In 2024, electricity demand in Spain reached 247,038 GWh, reflecting a 1.4% growth compared to the previous year, according to data from Red Eléctrica de España (REE). However, this recovery is not enough to meet the targets set by the National Energy and Climate Plan (PNIEC), which envisions more aggressive electrification in key sectors.

Fernando Vivas, Business Development Director at Adelanta Energía, emphasizes that although the growth in demand is a positive sign, industrial demand remains weak. “To meet the goals of the PNIEC, electricity demand needs to grow much more,” he states. He suggests reviewing electricity taxation and introducing incentives to electrify sectors such as transport and heating. Vivas also highlights the need for measures that allow energy-intensive industries to compete on equal terms within Europe.

By the end of 2024, electricity prices for large consumers were at 63.59 €/MWh, which is 193% higher than in France (21.72 €/MWh) and 78% higher than in Germany (35.64 €/MWh). One factor behind this difference is access to more competitive contracts in other countries. “Reducing barriers to PPAs and improving taxation is crucial for the recovery of intensive industry,” he notes.

Economic and geopolitical context

Kim Keats Martínez, Director of K4K Training & Advisory and EKON Strategy Consulting, observes that the increase in electricity demand reflects Spain’s strong economic performance, even compared to other European countries. “The Spanish economy is doing well, and the increase in demand likely reflects this, even excluding the impact of self-consumption,” he states.

The expert highlights that although this growth may continue in 2025, geopolitical uncertainties could affect the trend, such as policies in the US under Trump or conflicts in Ukraine and the Middle East.

Curtailment: A technical and economic challenge

Both experts agree that curtailment will remain a critical challenge. According to REE data, in 2024 there were over 850 hours with wholesale electricity prices being null or negative, indicating an oversupply of renewable generation during certain periods. This situation led to a significant amount of MW being excluded from the market, affecting expected revenues for renewable energy producers.

Although the exact percentage of curtailment for the entire year 2024 is not available, it is estimated that this phenomenon remained around 2% of total renewable production. Vivas explains, “Technical curtailment applies only at certain network nodes, but economic curtailment will be inevitable without increased interconnection with France and more storage capacity.” He adds that these curtailments often coincide with very low electricity prices, making renewable energy less profitable.

Keats Martínez further remarks, “Curtailment is here to stay. Even in a balanced market, renewables will have periods when they cannot sell their energy or will do so at very low prices.” According to him, although BESS (Battery Energy Storage Systems) can be a partial solution, the ability of the market to absorb renewables will depend on the growth of demand.

Towards a comprehensive solution

To mitigate these challenges, the experts suggest several key measures:

• Increase incentives to electrify sectors such as transport and heating.
• Review taxation to reduce industrial costs and promote PPAs.
• Strengthen international interconnections and storage capacity to manage renewable energy.
• Accelerate the implementation of advanced technologies that add flexibility to the electrical system.

Vivas concludes, “Until these solutions are implemented, we will have to get used to economic curtailment, especially during peak solar production hours.” Keats Martínez adds, “The size of the market will be key to determining how much the system can absorb and ensuring the success of the energy transition.”