Spain has seen a notable shift in electricity costs, with the bill in some months dropping to levels well below what was observed in September. The euro area has reported the strongest rate since March 2021, rising by about 20 percent.
According to data released this Wednesday by Eurostat, Spain was the second-largest European economy where the electricity bill decreased, behind France where the price rise reached 10.6 percent thanks to the cap implemented by the French government.
In comparison, electricity costs rose by a European Union average of 36.7 percent per year and up to 39.6 percent in the euro area—almost double the increase seen in Spain.
Among neighboring countries, Italy again recorded the biggest jump in electricity costs, showing an increase just over double the year before at 103.4 percent. Portugal followed with 31.8 percent and Germany with 20.9 percent.
When examining data across all member states, the Netherlands shows the largest rise in electricity prices, surpassing Estonia at 105.6 percent and Italy at 188 percent, an increase nearly three times the previous year. Malta, Slovenia at 0.9 percent, and Luxembourg at 2.6 percent were among the least affected, with prices remaining largely stable.
Gas cap and regulated rate
The slower pace of electricity cost growth in Spain compared with the rest of Europe contrasts with the trajectory seen in prior months and since the onset of the Russia-Ukraine conflict. Spain has outpaced a number of major European economies in the latest changes.
Eurostat estimated the March increase in Spain at 107.8 percent, a figure that gradually moderated to ranges between 30 and 60 percent as tax relief measures and the gas cap took effect.
Government aid and the regulated gas rate outlook
The gas cap, established through the Iberian mechanism, began on June 15 and sets a ceiling on the price of gas used to generate electricity in Spain and Portugal.
In the initial months, the mechanism did not produce the desired effect. Higher temperatures, increased gas consumption, and lower renewable generation created some pressure. Nevertheless, the mechanism helped limit the rise in electricity costs to more than 15 percent and has since offered an average price of 254.6 euro per megawatt hour compared with 300.6 to 419 euro per MWh in other cases without this mechanism. Italy reported 380 euro per MWh, France 329 euro per MWh, and Germany 419 euro per MWh.
Despite these measures, Spanish consumers remain more exposed to fluctuations in the wholesale electricity market, particularly among about 11 million households with contracts in the regulated market tied to daily price movements.
To dampen these fluctuations, the government is pursuing a new system to calculate the regulated electricity rate, known as PVPC. The plan envisions pricing changes based on a three reference framework: a monthly, a quarterly, and an annual average. This approach aims to anchor energy costs to shorter time frames while providing a clearer signal for households and small businesses.
This evolving policy landscape is shaping how households in Spain and nearby regions experience electricity bills, as regulatory adjustments and market dynamics interact with seasonal demand and fuel costs. Observers note that the balance between price stability and market responsiveness remains a central goal for policymakers and consumers alike.