Spain urged to boost electricity grid investment as report warns of risks

Spain must accelerate investment in its electricity grid between 2026 and 2030 or face higher energy costs, slower renewable rollout, and greater supply instability, according to a new analysis by the Institute for Energy Economics and Financial Analysis (IEEFA).
The gap could hit households across the Costa del Sol, Costa Blanca, Balearics, and Canary Islands, where large expat communities rely on a stable electricity supply and increasingly on rooftop solar.

Spain’s energy network falling behind rapid renewables growth

Spain’s target of generating 81 per cent of electricity from renewable sources by 2030 demands a vastly stronger grid. IEEFA notes that renewable generation is “growing faster than the availability of transmission capacity in many regions.”

Key pressures highlighted include:
• Grid congestion causing renewable energy to be curtailed
• Delays in connecting new solar and wind capacity
• Insufficient investment during the current 2021–2026 plan
• A growing backlog of projects waiting for grid access

Between 2021 and 2024, REE invested €2.9 billion, far short of the €6.96 billion planned under the 2021–2026 transmission grid planning. Spain has now proposed raising grid investment to €13.6 billion between 2025 and 2030 to catch up.

Cost of living pressures in expat hotspots in Spain

IEEFA warns that without rapid upgrades, grid bottlenecks could undermine “energy affordability and security” across the country.

For expat-heavy regions such as Andalucia, Valencia, and Murcia, this could mean:
• Higher volatility in electricity bills
• More costly reliance on fossil-fuel back-up generation
• Prices spiking during heatwaves, when demand for air-conditioning soars

These regions already experience some of Spain’s highest summer electricity peaks, making a robust grid essential.

Rooftop solar delays for Spanish homeowners

Many homeowners in Spain install rooftop solar to help lower their long-term energy bills. But limited grid capacity can slow or restrict connections.

IEEFA stresses that delays occur when renewable growth outpaces network readiness, causing:
• Longer waiting times for solar approvals
• Reduced ability to export surplus power back to the grid
• Higher costs, as households may need home batteries to compensate for weak local capacity

Energy insecurity in the Balearics and Canary Islands

The islands face the highest supply risk due to isolated grids and dependence on submarine cables.

IEEFA highlights that the Balearics and Canaries require substantial investment in storage and interconnections to avoid further instability.

For expats living in Mallorca, Ibiza, Tenerife, or Gran Canaria, the risks include:
• Higher likelihood of localised outages, especially in peak tourist months
• Delays to EV-charging expansion
• Slower adoption of rooftop solar and small-scale wind

The Salto de Chira pumped-storage plant in Gran Canaria – the first hydro-storage facility owned and operated by a transmission system operator (TSO) in Europe – will be crucial to stabilising the island grid once operational.

Daily-life impacts: appliances, remote work, and heat management

A weak grid affects more than energy bills. It can also lead to:
• Power dips damaging appliances
• Interruptions to broadband routers critical for remote work
• Reduced reliability for medical equipment used by retirees
• Difficulty cooling homes during heatwaves

For many expats who settle in Spain for lifestyle reasons – sunshine, outdoor living and remote working – grid reliability is becoming as important as healthcare access or residency rights.

Regulators propose higher returns to support investment

Spain’s competition regulator, the CNMC, has proposed increasing the allowed financial return on grid infrastructure from 5.58 per cent to 6.58 per cent for the 2026–2031 period to attract more investment.

Although still below industry requests, the increase aims to support major projects such as:
• New France–Spain interconnections
• Submarine links to the Balearics
• High-voltage upgrades across Andalucia and the Mediterranean corridor

Redeia to expand sustainable financing as investment rises

REE’s parent company Redeia aims to reach 100 per cent sustainable financing by 2030, using green bonds and EU-backed loans.

IEEFA recommends Redeia adopt the European Green Bond Standard to boost transparency and investor confidence, especially as grid-related projects expand rapidly between 2025 and 2030.

A modernised grid helps ensure Spain remains an attractive, affordable and sustainable destination for locals, retirees, long-term residents, digital nomads and second-home owners.

The Spanish government is expected to approve the 2025–2030 grid plan in late 2025 or early 2026. REE will then publish its 2026–2030 strategy, which IEEFA says must deliver a “structural scale-up in capex” to prevent further congestion and keep Spain on track for its 2030 renewable goals.

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