The energy-intensive industrial sector in Spain is facing a structural dilemma that threatens its continued presence in the country. The withdrawal of fiscal support for energy consumption has left the sector without shock absorbers against market volatility and uncompetitive compared to other European economies.

“The loss of the 80% discount on electricity access tariffs has wiped out our most important support mechanism, which could account for ten to twelve euros per MWh,” explains Carlos Martín Graña, Head of Operations at ENERJOIN.

This measure was repealed in January following the fall of the omnibus Royal Decree Law (RDL), and according to the Secretary of State for Energy, “it would only be reinstated if there is unanimity in Parliament,” which is considered “unlikely” by the energy sector under current political conditions.

A second fiscal blow has compounded the situation: the annual aid for regulated charges on energy bills has been slashed from €33 million to just €11 million, according to data published last week by the Ministry of Industry.

“We haven’t just lost 100% of a key monthly subsidy, we’ve also lost 65% of an annual grant that was essential to closing the year in financial balance,” Graña points out in conversation with Strategic Energy Europe.

This fiscal tightening, which in other countries might be cushioned by structural incentives or long-term contracts, is taking place in a system that offers no certainty or predictability for investment.

Spain faces the paradox of enjoying low wholesale energy prices thanks to its high share of renewables, while structural costs remain elevated due to adjustments, grid fees and taxes.

According to the latest AEGE Energy Barometer, updated on 21 April 2025, the final cost of electricity for energy-intensive industry in Spain stands at €58.28/MWh, significantly higher than in France (€23.29/MWh) and Germany (€43.29/MWh).

This highlights the loss of Spain’s industrial competitiveness, even in a relatively stable market context where the average daily market price is €66.40/MWh. “You can have a cheap market, but if your bill stays high, it’s useless for attracting industry,” warns Graña.

Futuros

A demand losing economic density

As industry reduces its share of energy demand, new consumers such as data centres are gaining ground.

At first glance, this shift might appear positive for the system, but the composition of demand is beginning to show profound imbalances.

“Data centres are good for the system because they require a lot of energy and help absorb renewables, but they don’t generate jobs or local development. They are neither employment-intensive nor fiscally anchored,” Graña points out.

Unlike industry, their contribution to the economy is limited and disconnected from the territory in which they operate.

By contrast, energy-intensive industry not only consumes electricity, but also drives investment, direct and indirect employment, supply chains, and auxiliary economic activity.

However, the absence of active policies to support this industrial structure is leading many companies to consider leaving the system or relocating operations.

“We’re already witnessing demand destruction, clearly evidenced by the 600 GWh drop in industrial gas consumption in March compared to the same month in 2024,” the executive notes, citing recent data from Enagás.

A PPA market that sidelines industry

The situation is further complicated by the centralisation of the Power Purchase Agreement (PPA) market. Rather than becoming a useful instrument for industry, long-term energy contracts have increasingly fallen into the hands of major utilities, investment funds, and trading companies.

“Large PPAs are no longer signed by industry. It’s Endesa, Iberdrola, Solaria or the funds that buy ten-year energy blocks and then resell or repackage them,” Graña explains.

This is not just a financial issue. To access these contracts, companies must provide guarantees, commit to long terms, and take on risks that are currently unmanageable.

“Signing a PPA means knowing you’ll still exist in ten or fifteen years. And without regulatory visibility, that’s impossible for any industrial company,” Graña stresses.

Moreover, when the spot market offers cheaper prices than PPAs, companies prefer to wait. “What’s the point in committing to €35/MWh if you can pay less today?”, he asks.

The result is a vicious cycle: with no support, no long-term visibility and distorted pricing, industry becomes disconnected from the energy market, while strategic decisions are left in the hands of financial players with entirely different goals.

Policy without signals, and no reindustrialisation strategy

The critical issue is not just the loss of subsidies, but the absence of a long-term signalling framework.

A few years ago, there was a discussion around organising direct auctions between renewable generators and industrial consumers, with the government acting as guarantor, in order to allocate clean energy to users committed to the national economy.

But the proposal was shelved. “It would have opened the door to efficiency, transparency and competitiveness. But it was lost, and now we are at the mercy of opportunity costs,” Graña laments.

The disconnection between industrial and energy policy is increasingly evident. “Industry needs profitability and visibility. Without that, there are no decisions, no CAPEX, no PPAs, no planning,” he summarises.

According to Red Eléctrica, national electricity demand grew by just 0.8% in 2024, and 1.4% when adjusted for working days and temperature.

The system is not shrinking, but it is being reshaped: industrial consumption is declining, while demand from digital and service sectors is rising.

Graña closes with a stark warning: “We won’t see a significant drop in demand, but we will see a profound shift in its composition. We are moving from demand that creates jobs to demand that just generates data.”