Electricity prices plummet by 19%! Spain overcomes rising natural gas prices with solar and wind power.

The large-scale deployment of Renewable Energy in Spain has driven energy prices to decouple from volatile global natural gas prices, resulting in a 19% reduction in residential electricity bills.

This is the core conclusion of a report released today by the think tank Ember. The report analyzes changes in electricity prices across Europe, linked to two major macroeconomic shocks: the 2022 Russia-Ukraine conflict, the US-Israel war against Iran, and the closure of the Strait of Hormuz, which led to price increases in several European countries.

The price increases were particularly pronounced in countries more reliant on fossil fuels. For example, Ember describes Italy as "more gas-dependent" than Spain, with an average electricity price of €143/MWh (approximately US$165.9/MWh), while Spain's energy price is less than a third of that, at only €42/MWh.

This means that, according to Ember's data, a typical Spanish household's monthly gas bill is now 19% lower than it was in 2021 when natural gas prices were closely linked to global supply, equivalent to a savings of €10 per household per month.

Decoupling Electricity Prices from Natural Gas Prices

The decoupling of Spanish electricity prices from global natural gas prices is a major reason for the decrease in electricity bills. Ember attributes this decoupling to the increase in installed renewable energy capacity, which has reduced the overall impact of natural gas on the energy mix.

According to Ember's data, wind and Solar Power generation in Spain increased by 37% between 2021 and 2025, meaning that in the first five months of 2026, natural gas will only affect 9% of the hours in the national energy mix.

In contrast, in 2021, natural gas affected 52% of the hours in Spain. The chart below, from Ember, shows the impact of global natural gas prices on Spanish energy prices during two global conflicts: the Russia-Ukraine conflict and the war involving the US, Israel, and Iran.

The difference is equally stark when compared to Italy. Ember calculates that in the first five months of this year, natural gas affected 75% of the hours in Italy's energy mix, more than eight times that of Spain.

The key is that Spain is addressing its internal challenges by doubling its investment in renewable energy. In April 2025, the Iberian power grid experienced a large-scale blackout, but Spain did not revert to fossil fuel power generation. Instead, it chose to expand its renewable energy sector to address this threat to grid security.

Last November, the Spanish government passed a decree supporting grid resilience and the deployment of Battery Energy Storage Systems (BESS). Ember data shows that since the blackout, Spain has added an average of 1.3 GW of solar and wind power capacity per month, slightly higher than the 1.2 GW per month the previous year.

“Spain’s long-term ambitious investments in wind and solar power are paying off, protecting consumers from the volatility of fossil fuel prices,” said Criss Rosslowe, senior energy analyst for Europe at Ember. “The reforms implemented after the April blackout have driven the energy transition and further enhanced electricity price stability.”

Addressing Curtailment

The Battery Energy Storage System (BESS) component is particularly important because the Iberian grid urgently needs significant strengthening. This is not only to address the blackout itself but also to minimize the widespread curtailment problem on the Spanish grid—the grid has consistently struggled to effectively absorb the large amount of renewable energy capacity that has been integrated into the grid in recent years. Data from Spanish grid operator Red Eléctrica shows that renewable energy curtailment surged from 0.1 TWh in 2021 to 4.6 TWh in 2025, while the annual cost of grid balancing increased from €1.3 billion to €3.8 billion during the same period. Therefore, strengthening the Spanish grid is a top priority, both from an energy security and cost-saving perspective.

Regarding energy storage, Spain aims to achieve 22.5 GW of operational energy storage capacity by 2030. Ember predicts that the number of operational battery storage systems in Spain will quadruple between 2025 and 2026.