Spain’s Renewable Energy Surge: A Transformation of the Grid and Emissions

Spain is undergoing an energy revolution driven by a flood of new renewable plants. The national power system is being redesigned, ushering in a new era of green records that keep breaking one after another. Last year Spain made history by producing more than half of its electricity from renewables for the first time. Wind, solar, and hydro combined generated more energy than the remaining nuclear, gas, and coal plants put together. Only fifteen years ago thermal plants controlled more than 80% of annual output.

Ahead of its trajectory, Spain’s electricity system is racing toward fresh milestones. If 2023 marked the first year with renewables supplying a majority of all electricity, the country is now heading toward a new landmark: a full year with every month led by green generation. This August will possibly mark the tenth consecutive month where renewables lead, a streak since last November, according to Red Eléctrica de España (REE), the operator of the national grid.

Over the past five years, the grid had already seen months where renewables briefly outproduced thermal energy. Those were temporary surges driven by wind and sun or hydroelectric spikes. But the large-scale deployment of new renewables in recent years is causing a persistent shift in Spain’s electricity mix, turning those episodic moments into structural changes.

During this year alone, renewables have managed to concentrate almost two-thirds of the nation’s electricity production in several months (March and April exceeded 64%, and May topped 62%). These figures refer to generation from wind, solar, and hydro across the entire system, including the Canary Islands, Balearic Islands, and enclaves like Ceuta and Melilla, where renewables are less dominant and fossil plants still play a larger role.

From the renewables sector, the expectation is that ten straight months of majority-renewable output will signal a long-term tilt toward green energy, making it unlikely that nuclear, gas, and coal regain dominance. The Government’s plan, described in the draft update of the National Integrated Plan for Energy and Climate (PNIEC) submitted to the European Commission, is to reach 80% electricity from renewable sources by 2030.

Harnessing Wind and Sun

The rapid expansion of renewables will continue to grow in the coming years. More than 62% of the country’s installed capacity already comes from renewable sources, totaling over 79,000 MW of green power, with more than 55,000 MW from wind and solar alone. This growth has driven the total installed capacity to a record above 126,000 MW.

Red Eléctrica highlights Spain as a leader in integrating renewables into its grid, reporting only about 2% energy losses due to inefficiencies, well below the EU limit of 5%. “Spain connects between 6,000 and 7,000 MW of new renewables each year, comparable to the total capacity of all its nuclear plants,” Beatriz Coronado, chair of Redeia, recently emphasized. “Every year. Achieving that without fail demonstrates the country’s industrial capacity.”

The renewable surge has caused a seismic shift in the sector. Since last year, wind and solar have alternated as the top electricity source for the country. In 2023, wind power led Spain’s electricity production for the first time in a full year, overtaking nuclear and natural gas plants, which had led in previous years. Wind was the dominant source for seven months from October to April, and since then, solar panels have led the market, with August poised to mark a fourth consecutive month in front.

Solar parks led production in May for the first time in Spain’s history, and they have continued to do so since, with solar contributing about a quarter of national electricity in the last four months. If hydro and solar thermal contributions are added, solar’s share would approach 27%. Plus, there is the impact of rooftop solar, which is not counted in REE’s generation statistics but effectively lowers demand.

Photovoltaics have become a powerhouse in Spain, now the second-largest electricity technology by installed capacity with nearly 27,200 MW, just behind wind at around 31,400 MW. In February, solar plants even surpassed the combined capacity of all gas-fired plants, which had been capped at roughly 26,250 MW for years.

Emissions at Historic Lows

The Renewable energy boom is driving a sharp drop in greenhouse gas emissions from electric utilities, pushing toward a new record low in 2024. Power plants reduced carbon emissions by about 25.6% from January to July, totaling 13.88 million tonnes CO2 equivalent. The previous semestral low was 15.6 million tonnes in 2021.

Last year, utilities reset downward their emissions after a spike in 2022 caused by higher gas usage during intense exports of power to neighboring countries, notably France. The system’s total emissions fell 28% in the previous year, reaching 32 million tonnes of CO2 equivalent, a historic low likely to be surpassed this year. The country had recorded four straight years of emissions reductions until 2022, when emissions rose again amid the energy crisis.

The Other Side of the Boom

While capacity to generate electricity continues expanding and investments pour into new green plants, demand for electricity has fallen. Consumption declined to levels seen two decades ago, with the lowest demand since 2003 and only a 0.6% rise between January and July this year. The demand slump has alarms ringing among utilities, especially renewables, who warn that uncertainty about demand could threaten future investments. Excess production has pushed wholesale electricity prices down, with more than 600 hours this year showing zero or negative prices, and some energy is being wasted as generation exceeds consumption and networks cannot absorb all the output.

As renewables expand further to meet green targets in the PNIEC through 2030, industry groups urge direct policies to accelerate electrification of the economy. This includes expanding distribution and transmission networks and increasing interconnections to export part of the generation. Renewables groups UNEF and wind association AEE call for regulatory measures to promote building electrification, such as heating pumps for heating, and to remove barriers to EV charging infrastructure. However, total electrification is not feasible for all sectors. Industries like refining, chemical, paper, and metalworking, which rely heavily on high-temperature heat, have an electrification potential estimated between 0% and 5%, according to Sedigás and PwC. Without switching to electricity, decarbonizing these sectors depends on renewable gases, starting with biogas and, in the medium term, green hydrogen.