European Energy Disparities Expose Political and Infrastructure Barriers to Decarbonisation

While the Iberian Peninsula enjoys a record surplus of renewable energy at minimal costs, much of the rest of Europe faces soaring energy prices and supply issues. Spain and Portugal are experiencing prices close to zero, enabling significant cheap energy production.

However, crossing the Pyrenees into northern Europe reveals a stark contrast. Countries like Germany, Belgium, and the Netherlands are paying hundreds of euros per megawatt hour, while France maintains a comparatively low cost of approximately 13.61 euros. This price disparity illustrates a fragmented energy market, often referred to as an energy island, where resource sharing is limited by policy and infrastructure gaps.

The phenomenon of total decoupling in February 2026 is driven by weather conditions favouring renewable generation in the south. Strong Atlantic storms have boosted wind and hydroelectric output, causing supply to significantly overshoot internal demand in the Iberian market. Consequently, prices in Spain and Portugal plummeted by up to 74 percent in some cases. Gas- and coal-dependent nations, however, continue to see high prices maintaining above 100 euros per megawatt hour.

Despite abundant cheap renewable energy, the continent faces systemic inefficiencies. Spain, for instance, is wasting around 7 percent of its clean energy due to grid saturation and insufficient export capacity. Technical curtailments lead to negative prices, undermining investment incentives for renewable developers. The internal Spanish grid remains largely overwhelmed, with only 12 percent of connection requests approved due to saturation of network nodes, delaying infrastructure expansion.

France, seeking to protect its nuclear industry, actively blocks interconnection projects intended to facilitate energy flow between north and south. President Emmanuel Macron dismisses interconnections as a false debate, asserting that Spains renewable model is incompatible with its grid. Yet data contradicts this, showing Spain exports electricity during crises, having previously aided France with exports during nuclear outages. The core issue is geopolitical: France needs to protect its 300-billion-euro nuclear investment and fears reduced reactor profitability from Spanish solar imports.

Efforts are underway to improve cross-border infrastructure, including a planned submarine cable across the Gulf of Vizcaya, expected to be operational by 2028. Nonetheless, the current interconnection level remains just 2.8 percent, far below the 15 percent EU target, effectively leaving Iberia isolated. The European Commission has issued an ultimatum to France, demanding prompt resolution of interconnection issues within nine months.

Overall, the conflicting interests and infrastructure limitations hinder Europas ability to leverage its renewable potential fully. While Spain could serve as a green energy hub for the continent, political resistance and inadequate grid capacity prevent efficient exports. The situation highlights the urgent need for strategic alignment, infrastructure investments, and policy harmonisation to realise a truly integrated and sustainable European energy future.