Electricity prices - Spain

Spain’s Electricity Market

Electricity Sources

Spain’s generation mix has rapidly shifted toward renewables. In 2024, wind was the single largest source (~23% of generation), followed by solar PV (~17%), nuclear (~19%) and hydropower (~13%). Overall, renewables (wind, solar, hydro, biomass, etc.) produced roughly 56–57% of the country’s electricity, up from ~50% a few years earlier. Fossil fuel use has plummeted: combined-cycle gas turbines now account for only ~14% (down about 25% year-on-year), and coal has nearly disappeared (~1%). Together with nuclear, about 77% of generation in 2024 was “emissions-free”. This shift is driven by large wind and solar buildouts: Spain added about 7.3 GW of renewables in 2024 (6 GW PV), making solar the largest installed capacity.

The high renewable share varies by region. On the peninsular grid, renewables dominate as above (e.g. March 2025: 63.9% of generation in the Peninsula was from renewables, with wind 29.3% and nuclear 20.5%). By contrast, the Balearic Islands and Canary Islands still rely mostly on gas (combined-cycle or diesel) with modest renewables. In March 2025, the Balearics produced ~68% of power from gas and just ~14% from renewables. The Canaries showed ~42% gas and only ~15.6% renewables (wind ~10.8%, solar ~4.8%). (Majorca and minor islands also import some power from the Peninsula via subsea cables.)

Table 1 – Approximate shares of main generation sources (2024)

Electricity Pricing for Consumers

End-user prices in Spain consist of several components: the energy cost (based on the wholesale market), regulated network fees (“peajes”), other charges, and taxes. There are two customer markets: the regulated tariff (PVPC) and the free market. Under Spain’s Electricity Law (Ley 24/2013), small consumers can choose the PVPC (Precio Voluntario al Pequeño Consumidor) which is an hourly rate tied to the wholesale pool. Other customers may contract in the liberalized market at a fixed or index-linked price.

• Wholesale market (OMIE): The Iberian market operator OMIE sets a daily wholesale price for each hour by auction. (Spot prices are typically denominated in €/MWh.) All generators bid, and the marginal price clears each hour. Spain and Portugal form the MIBEL. Retail tariffs tied to the market (like PVPC) use the OMIE spot price as a base.
• Regulated energy cost (PVPC): For PVPC customers, the energy term of the bill is literally the sum of the hourly wholesale price plus adjustments. By law, PVPC must include “the cost of production determined by market mechanisms”, plus network tolls and other system charges. In practice, under RD 446/2023 the energy cost is computed as a weighted mix of the day-ahead/intraday market (OMIE) and futures market (OMIP) prices, plus the costs of balancing services and distribution. (For example, in 2024 PVPC energy = 75% spot + 25% futures; in 2025 it shifts to 60% spot/40% futures.) The grid operator publishes the 24-hour PVPC prices each day at 20:15 for the next day.
• Network fees (“peajes y cargos”): Both regulated and free-market tariffs include fixed grid charges. Transmission and distribution tariffs (peajes) are time- and region-dependent and cover the cost of the grid. These are charged in both the power term (€/kW of contracted capacity) and energy term. The law explicitly adds “access tolls and charges” to the PVPC.
• Marketing costs: Small fixed retail fees (meter rental, billing). Under PVPC, sales and commercial costs are generally minimal, but they are included in the rate.
• Taxes: The final bill includes Value-Added Tax (VAT) and the special electricity tax. As of Jan 2025, VAT on electricity is 21%. (It was temporarily reduced to 10% or 5% during 2022–2024.) Additionally, a 5.113% electricity tax (Impuesto a la Electricidad, IEE) is levied on consumption and contracted power. (There is also a 7% Production Tax (IVPEE) on generators, which does not appear on bills but raises market prices.)
• Final retail price: Thus, for a PVPC consumer the hourly bill = (OMIE price + PVPC adjustments) × consumption + power charge + network fees, then + IEE + 21% VAT. Under the free market, suppliers often bundle these same costs into fixed or indexed contracts (the supplier must still pay the network charges and taxes to the system).

