks to its great electricity mix, etc.

The reality is that Spain's electricity is cheap because it is relatively insulated from Europe's core network, because its interconnections with other countries are limited. In financial words, there is a spread with the rest of Europe because the ways to arbitrage that spread are extremely limited. If Spain was located near Germany and well interconnected, their prices would look like Germany's. And while cheap energy is pictured by op as a good thing, Spain understands very well that higher prices are good for its renewables industry, and is pressing for more interconnections[1].

The overall tone of the article feels like the author is here to extoll the virtues of renewables.

[1] https://www.ft.com/content/8e94079c-585f-11e4-b331-00144feab...

miohtama• 2 months ago

Hmm. Everyone should just disconnect Germany, let them freeze, and enjoy cheap electricity?

noprocrasted• 2 months ago

Then you'd have people run extension cords across the border and selling their cheap electricity at inflated prices to their freezing neighbor.

pyrale10• 2 months ago

That's not my point. My point is that the price spread between EU electricity markets speaks more to the availability of interconnections than to the virtues of one country's electricity mix. The article gets to that conclusion because that's what it was looking for.

The one question the article leaves open, but which is pretty relevant, is the question about who should pays for stability services to the grid.

generic92034• 2 months ago

You forget the times with an overproduction of electrical energy in Germany. Then they sell it for a negative price to the neighbor countries. Later, when they need more energy they buy it back at a premium. It is good business for neighbor countries with enough storage (pumping hydro, etc.).

mhh__13• 2 months ago

normally when you buy electricity it costs money!

ragebol• 2 months ago

Spain's neighbors could also have lower energy prices with more interconnection to Spain. The whole network diversifies, which would be more beneficial for Europe as a whole.

mhh__13• 2 months ago

This is a lesson in how electricity isn't really a commodity e.g. it's very very difficult to send some electrons from one side of the world to another.

pyrale10• 2 months ago

That it is treated as such speaks volumes to the craft of the people designing and maintaining the grid.

hn_throwaway_992• 2 months ago

But all commodities are like this. It is actually pretty easy to send some electrons great distances, or heck at least it's a well understood, solved problem. It's just that those interconnections haven't been built yet.

Heck, oil is probably the "default" example of what a commodity is, but we're now all acutely aware of what happens when moving that oil from one place to another becomes exceedingly difficult.

toast02• 2 months ago

Commodities are traded on type, quantity, and place. Oil of a specific grade at a specific port. Pork bellies (no longer traded) of a specific grade in Chicago. Etc.

If you want the commodities elsewhere, you have to provide for transportation. Same for electricity. Grids (or grid sections) where supply outpaces local demand and transmission to remote grids can hit negative spot prices even when neighboring grids haven't.

verzali• 2 months ago

It is actually very easy to move electrons. I only need to get on an aeroplane to move a lot of electrons around.

iot_devs• 2 months ago

I mean it is hard to argue with the number - I believe everyone will benefit for more interconnections. More energy to Europe, more money to Spain.

And for the numbers it seems obvious that renewables are a fundamental part of the picture.

maartenscholl• 2 months ago

This is an interesting point about energy market balancing but it has causality backwards. Spain simply has a better energy mix than Germany, no matter how big the spread between the countries is as a function of interconnectedness.

hunterpayne• 2 months ago

The article is a mix of facts and figures on the supply side. However, the real reason for the current cheap prices is the lack of demand. Spain's economy isn't doing well and they have hurt their tourism industry with politics. That's most of the reason for the temporarily cheap power that they mostly import from their neighbor. Being dishonest about their energy policy is pure politics.

jauntywundrkind• 2 months ago

Spain also has pretty sensible legislation that is somewhat green. For large public areas the lowest allowed AC setting is 27°C / 81°F. Where-as in America you'll go to a mall and it'll be 65°F. https://www.catalannews.com/politics/item/spain-limits-air-c...

Probably doesn't make a ton of difference. But I found that very respectable. It made me hopeful they have other basic green sensibilities.

leonidasrup6• 2 months ago

Let's not forget that Spain has better theoretical PV potential.

"Global horizontal irradiation (GHI, measured in kWh/m /day), the long-term amount of solar resource available on a horizontal surface on Earth."

German average 2.978 kWh/m2

Spain average 4.575 kWh/m2

https://globalsolaratlas.info/global-pv-potential-study

sega_sai• 2 months ago

It is worth mentioning that the linked FT article supporting the claim is from 12 years ago.

pyrale10• 2 months ago

Yeah, that's not new. Here's another article from 2025, in the wake of the blackout.

https://www.politico.eu/article/france-needs-eu-push-on-powe...

PowerElectronix2• 2 months ago

To add to this, Spain gets it gas from Algeria, the rest of europe gets it from Russia and the middle east. So yeah, It's easy to have better prices when your gas is comparatively free from disruptions.

tialaramex7• 2 months ago

Sure, Algeria does have gas pipelines to Europe. Two of them actually. The smaller one goes to Spain and Spain as we see in this article has lower electricity wholesale prices.

But er, the bigger Algerian pipeline goes to Italy, a country with notoriously high energy prices. So if Algerian gas was the secret that's actually a big problem for you.

spiderfarmer• 2 months ago

Check your facts.

