Spain’s renewables hold power prices near €59/MWh as Hormuz risk lifts European gas
Gas plants set Spanish wholesale prices just 15% of the time this year, versus 89% across Europe, insulating Iberia as Strait of Hormuz tension tightens gas.
Gas-fired power plants set the wholesale price in 89% of European hours so far in 2026, according to Ember, a think-tank. In Spain the figure was 15%.2
That gap is what separates Spain from its neighbours as Strait of Hormuz tension tightens global gas supply. Wind and solar now supply more than 40% of Spanish electricity, which has kept Iberian consumers away from the price spikes hitting much of the continent.1,2
The March data make the point. Italy’s average power price was €142 per MWh that month, against €59 in Spain, Ember calculated.2 The spread tracks the share of gas in each country’s generation stack, not a passing weather anomaly.2
Spain’s shift is recent. A decade ago the country had almost no oil or gas of its own and was exposed to every swing in global fuel prices, the Economist reported.1 A Bank of Spain study found wholesale electricity prices in 2024 were 40% lower than they would have been had the energy matrix stayed as it was in 2019.1
Gas plants still run, but less often. Hydro and pumped storage, at 19% of generation in 2024, provide cheap, dispatchable power that limits reliance on costly gas peakers.1
The capital keeps arriving. Energy Voice describes Spain as one of Europe’s best destinations for sustainable investment, a reputation built on its wind and solar expansion.5
For European gas markets, a lower thermal share means Spain’s call on LNG and pipeline gas sits below that of peers running more thermal plant.2 ICE Endex TTF front-month trades near €48.80/MWh, while the Hormuz risk premium has lifted JKM Asian LNG to about $16.52/MMBtu, keeping pressure on any buyer still exposed to imported fuel.4
But the policy cost is climbing. Levies to fund renewables and grid upgrades already make up around 20% of household bills, according to Christoph Maurer of Consentec, a consultancy. “We are transforming the system from variable fuel costs to largely fixed costs,” he said.2
The larger question is whether Spain’s model can spread across Europe fast enough to matter. The Oxford Institute for Energy Studies frames the issue as whether European leaders engage with their energy-transition dependencies seriously and soon enough to shape the terms on which the transition lands.3
Spain has advantages others lack. It benefits from high solar irradiance and interconnection to France and Portugal, not the baseload coal and nuclear fleet that Germany or Poland must unwind.1,3 Replicating that across member states with different grids and fuel mixes is slower and costlier.
The global money is flowing elsewhere. China accounts for the majority of low-carbon projects that secured $43 billion of total funding over the last six months, Reuters reported.4 Europe’s build-out looks modest against that pace.
The signal to watch is how Iberian power spreads behave this winter, from December, when solar output falls and wind turns variable.1 If Spain’s renewables cushion holds through the cold months, the argument for faster build-out across the continent becomes harder to dismiss.1