Consequently, Spain now boasts the second-largest renewable energy infrastructure in the EU, following Sweden.
The patchwork plains of Castilla-La Mancha in central Spain, once famous for their windmills, are now dominated by wind turbines. The 28 large turbines of the Sierra del Romeral wind farm, located near the historic city of Toledo, overlook the region.
Managed by the Spanish company Iberdrola, these turbines are part of a growing trend that has significantly boosted Spain’s renewable energy output in the past five years, positioning the country as a key player in the industry. Spain’s wind generation capacity, its leading renewable energy source, has doubled since 2008, while its solar energy capacity has increased eightfold.
Earlier this year, Pedro Sánchez, Spain’s Socialist Workers’ Party prime minister, declared Spain a “driving force of the energy transition on a global scale.” This surge began with the Sánchez administration in 2018, which eliminated regulatory barriers and introduced subsidies for renewable energy installations. The COVID-19 pandemic further accelerated this trend domestically. “The impact of Covid was very positive for our sector,” says José Donoso, CEO of UNEF, the Spanish Photovoltaic Association. “People saved money, considered how to use it, and many chose to invest in solar panels for their roofs rather than keep it in the bank.”
Additionally, the government has set ambitious goals, such as meeting 81% of Spain’s electricity needs with renewables by 2030. Despite these achievements, the electricity industry faces challenges due to an imbalance between supply and demand, leading to occasional electricity surpluses. Although Spain’s economy has recovered strongly from the COVID-19 pandemic and is growing faster than other major EU economies, electricity consumption has declined. Last year, demand for electricity was lower than in 2020, the pandemic year, and the lowest since 2003.
Miguel de la Torre Rodríguez, head of system development at Red Eléctrica (REE), notes that until 2005, GDP growth correlated with increased electricity demand. Recently, however, demand has grown less than GDP, indicating a decoupling of energy intensity from the economy. Factors contributing to the decreased demand include the energy crisis following Russia’s invasion of Ukraine in 2022, improved energy efficiency, and increased renewable energy usage, reducing reliance on the national grid.
Rodríguez explains that during peak solar energy production in daylight hours, the supply-demand balance can be disrupted, affecting prices. “Since the power system must always maintain equilibrium, excess generation during these hours has driven prices down, sometimes to zero or even negative,” he says. While low prices benefit consumers, they pose challenges for attracting investment in the renewable energy sector. Sara Pizzinato, a renewable energy expert at Greenpeace Spain, warns that this could hinder the energy transition by making it harder for investors to fund new renewable energy projects.
To address the surplus electricity issue, there is a push to accelerate the “electrification” of the economy, reducing dependence on fossil fuels. The Sánchez government aims for 34% of the economy to rely on electricity by 2030. “This process is slow and needs to speed up,” says UNEF’s José Donoso. “Electricity is the most cost-effective way to produce clean energy. We need more facilities that use electricity instead of fossil fuels.”
While complete electrification is unlikely, particularly for sectors like chemicals and metals, Donoso and others see potential for faster progress. Spain lags behind many European countries in installing heat pumps in homes and adopting electric vehicles, which account for only about 6% of cars on the road. Pizzinato agrees on the importance of electrification but also suggests other solutions to balance supply and demand, such as phasing out nuclear plants faster and enhancing energy storage capabilities. “We need to engage more people and industries in demand-side management to ensure the system has the flexibility needed to match generation and demand better throughout the day and night,” she says.
