Spain electricity prices remain high despite record renewable production

In July, the average price of the wholesale electricity market in Spain exceeded 104 euros per megawatt-hour (euros/MWh). This high cost persists despite renewable energy covering 66.83% of the energy mix and photovoltaic production reaching a record 8,161 GWh.

The disparity between high renewable production and high electricity prices is attributed to a continued material dependency on natural gas. While solar energy reduces costs during daylight hours, the system relies on gas to maintain supply when renewable production drops in the evening, causing market prices to be set by gas costs.

Critics argue that the current energy policy lacks balance, noting that the installation of intermittent power is not being matched by sufficient progress in energy storage, grid flexibility, or interconnections. Furthermore, the government's plan to close nuclear power plants is highlighted as a contradiction, as nuclear energy provides a stable, decarbonized source of firm power that could reduce reliance on gas.