the long-awaited gas cap for Spain and Portugal coincided with recent plans to curb electricity costs by intervening in the regional market. this move reflected a mix of factors that tempered the initial optimism about its impact. high demand driven by heat waves and reduced renewable output due to calm winds forced reliance on more expensive generation options, keeping wholesale prices from dropping as much as hoped.
much attention has been paid to rising consumption alongside dwindling renewable supply. gas-fired plants surged to near record levels in some days, at times accounting for a sizable share of national production. during the heat wave, coal-fired plants also ramped up quickly, reaching production levels not seen since previous cold spells such as the storm filomena in early 2021, as reported by El Periódico de España.
the so-called iberian exception allows Spain and Portugal to cap gas prices and the price of coal used for power generation for a year, set at 40 euros per megawatt hour in the initial phase. this policy intends to lower wholesale electricity prices and shield other technologies from being priced out by sudden spikes in gas and coal inputs.
gas and coal generation, two overlapping technologies, proliferated in the early days of the government plan due to rapidly rising electricity demand. the iberian system requires gas and coal plants to cover actual production costs even when the market offers imply lower limits on prices.
records from the power-system operator Red Eléctrica de España show daily coal consumption topping 40 gigawatt hours on multiple days during the heat wave. on 17 June, coal generation reached 46 GWh, representing about 5.1% of total national production, and similar to levels observed during the cold spell associated with filomena in January 2021 and the cold snap in January 2020.
waiting for blackout
spain stands at the brink of a potential all-coal shutdown scenario. as some european neighbors rethink their thermal plans to guard against disruptions in gas supply from russia, spain faces a different calculus shaped by government policy and market dynamics. the question is whether there will be a decisive move to retire coal plants or to keep them online as a reliability measure when wholesale prices surge. at this juncture, there is no definitive sign of retreat.
major electricity players have already shut down or sought government authorization to suspend operations at most coal plants, with only a few facilities kept in reserve. yet as market prices spike, coal plants that were nearing retirement have been reactivated, sometimes for only brief periods, to meet demand spikes and stabilize supply.
in the interim, grid operators and utilities must maintain readiness. if needed, they are expected to submit generation offers to the market. during periods of high prices, burning coal has become profitable again, allowing thermal plants to re-enter the market when conditions warrant.
coal plant output in spain has risen for ten consecutive months. year-on-year gains have been reported since september 2021, with some months showing doubling or even tripling of production. however, last week the system’s extremes pushed coal generation toward levels that tested the boundaries of typical operations, stressing the balance between supply and demand as noted by energy data observers.
endesa operates two coal plants in the peninsula with notable positions: as pontes in coruña and es murterar in mallorca; edp runs the asturian facilities in aboño and soto de ribera; and viésgo, now part of edp, has a facility in los barros, cadiz. several of these plants were nearing closure, awaiting final permits or extra transition time after regulatory steps, even as market dynamics pushed them back into action.
survivors
following ongoing plant closures in spain, only a single coal facility remains active in the peninsula and one in mallorca. the aboño plant in asturias, owned by edp, continues to operate in a reduced capacity, while es murterar in mallorca remains at limited operation as security of supply rules apply to the islands. aboño is notable for its use of iron and steel byproducts from the nearby arcelorMittal facility, a circular-economy approach that keeps some emissions in check rather than releasing them directly into the atmosphere.
mallorca’s endesa facility has shut down two of its units and keeps two more online to meet reliability criteria and island-specific usage restrictions. until a second interconnection cable to the mainland is completed, the plant is expected to remain idle and is anticipated to return to full-scale operation only by 2026 at the earliest.