Over the past five years, Spain has made significant strides in renewable energy, establishing itself as a European leader in the sector. Photovoltaic capacity has surged, while wind energy has also grown, albeit at a more gradual pace. This progress has positioned Spain as a key player on the continent, both in renewable energy generation and in the development of Power Purchase Agreements (PPAs), AleaSoft reports.
The period was also shaped by three major crises that tested the resilience of Spain’s energy system. The COVID-19 pandemic in 2020 caused a sharp decline in electricity demand, while the Russian invasion of Ukraine in 2022 led to an unprecedented energy price crisis. Then, in 2024, the Spanish electricity market experienced negative prices for the first time, with very low prices during the spring—highlighting the need for a turning point in the energy transition. Despite these challenges, Spain managed to integrate over 25 GW of additional renewable capacity and maintain more competitive energy prices compared to many European nations.
However, several challenges have hindered the sector’s full potential. Among them are price cannibalisation in the wholesale market and an increase in renewable energy curtailments. Despite this, it was noted that these issues are not currently critical for most renewable installations, as energy curtailments in 2024 have remained at only 2%, which is manageable in an electricity mix where renewable energy now accounts for more than 50%.
Looking ahead to the next five years in the energy transition, batteries are expected to play a pivotal role. These technologies are crucial to addressing one of the electricity system’s biggest challenges—energy storage. Batteries will enable the management of renewable energy intermittency, ensuring system stability and optimising resource use. Experts highlighted that battery costs have fallen by 86% over the past decade, and projections suggest that the return on investment is becoming increasingly attractive. With falling costs and a growing need for storage capacity, the battery market is expected to experience accelerated growth in the coming years.
At the same time, electricity demand is anticipated to rise significantly, driven by the electrification of transport, industry, and heating. Data centres will also be a key factor, as they require renewable energy to meet their sustainability targets. Spain, with its competitive energy prices and abundant renewable capacity, is well-positioned to attract international investments in this area.
Another important aspect of the energy transition will be improving electricity grids and international interconnections. The Iberian Peninsula remains an energy island, limiting both energy exports and imports. Experts emphasized that annual investments of €4.3 billion are needed to modernize and expand the grids, enabling efficient integration of renewable energies and facilitating decarbonisation across all sectors.
Hybridisation also emerged as a crucial topic. Hybrid plants, which combine renewable technologies with storage, will be key to managing intermittent production and improving investment profitability by reducing price cannibalisation and energy curtailments.
Finally, the need for regulatory stability was underscored. A clear, predictable regulatory framework is essential for attracting investment and ensuring the success of the energy transition. Capacity markets were highlighted as important mechanisms to ensure the profitability of technologies like batteries and their integration into the grid, while ensuring long-term system stability.
The webinar concluded with a message of optimism: the energy transition is unstoppable, but it will require coordinated action and a collective commitment. The next five years will be crucial in consolidating Spain’s leadership in renewable energy and laying the groundwork for a sustainable, competitive electricity system. Success will depend on collaboration between the public and private sectors, the development of robust demand, sufficient storage capacity, and modern infrastructure, AleaSoft reports.
