On June 15, the Iberian exception received permission from the European Union and came into effect. It shields the high gas price from spilling into wholesale electricity prices. This decision, which is not tied to fossil fuels, created a divergence in the pool price in Spain compared with broader European trends, where prices remained lower in many neighboring economies.
In the wholesale market, where generation companies submit sale offers and supply companies submit purchase offers, Spain recorded a markedly different trajectory. A study by the specialist consultancy Grupo ASE shows Spain’s price in December was roughly half the level seen in other major European nations, a difference that stands out in the European wholesale landscape.
Last month the average price in Spain was 135.29 euros per megawatt hour, even after accounting for adjustments for combined cycles. In contrast, the average price in Germany, France, Italy, the Netherlands, and the United Kingdom stood at 272.67 euros, about 101.54 percent higher.
Throughout 2022, the average Spanish price, after adjusting for the petrol cap, totaled 209.69 euros, about 18.93 percent lower than the combined average for the rest of the major European nations at 258.67 euros. France and Germany have traditionally displayed the lowest electricity costs alongside the Nordic countries. Still, the year 2022 marked a turning point. In Germany, the average price was 234.15 euros, roughly 11.66 percent higher than in Spain, while in France it reached 275.08 euros, around 31.18 percent higher than in Iberia.
For the first time, the Spanish price dipped below the levels in Germany and France, a development tied to the Iberian gas cap mechanism effective since June 15. In December, another factor was the surge in renewable energy production and the country’s relatively mild winter climate, though this climate element was shared with other markets that faced different pressures. In some countries, fears of a harsher winter influenced pricing differently.
AEGE, the Association of Companies with Large Energy Consumption, also indicates the same direction. Data through December show that the Spanish wholesale price remained below that of France and Germany in the cumulative period to date, reinforcing the trend toward cheaper electricity costs in Spain that year.
Fortia Energía, a company controlled by energy-intensive industries to purchase electricity in the market, has defended the Iberian exception since late November. The mechanism placing a cap on natural gas prices, excluding the impact on combined cycles, helps electricity produced without gas to compete with gas-driven costs. If gas costs cannot be fully passed through, the benefit of other technologies such as hydro, nuclear, hydraulic, and solar persists. The chief executive described the mechanism as delivering a better outcome than alternatives. The central question remains how compensation to combined-cycle plants for real gas costs will be treated under the Iberian exception, while other technologies that do not rely on gas are kept at the same price level, which helps keep overall prices lower in Iberia. This framing explains why price drops have appeared in countries without a comparable regulation in Spain. Moody’s recently noted that electricity could be cheaper in Spain this winter than in other parts of Europe, lending further support to the Iberian approach.
Eurostat confirms a broader European context: Spain shows the lowest price level in the euro area up to December and across the wider European Union. This has meaningful implications for energy costs across industries and households alike, underscoring Spain’s competitive electricity position amid European market reforms.
Within the Iberian framework, electro-intensive industries in Spain, including major producers, have experienced cost advantages. Comparisons show Spain delivering lower costs for these sectors than Germany, where prices have typically hovered higher, and France, particularly because of government interventions and the presence of state-owned energy giants. The Iberian adaptation mechanism has sparked debate within Spain and across the EU, with several countries seeking similar measures and the EU proposing a separate cap on European gas to operate alongside the Iberian regime for a provisional period. The negotiation outcomes reflect a balance between securing affordable electricity and maintaining reliable energy supply across the European grid. Spain argues that iberian gas stabilization remains a necessary step while continuing to support a broader reform that protects the marginal pricing system that governs European electricity markets, except in cases defined by exceptional regulation. This approach remains a focal point in ongoing discussions about energy policy and market design across Europe.