Spain Q3 Power Prices Face 20% Year-on-Year Jump as Gas Costs Bite
Analysts polled by Montel see Spain's third-quarter power prices rising around 20% year on year, with elevated gas contract levels the main driver and record solar output the principal buffer.
Wood Mackenzie said in a report published in the week of 2026-06-29 that U.S. natural gas prices are set to rise persistently through 2035, with Henry Hub approaching $5 per MMBtu as AI data centres and LNG export terminals absorb ever more supply. U.S. LNG exports have already surged from 0.5 billion cubic feet per day in 2016 to 15 billion cubic feet per day in 2025, according to EIA data, and the consultancy sees volumes potentially approaching 40 to 45 billion cubic feet per day by 2050.4
That structural shift in Atlantic LNG export capacity matters to European buyers. As U.S. export volumes expand and Henry Hub prices rise, the economics of shipping American LNG to European terminals tighten, placing upward pressure on hub prices across the continent. ICE Endex TTF front-month was trading at €45.20 per MWh on Monday (2026-07-06), elevated enough for gas-fired generation to act as a price-setter during a material proportion of hours across Iberia this summer.
Analysts polled by Montel on Thursday (2026-07-03) said Spain's power prices in the third quarter could run around 20% higher year on year, with the recent rise in gas contract levels as the primary driver. Record summer solar output should limit the scale of the gain, they said, but was unlikely to eliminate the gas-driven premium entirely.5
Spain's renewable build-out has been among the most rapid in Europe. Wind and solar now supply more than 40% of total electricity, a shift that knocked wholesale power prices roughly 40% below where they would have been had the generation mix remained at 2019 levels, according to a Bank of Spain study. Nuclear provides a further 19% of output, offering cheap and stable baseload.2
Even so, gas-fired plants retain enough presence at the margin to transmit continental gas price signals into Iberian forward curves. They set the clearing price during evening demand peaks, on overcast days, and when wind generation is thin. The analysts' 20% figure reflects how much of that marginal-hour exposure persists despite a decade of renewable investment.
The Spanish market has also shown structural adaptation. Negative power prices — a symptom of solar oversupply in daytime hours — were less common in May 2026 than in May 2025, despite higher installed solar capacity, a trend Montel attributed to stronger demand and changes in trading behaviour.3 That development narrows one risk: deep negative prices that deter further renewable construction without reducing average quarterly prices for end users.
Across the continent, German Q2 spot power prices were forecast to surge 17% year on year in Montel's survey from the week of 2026-05-18, with gas projected to average EUR 46.35 per MWh — up 40% from Q2 2025. The German and Spanish situations share a common driver: gas levels that, while well below the crisis peaks of 2022, are high enough to lift clearing prices whenever thermal plants are on the margin.1
How Q3 ultimately settles in Spain will depend on three variables: whether TTF contract levels hold around or above current levels, how much of the forecast record solar generation actually materialises during July and August, and whether summer heat drives Iberian demand high enough to call on thermal capacity during peak afternoon hours. The last is the least predictable. If all three move adversely, the 20% year-on-year jump analysts currently project could prove a floor rather than a ceiling.5