More and more organizations are urging Spain to renew its power grid. The latest is the European Commission, which states that the country must invest in modernizing and strengthening the electrical network to integrate renewable energy and bolster supply security, as reflected in the analysis of the energy de-coupling plan from Russia, Repower Europe, carried out two years after its adoption.
The European Commission focuses on distribution networks, which deliver electricity to homes and businesses. It identifies challenges to evacuate generated power and calls for greater cooperation among different levels of government. Meanwhile, in the transmission network that connects power plants with large industrial users and distribution networks, the Commission acknowledges that the Ministry for the Ecological Transition has made substantial progress.
The department led by Vice President Teresa Ribera recently approved an expansion of the current planning (2021-2026) to accommodate numerous projects under the Recovery Plan, such as Stellantis’s Vigo factory. If approved, the transmission network permits would enable Spain to meet its 2030 objectives, according to the European Commission.
Utilities Seek Profitability
Major electric utilities are responsible for investing in distribution networks but have paused their plans while awaiting a signal from the National Markets and Competition Commission about the profitability these infrastructures will yield starting in 2025, the onset of the new regulatory period, since returns will be earned during that period on existing investments.
Currently, the profitability stands at 5.58 percent, but utilities view this as insufficient given rising interest rates. They aim to raise it to around 7 percent. Total investments in the distribution network are capped at 0.13 percent of annual GDP (about 1.725 billion euros using 2022 GDP) by the government to prevent electricity bills from rising.
Spain Falls Behind on Gas Reduction
Beyond grid issues, the RepowerEU balance sheet shows that Spain missed its target to cut gas consumption by 12 percent between August 2022 and January 2024, falling short of the EU average of 18 percent and well below the voluntary 15 percent cut pledged by the twenty-seven. Only Slovenia, Poland, Ireland, and Malta performed worse.
The Ecological Transition Ministry has argued that the normal gas consumption should be net of fuel used by power plants to meet higher electricity demand from France and Portugal. Still, the voluntary reduction pledge depended on member states exerting their best efforts. The commitment extends for another year, until March 31, 2025, as agreed by the twenty-seven in a joint recommendation in March.
Joint Objective Achieved
Overall, the European Union claims to have met its targets. The continent has reduced its gas consumption by at least 15 percent compared with the 18 percent EU-wide average from August 2022 to March 2024, saving about 125 billion cubic meters of gas and achieving 90 percent gas storage ahead of winter (by August).
Moreover, dependence on Russian gas has lessened through diversified supply sources. In 2021, 45 percent of total imports came from Russia; by 2023 that share had fallen to 15 percent. Renewables have been accelerated, with installed wind and solar capacity rising about 36 percent between 2021 and 2023, resulting in an estimated saving of roughly 24 billion cubic meters of gas over that period.
[Source: European Commission RepowerEU assessment, 2024].