# Cheap clean energy: Spain's productivity advantage, and how to turn it into factories

> Spain has some of the cheapest electricity in Europe because wind and solar now cover most of its generation: in the first half of 2026 a mid-sized Spanish industrial consumer paid 11.8 cents per kWh before VAT, against 17.4 in Germany and 19.9 in Italy, according to Eurostat. That gap is a real productivity advantage for a country that needs more investment per worker. To turn it into growth, Spain has to fix voltage control and grid services after the April 2025 blackout, invest in grids at the pace of renewables, and bring new industry to where the clean power is, with connection queues ordered by readiness and tariffs that reward using power when it is abundant.

- URL: https://www.radicalcentre.eu/en/articles/cheap-clean-energy-spain-productivity-advantage
- Language: en
- Publisher: radical centre / centro radical
- Published: 2026-11-10
- Topic: Climate & energy
- Author: radical centre
- Licence: CC BY 4.0

## Key points

- Eurostat, first half of 2026: firms using 2,000–19,999 MWh a year paid 11.8 cents per kWh in Spain before VAT and recoverable taxes, against 17.4 in Germany, 19.9 in Italy, 12.4 in France and 15.6 in the EU.
- Ember: in the first half of 2025 Spanish wholesale prices averaged €62/MWh, 32% below the EU average, and fossil fuels set the price in 19% of hours, down from 75% in 2019.
- Red Eléctrica: renewables produced 55.5% of Spain's electricity in 2025, and Spain was a net exporter for the fourth year running.
- ENTSO-E's final report on the 28 April 2025 blackout found systemic failures in voltage control and reactive power, and made 22 recommendations.
- The advantage pays off only with grids, storage and new demand located where clean power is cheap.

A Spanish factory that uses a few thousand megawatt-hours of electricity a year paid 11.8 cents per kilowatt-hour in the first half of 2026, before VAT and recoverable taxes. The same factory paid 17.4 cents in Germany and 19.9 in Italy, according to Eurostat. France, with its nuclear fleet, came in at 12.4 and the EU average at 15.6. For energy-hungry industry that is a gap of about a third against Germany and around 40% against Italy, and it is the clearest productivity advantage Spain has gained in a generation.

Energy did not appear in the speech Miriam González gave at the launch of Democracia 21, which put productivity at the centre of its economic offer (see [our overview of the party's proposals](/en/articles/democracia-21-miriam-gonzalez-proposals-radical-centre)). It belongs there. Growth per hour worked depends on how much capital each worker has to work with, and capital that runs on electricity is cheaper to run in Spain than almost anywhere else on the continent.

## How the edge was built

The think tank Ember tracked the change in a report published in October 2025. Spain added more than 40 GW of wind and solar between December 2019 and June 2025, and those two sources covered 46% of demand in the first half of 2025, up from 27% six years earlier. The effect on prices came through the way the market sets them. Wholesale electricity is priced at the cost of the last plant needed to meet demand, and in 2019 that was a fossil-fuel plant in 75% of hours. In the first half of 2025 it was 19%. Spain's average wholesale price in that period was €62/MWh, against roughly €111/MWh for the cost of generating with gas, and 32% below the EU average. Spain's fall in fossil price-setting hours was far bigger than Germany's or Italy's.

Red Eléctrica's figures for the full year 2025 tell the same story. Renewables produced 55.5% of Spain's electricity, and almost 10 GW of new solar and wind came online. Spain exported 12,794 GWh more than it imported, its fourth year in a row as a net exporter. Ember adds a figure that should interest any finance minister: the wind and solar built in five years avoided gas imports worth €13.5 billion, almost five times what Spain invested in its transmission grid over the same period.

This is the European problem Mario Draghi described in his 2024 report on competitiveness, solved in one country. Draghi found that EU firms pay electricity prices two to three times those in the US, and that market rules keep industry and households from capturing the full benefit of clean energy in their bills, because gas still sets the price most of the time. His remedy was to keep marginal pricing for balancing the system and to move renewables and nuclear onto long-term contracts. Our [explainer on the Draghi report](/en/articles/draghi-report-explained-european-competitiveness) covers the rest. Spain got there faster by building so much cheap generation that gas simply sets the price less often.

## What the blackout exposed

On 28 April 2025 the Iberian peninsula went dark. ENTSO-E, the network of European grid operators, published its expert panel's final report in March 2026. It found systemic failures in voltage control, reactive power management and the regulatory framework, and spread responsibility across Red Eléctrica, conventional and renewable generators and the rules themselves. Key voltage equipment was switched manually; operators lacked real-time visibility of the reactive power they needed; several conventional plants delivered less than required at critical moments; many renewable plants ran fixed power-factor settings and disconnected early. The panel made 22 recommendations, starting with a move to active voltage control and stronger ride-through rules for every generator, small rooftop systems included.