MakersF2• 2 months ago

What are you talking about? Spain is one of the biggest importer of Russia LNG, at 25% https://www.reuters.com/business/energy/us-remains-spains-to...

g8oz• 2 months ago

The relative isolation you cite for power being cheap were true a decade ago when power was expensive. The author is correct in extolling the virtues of renewables.

try-working• 2 months ago

This is correct. The price for electricity has been increased by 2x-10x in the Nordics because of the interconnect with Germany.

mono442• 2 months ago

The reality is that expensive electricity in the EU is by design. The EU ETS imposes heavy taxes on fossil fuels (and they are set to increase even more), which in turn causes the price of electricity to rise. Fully renewable electricity generation is still a long way off, so this will continue for a long time. But it is entirely a self-imposed political problem and could easily be fixed by getting rid of the EU ETS or capping the price of emissions at a more reasonable level.

gman83• 2 months ago

Yeah, crippling Europe in the long term for short term gain might not be the best idea - https://www.theguardian.com/environment/2026/apr/15/critical...

wolvoleo• 2 months ago

It's for long term gain. Energy independence, combating climate change which will cost more to mitigate than the energy costs.

throawayonthe• 2 months ago

why would you do that

m4632• 2 months ago

It seems many markets have punitive pricing on electricity, california being one egregious example.

In most places, if you buy more of something, you are a good customer, it is usually more economical to sell to you and you get a discount.

In california people who use more kilowatts, pay more.

Rygian2• 2 months ago

Punitive pricing is a great thing.

The less energy you spend to deliver value, the better for everyone.

TheGuyWhoCodes• 2 months ago

Spain is one of the largest buyers of Russian LNG [1], even doubled in March compared to February 2026 and has been linked to servicing "shadow fleet" tankers carrying Russian oil [2].

Moral bankruptcy.

[1] https://cepa.org/article/spains-baffling-russian-gas-addicti...

[2] https://kyivindependent.com/spain-escorts-shadow-fleet-vesse...

znort_2• 2 months ago

bs. all of the eu is doing this. the top importer is hungary, then france. and that's the official figures, not counting imports "rerouted" through other countries.

regardless of inflamed speeches eu simply cannot operate without that energy. should have thought about that before starting a war with russia. best of lucks!

oezi2• 2 months ago

Ha, Europe didn't start the war and seems like Russia is only able to export half of what they used to despite re-routing much to China and India.

https://energyandcleanair.org/january-2026-monthly-analysis-...

distances2• 2 months ago

EU is gradually stopping all energy purchases from Russia. Long term contracts for LNG purchases stop end of this year, pipeline gas late next year. Oil imports from Russia are planned to come to end late next year, too.

The days of Russian energy exports to EU are basically permanently over, and will not be reinstated even after the war has ended.

sunk1st• 2 months ago

Maybe it's cheap compared to other European countries but that doesn't mean it's cheap. Electricity in Spain is expensive.

znort_2• 2 months ago

it's in the article: wholesale energy price is among the cheapest in eu, but retail price to residents (including tolls, fees and taxes) is well over eu average. tells you something about spain ...

cbmuser2• 2 months ago

Might be because the article doesn’t tell you the whole story.

BonitaPersona2• 2 months ago

So the article is not telling the whole story. Wonder why they may have hyper-focused on only a part of the whole story.

iamkrazy• 2 months ago

Shhhh.... Don't let Sam Altman find out.

hokkos• 2 months ago

Jan Rosenow doesn't know what he is talking about, power markets are not only day ahead market, but there are a lot of other maturities, CAL27 is higher in Spain than France or the Nordics.

https://www.eex.com/en/market-data/market-data-hub

cbmuser2• 2 months ago

Well, it’s HN. People love to spread articles that push renewables. In the meantime, France has the cleanest and cheapest electricity among the large countries in Europe.

zejn9• 2 months ago

That's some serious cherrypicking.

Where CAL27 low is either limited interconnectors (Nordics and Spain) or major nuclear (France). The other countries have CAL27 over 80 eur.

gregwebs• 2 months ago

I think Spain is showing that majority renewables can work, if you are willing to work through the pain. Someone needs to lead the way and figure out how to make it work, so I am glad they are doing it. I do think this article and most information is focused on cheer-leading rather than telling it like it is.

This title of the article is misleading. Spain is one of the cheapest power generation markets, but In the article it states "Spanish households pay above the EU average". Then the reason is stated "Other system costs are rising. The flip side of getting energy cheap is paying more elsewhere to keep the system stable.".

Spain of course also had a blackout and the article states "every country in Europe needs to modernise how it handles voltage stability". I believe that's code for "its harder to manager power transmission grids with renewables". I have been told by a power engineer that read the report on the blackout that the authors are going out of their way not to explicitly blame renewables, but these things that caused the blackout are bigger issues now due to the switch to renewables.

But it makes sense for Spain to continue down this path and not pollute with coal or rely on other countries for gas imports.

j16sdiz• 2 months ago

Power grid is the limiting factor, not power plant. Transporting energy can cost more than generating them.

Spain has become one of Europe’s cheapest power markets

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