The rise of renewable curtailment in Spain poses a critical challenge for the profitability of clean energy projects. According to Alantra Energía ‘s report , the percentage of energy curtailed is expected to reach 5% in 2027-2028 , a notable growth compared to the 2% recorded in 2024.

According to Chema Zabala , Managing Director of the firm, the economic impact not only depends on the volume of energy spilled, but also on the market conditions at the time of the spill .

“If the energy supply is cut off at a time when the price is zero, the impact is less. But if the restriction occurs when the market is at €100/MWh, the economic loss is significant,” explains the executive in conversation with Strategic Energy Europe .

Technical and market curtailment: keys to understanding its impact

“Technical curtailment at a global level is not a serious problem in Spain,” says Zabala, although he clarifies that in some plants located in congested nodes, the situation is different .

According to Alantra’s report, the most affected areas are where the growth of photovoltaics has exceeded the capacity of the network, such as:

• La Mancha – Madrid Corridor
• Andalusia – Extremadura – Madrid corridor
• New Aragon – Levante corridor
• Aragon – Navarre reinforcement / southern and central Catalonia

It should be noted that curtailment in Spain responds to two main causes: technical restrictions on the network and excess supply on the market .

While the first is linked to limited evacuation capacity at certain nodes, the second occurs when renewable generation exceeds demand, driving prices to zero or even negative values.

This is not limited to a specific region, but its implications extend to all projects operating in the market and its effect is on financial stability.

Although energy not injected into the grid does not represent a direct cost, it does affect the predictability of revenues and long-term profitability.

Zero or negative price hours reduce renewable energy trading opportunities, forcing developers to rethink their monetization strategies.

The increasing penetration of renewables in Spain has led to greater volatility in wholesale market prices, as demonstrated by the more than 800 hours with zero or negative prices recorded during 2024, and this trend is expected to continue in 2025, especially in the central hours of the day.

For PV projects, this means that a significant portion of their output may not generate revenue, affecting the financial viability of the assets.

“Investors are increasingly evaluating how falling prices affect the cash flows of solar plants and what strategies can be implemented to mitigate these effects,” Zabala said.

Red Eléctrica’s investments and the future of infrastructure

To mitigate these problems, Red Eléctrica has deployed an investment plan in transport networks, with special attention to critical corridors such as La Mancha-Madrid and Andalusia-Extremadura-Madrid .

However, Alantra warns that until these infrastructures come into operation, curtailment is likely to continue to increase.

“Red Eléctrica’s original planning considered a lower penetration of photovoltaic energy than has actually occurred, so until the new investments are made, the level of discharges could increase,” warns Alantra’s Managing Director.

Given this scenario, developers must evaluate solutions to minimize the impact of curtailment on the profitability of their projects.

Hybridization with batteries and storage at critical nodes emerge as the most effective strategies.

“In areas with a high risk of spills, incorporating storage can make a difference, allowing generation to be shifted to times of greater demand,” explains Zabala. In addition, Alantra has identified that the fall in battery costs is making this alternative increasingly viable for developers.

Projections to 2027-2028: What to expect from curtailment in the coming years?

Alantra expects curtailment to gradually increase until 2027, reaching 5% , before starting to decrease with the entry into operation of new infrastructures. In the short term, 2025 will be a key year, with a probable expansion of zero-price hours in the electricity market .

“Our vision is that zero-price hours will remain in line with those of 2024, although demand and weather conditions may cause variations,” says Zabala.

He also said that gas volatility will continue to influence prices, although not enough to alarm traders.

In this context, power purchase agreements (PPAs) are evolving to adapt to the new scenario. One of the trends that stands out is the inclusion of clauses that exclude settlements when the market price is zero or negative .

In addition, Zabala mentions that PPAs with storage allow greater flexibility to avoid the hours of lower profitability.

“More and more projects are exploring time-based profiling mechanisms to take advantage of peak demand,” he says.

Where is renewable integration going in Spain?

The increase in curtailment is a challenge that requires solutions from both network planning and developer strategy .

Investments in infrastructure will help to reduce technical constraints, but in the meantime, smart energy storage and management will be key to optimising the profitability of projects.

According to Zabala, the key is to anticipate market dynamics and evaluate each node individually .

“It is not enough to look at the system average; you have to analyze node by node to understand the true implication in each project,” he concludes.