Pedro Sanchez states that Spain's significant renewable energy deployment has insulated it from high gas prices, contrasting with other EU nations. He criticizes policies undermining climate efforts.
Pedro Sanchez highlights renewables’ role in stabilizing Spanish energy bills
Spanish Prime Minister, Pedro Sanchez, stated that European governments drew wrong conclusions from the energy crisis triggered by the war in Iran. On the sidelines of the European Council on March 19, Sanchez criticized other EU leaders for wanting to exploit the rise in oil and gas prices to undermine European climate policies. “Unfortunately,” he declared, “some governments are using this crisis and the rise in electricity prices to undermine climate policies.”
“In Spain,” he continued, “where renewables now account for almost 60% of electricity generation, prices last Saturday were around 14 euros per megawatt-hour. In Italy, Germany, and France, prices were over 100 euros per megawatt-hour. This is no coincidence.”
“I believe Spain can provide good examples of how the energy transition and the commitment to renewables are allowing our citizens, our industries, and our businesses to suffer less from the impact of gas prices,” Sanchez told reporters.
Ahead of the summit, some Member States, including Italy, had called for the suspension of the EU’s carbon taxation system (ETS), complaining that industries, already struggling with high energy costs, could lose competitiveness if carbon prices continued to rise. Giorgia Meloni had asked to block the system, arguing it was a necessary measure at this historical moment. Fortunately for European climate policies, the request did not find enough support from other leaders.
Pedro Sanchez’s Spain: Less dependent on gas prices
The influence of gas on energy prices varies from country to country. Countries that rely more heavily on gas for electricity generation are more affected by rising electricity prices. Due to the interconnectedness of the European grid, each country is affected to some extent by rising gas prices, but, as this Ember analysis explained, the effect of the Middle East conflict is stronger in countries that maintain a strong reliance on gas for electricity generation and energy system flexibility.
In the Spanish market, Ember reiterates, a structural decoupling has been achieved, while other countries have been slower to weaken the market power of gas. Among countries most reliant on gas-fired power plants, Italy is one of the markets most exposed to gas price variations, while Spain is the least exposed. In Spain, since the beginning of 2026, the analysis further specifies, gas has influenced electricity prices in only 15% of hours, compared to 89% in Italy.
The expansion of wind and solar in Spain has reduced the influence of fossil fuel generators on electricity prices by 75% compared to 2019 levels. This drop in the hours when energy prices are determined by the cost of gas has been faster than in other countries still heavily dependent on this fossil fuel, such as Italy.
Carbon costs less relevant to gas-produced energy costs
Ember’s analysis also explains that in Europe, the volatile cost of gas has a much greater impact on electricity prices than the price of carbon. Countries that have protected themselves from price spikes by reducing gas reliance, such as Spain, have shown that the marginal pricing system can offer more competitive electricity prices. Furthermore, Italy’s plan, which includes reimbursing carbon costs to gas-fired power plants, does not protect consumers from price spikes. In short, it is by no means guaranteed that eliminating carbon costs will significantly reduce electricity prices for consumers. Electricity market prices, which include the cost of carbon, constitute less than half of the typical electricity bill for an average EU household.
At current gas prices, the cost of carbon makes up at most one-fifth of this cost segment, translating to at most 10% of the final electricity bill, the analysis specified. This share is lower than the average VAT rate on electricity, which was 18% in 2024. Moving taxes and charges off electricity bills is a safer way to lower electricity prices without redesigning electricity markets. Only renewables, batteries, demand flexibility, and electrification can build resilience against future fossil fuel price shocks.
Spain’s 2025 data
In the first half of last year, wholesale electricity prices in Spain were 32% lower than the EU average and at least 30% lower than in other European countries with a large fleet of gas-fired power plants, such as Italy. In the first half of 2019, before the gas crisis triggered by the war in Ukraine and the large-scale deployment of wind and solar in the EU, Spain, by contrast, had among the highest electricity prices in Europe.
However, greater reliance on gas after the blackout for grid stabilization was costly and highlighted the need for investments in clean forms of flexibility, such as batteries and interconnections. By early 2026, Spain aimed to achieve 81% of electricity generation from renewable sources and a renewable capacity of 179 GW by 2030.
