Two months after the cap on gas prices in the electricity market, the mechanism is functioning. It is an instrument designed to dampen contagion from rising gas costs onto electricity bills. It has managed to slow the surge, though not as much as hoped, and Spain has moved from being among the most expensive to one of the cheapest places for electricity. Prices in Spain are rising three times slower than the average in major European countries. The Iberian market shows lower fuel costs as well, helped by the separation of the Iberian gas market from the broader European reference market. In historical terms, electricity remains far more costly than before tensions with Russia began.
From June 15 to August 15, the Spanish wholesale electricity price reached a record of 254.74 euros per megawatt hour, combining the pool price and compensation. This was 35% higher than the previous month, according to data from the Iberian market operator. By contrast, the six main European markets including France, Germany, Italy, Belgium, the Netherlands, and the United Kingdom saw an average increase of 102%. In other words, Spain experienced a price rise triple the average of these peers. An energy expert and consultant explains that during past periods Spain often ranked near the top, with the United Kingdom and Italy close behind; in this latest sequence, France slipped to second place while the United Kingdom and Spain tended to the forefront of prices.
How high would prices have stood without the cap? That is hard to measure exactly. If there had been no Iberian exception, the daily calculations published by the Ministry of Ecological Transition suggest an average around 299.46 euros per megawatt hour in the last two months, about 17.7% higher than the current level. Still, such estimates are theoretical and do not replicate real market behavior. The expert notes that generators may alter their bidding strategy when rules change, even if that shift cannot be proven with certainty.
And what would the monthly bill look like? An energy market scholar and professor at a private university notes that a regulated tariff consumer paying about 100 euros in March would see roughly 81.23 euros in July—around 14% lower than the no-cap scenario.
Experts agree that prices did not drop as much as hoped because the policy took effect amid a perfect storm: drought and low wind, a heat-driven demand spike, higher exports to France (without compensation), and the unexpected impact of power plant commissioning costs in the combined cycle sector. An advisor explains that once wind returns and water levels improve, prices could fall toward what the market has observed in recent months, but not dramatically. In the winter, gas is expected to remain expensive, and Europe will still need to replenish supplies, maintaining price pressure on energy.
Cogeneration plants, large industrial facilities that produce electricity while burning gas to generate steam, did not receive gas compensation. The gap between the actual price, averaging around 145 euros per megawatt hour, and the cap at 40 euros per megawatt hour meant many plants operated at a loss and chose to reduce output, with more production shifting toward gas-fired generation. Cogeneration accounted for about 11% of electricity generation, up from 4.3% in the prior month.
Even with a stable pool and ample gas supply, experts foresee a decline in electricity prices as the Iberian gas price level remains higher than the broader European reference, though by a narrower margin. The ability of the Iberian Peninsula to rely on liquefied natural gas reduces vulnerability to price swings tied to Russian gas and Russian supply cuts faced by other regions. Market observers note that energy is a traded commodity, and price dynamics can oscillate widely depending on supply, demand, and policy moves.