The aftermath has a price. Ember found that grid services, which made up 14% of the final electricity price in the year before the blackout, rose to 57% in May 2025, as the operator ran more gas plants to hold voltage. Curtailment of renewable output went from 1.8% in 2024 to 7.2% between May and July 2025. Combined-cycle gas plants still produced 16.8% of Spanish electricity over the year. And Ember notes that between 2019 and 2024 Spain invested 30 cents in grids for every euro in renewables, against a European average of 70 cents. Ember counted a Spanish battery fleet of only 120 MW, with 2,600 MW announced and 340 MW permitted.

So the advantage is real and fragile. Cheap power that is curtailed at midday and propped up by gas in the evening is cheap power going to waste.

## Bringing industry to the power

Stewart Brand, who made his name with the Whole Earth Catalog, called his 2009 book Whole Earth Discipline an ecopragmatist manifesto. He asked greens to borrow the engineer's comfort with trade-offs and to judge energy by its results. That is the right spirit for Spain now: a country with surplus clean electricity at midday and a productivity problem should treat the surplus as an industrial asset.

The left brings an important point. Energy is a shared good, and the gains from cheap renewables should reach households' bills and the regions that host the panels and turbines, many of them rural and losing people. The liberal market tradition brings another. Competition and private investment made Spanish solar cheap, and marginal prices are the signal that tells investors where to build and consumers when to use power. Draghi kept marginal pricing for that reason.

Put together, they point to a policy of bringing industry to the power. Red Eléctrica and the regulator should publish, node by node, where clean electricity is spare and cheap and where the grid is full, and plan grid investment ahead of demand in the places with surplus. Connection capacity should go to the projects that are ready to build, with land, permits and finance in hand, so that speculative requests stop blocking real factories, data centres and electrolysers. Large consumers should be able to sign long-term contracts with new renewable plants and be paid to shift their use into the hours of abundance, and households should have simple tariffs that give them the cheap midday hours too. A green-steel plant in Extremadura or a battery factory in Aragón would then become the fair transition the left asks for, financed by the price signal the right defends.

Grids, permits and the future of the Almaraz nuclear plant each deserve a piece of their own, and they come tomorrow. The starting point is already in the data: Spain makes some of the cheapest clean electricity in Europe, and the productivity gains go to whoever builds next to it.

## FAQ

### Why is electricity cheaper in Spain than in Germany or Italy?

Because wind and solar cover a large share of Spanish demand, gas sets the wholesale price in far fewer hours. Ember found fossil fuels set Spain's price in 19% of hours in the first half of 2025, against 75% in 2019, and Spanish wholesale prices were at least 30% below those in Germany and Italy, which burn more gas.

### How much do Spanish companies pay for electricity compared with the rest of Europe?

For a mid-sized industrial consumer (2,000–19,999 MWh a year), Eurostat puts the price in the first half of 2026 at 11.8 cents per kWh excluding VAT and recoverable taxes in Spain, 12.4 in France, 15.6 in the EU, 17.4 in Germany and 19.9 in Italy.

### Did renewables cause the 2025 blackout in Spain?

ENTSO-E's expert panel, which published its final report in March 2026, found systemic failures in voltage control, reactive power management and regulation, with responsibility spread across the grid operator, conventional and renewable generators and the rules. It recommends active voltage control and stronger ride-through requirements for all generators.

### What is the radical-centre position on cheap clean energy?

Keep marginal pricing and private investment, which made Spanish renewables cheap; make sure the savings reach households and the regions that host the plants; and plan grids and connections so that new industry settles where clean power is abundant.

## Sources

- [Decoupled: how Spain cut the link between gas and power prices using renewables](https://ember-energy.org/latest-insights/decoupled-how-spain-cut-the-link-between-gas-and-power-prices-using-renewables/), Ember (2025)
- [Electricity prices for non-household consumers, bi-annual data (nrg_pc_205)](https://ec.europa.eu/eurostat/api/dissemination/statistics/1.0/data/nrg_pc_205?format=JSON&lang=EN&geo=ES&geo=DE&geo=FR&geo=IT&geo=EU27_2020&time=2026-S1&nrg_cons=MWH2000-19999&tax=X_VAT&currency=EUR&unit=KWH), Eurostat (2026)
- [El sistema eléctrico español en 2025 (nota de prensa)](https://www.ree.es/sites/default/files/2026-03/1103_NP_ISE_2025.pdf), Red Eléctrica (2026)
- [Entso-E report finds systemic failures behind 2025 Iberian blackout](https://www.pv-magazine.com/2026/03/23/entso-e-report-finds-systemic-failures-behind-2025-iberian-blackout/), pv magazine (2026)
- [The future of European competitiveness, Part A: a competitiveness strategy for Europe](https://commission.europa.eu/document/download/97e481fd-2dc3-412d-be4c-f152a8232961_en?filename=The%20future%20of%20European%20competitiveness%20_%20A%20competitiveness%20strategy%20for%20Europe.pdf), European Commission (2024)
- [Stewart Brand's strange trip: Whole Earth to nuclear power](https://e360.yale.edu/features/stewart_brands_strange_trip_whole_earth_to_nuclear_power), Yale Environment 360 (2009)