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Spain Keeps Power Prices Low Despite Europe's New Natural Gas Crisis, Ember Says

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As Europe faces its second natural gas price shock in five years, Spain is showing how renewable energy can protect consumers from volatile fossil fuel markets, Ember analyst Chris Rosslowe said in a Wednesday note.

Spain's long-term expansion of wind and solar power, launched before the 2021-2024 natural gas crisis and reinforced after the April 2025 Iberian blackout, has helped keep electricity prices among the lowest in Europe despite elevated gas costs.

The government is now pairing that strategy with measures to accelerate electrification and reduce dependence on imported fossil fuels.

Since March 2026, when natural gas prices surged following the conflict involving the US, Israel and Iran, electricity prices in Spain have remained largely insulated. Strong renewable generation has weakened the traditional link between gas and power prices.

Spain and Portugal ranked among the EU's three cheapest electricity markets in each of the first four months of 2026. In March, wholesale electricity prices averaged 42 euros ($48.30) per megawatt hour in Spain, compared with 143 euros/MWh in more gas-dependent Italy.

The lower exposure to natural gas markets is translating into savings for consumers. Analysis shows that a typical household on Spain's regulated tariff would pay an additional 10 euros per month, or 19% more, if electricity prices were still as closely tied to natural gas prices as they were in 2021.

Renewable deployment has continued at a pace since the April 2025 blackout, with Spain adding an average of 1.3 gigawatts of wind and solar capacity each month.

Reforms to accelerate battery storage are expected to quadruple storage capacity in 2026, while additional grid resilience measures aim to reduce reliance on costly emergency operating procedures.

Spain's latest energy package combines temporary tax cuts with incentives to electrify homes, transport and industry.

The tax reductions have cut around 8 euros from a typical monthly electricity bill, helping regulated power prices fall in April 2026 to some of their lowest levels since before the 2021-2024 natural gas crisis.

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