Summary of price components:

• Energy (€/kWh): wholesale market price (hourly OMIE price, possibly smoothed via futures) plus small regulated add-ons.
• Power (€/kW·day): a fixed daily rate depending on contracted capacity.
• Network (peajes): fixed distribution and transmission charges by regulatory band.
• Taxes: Electricity tax (~5.113%) and VAT (21% from 2025) on top of energy+power.

(Applies nationally on the peninsula; in Ceuta/Melilla separate carriers; the Canary/Balearic systems use higher insular tariffs due to generation differences.)

Dynamic Electricity Tariffs

Definition: A dynamic tariff (tarifa dinámica) in Spain is one whose price varies in real time (typically hourly) with wholesale conditions. The regulated PVPC is itself a dynamic tariff – household consumers under PVPC pay the pool price (with hourly variation) plus network fees. In the free market, “dynamic” or “index-linked” plans also exist, where the variable energy price follows the OMIE market.

How they work: Under PVPC, each hour’s price is published daily based on the prior day’s market. Consumers can view the 24 hourly prices and adjust use accordingly. Under a free-market index tariff, the supplier usually adds a small fixed management fee and passes through the OMIE hour-by-hour price (or a published retail variant). In all cases, peak demand hours have higher wholesale prices, while abundant renewable hours have low prices. Legally, PVPC is governed by Royal Decree 216/2014 and modified by RD 446/2023, which prescribe the methodology. Article 17 of the 2013 Electricity Law explicitly requires that PVPC include “the cost of production of electricity determined by market mechanisms”.

Relation to OMIE: Dynamic tariffs are directly tied to OMIE. The day-ahead market sets the energy cost for each hour. PVPC (and index contracts) derive their rate from this pool price. Since 2024, Spain has also blended in futures-market prices (OMIP) to reduce volatility, per the government’s RD 446/2023. In summary: PVPC = (OMIE price + futures adjustment) + regulated fees, then taxed.

Regulation: By law, only “commercializadoras de referencia” (suppliers of last resort) can offer the PVPC. Those are the six major utilities (Endesa/Energía XXI, Iberdrola, Naturgy/Curenergía, TotalEnergies/EDP, Repsol, etc.) plus regional ones (Grupo CHC, Ceuta, Melilla). All must use the government-set PVPC formula and must adjust hourly. Free-market contracts, including dynamic ones, are private but must be approved by the regulator and supply the same underlying energy and network costs. In practice, the Spanish regulator and OMIE enforce the transparent publication of hourly prices (via ESIOS/REE) so consumers under dynamic tariffs know their exact rate each hour.

Major Providers with Dynamic Tariffs

All of Spain’s main suppliers offer some form of dynamic or index-linked plan:

• Regulated suppliers (Comercializadoras de Referencia): Endesa (Energía XXI), Iberdrola, Naturgy (Curenergía), TotalEnergies (EDP), Repsol (Régsiti), Grupo CHC, etc. – each can offer the hourly PVPC tariff to small consumers. (These are often simply the customer’s right to opt for the regulated rate.)

• Free-market retailers: Many companies offer “precio indexado” plans. For example:

  • Lucera Energía – “Luz a precio de coste”, an index tariff with a small monthly fee.
  • Factor Energía – “Tarifa Variable”, no management fee, 24‑h variable price.
  • Gana Energía – “Tarifa Precio de Mercado”, index-based with modest fixed charge.
  • Holaluz, Podo, Som Energía, MasMóvil Energía, EDF, etc. – all offer market-price plans (often combining the hourly pool price with a fixed component).
• Plans from big utilities: Traditional utilities also market index plans in the free market. For instance, Endesa’s “One Luz” (pool-indexed plan), Iberdrola’s index option, Naturgy’s “Por Uso” plan, Repsol’s “Ahorro Plus”, TotalEnergies’ “Luz Siempre”, etc. (These typically charge a fixed €/kW·day plus the variable €/kWh from the pool.)

Because Spain’s dynamic tariffs simply mirror the wholesale price, consumers must monitor hourly rates. (Peak/valley timebands apply to both PVPC and many fixed plans.) But offered correctly, these plans can save money if users shift consumption to low-price hours.

Peak and Off-Peak Hours

Spain 2024 – Average Hourly Wholesale Electricity Price (OMIE)