Electricity Price Decline and Renewable Integration in Spain's Decarbonisation Trajectory
The wholesale electricity market in Spain, known as the pool, is projected to decrease by approximately 16 percent in 2026, reaching an average of around 55 euros per megawatt hour (MWh).
In 2025, the pool closed with an average price of 65.52 euros/MWh, marking a 4.2 percent rise compared to the previous year, reflecting ongoing market fluctuations. Analysis indicates that surplus renewable generation, stable gas prices, and limited demand growth will continue to exert downward pressure on electricity prices. This trend aligns with the strategy of the country to foster a more cost-competitive and sustainable energy system.
According to future market estimates, the average 2026 electricity price is expected to be 54.55 euros/MWh under normal climatological and economic conditions, with a range of potential prices from 48.51 euros in a bearish scenario to 62.34 euros in a bullish outlook. These projections incorporate current gas and emission pricing, with gas at 27 euros/MWh and carbon allowances at 86 euros per tonne.
Spain has maintained a more competitive electricity rate compared to most European nations, with 2025 figures only surpassed by France, which reported 60.72 euros/MWh. The country experienced a marginal annual increase of 4.16 percent, significantly lower than Germany's 14.56 percent, where rates soared to 89.53 euros/MWh. Monthly analysis from December highlights a quarterly rise to 77.91 euros/MWh, yet a 30 percent decrease on December 2024 levels, showing market volatility.
Increased photovoltaic capacity in 2025 (12.5 percent) led to notable daytime price reductions, down 28.43 percent to 33.02 euros/MWh between 10:00 and 16:00 hours. Conversely, peak demand hours from 20:00 to 00:00 saw a 12.56 percent increase, hitting 100.57 euros/MWh, driven by rising gas and CO2 emission costs. These dynamics emphasise the role of technological adaptation and market flexibility in decarbonisation.
Generation in Spain rose by 3.6 percent last year, with a notable reliance on combined cycle gas turbines (CCGT), which played a crucial role in stability and crisis management following a significant outage in April. While renewable energy sources like wind and solar set a new record addition of 9,408 MW in 2025, their relative contribution to the energy mix slightly declined from 40.3 percent in 2024 to 40 percent in 2025, largely due to strategic grid stability measures.
Forecasts anticipate a resurgence in renewable non-dispatchable generation, including wind and solar, along with sustained hydroelectric production. Price corrections are expected primarily in early 2026, driven by increased solar output and stable gas prices. Despite contributing to decarbonisation, the continued reliance on gas-fired plants remains a measure to enhance grid resilience, with adjustment costs estimated at around 17 euros/MWh for the period.
Overall, the evolving energy landscape of Spain highlights a delicate balance between cost efficiency, grid stability, and the accelerated integration of renewable energies to meet decarbonisation goals amid market and technological dynamics.