The renewable energy market in the Iberian Peninsula

Overview of the Spanish Market

“In 1985, the Iberian system relied on just one renewable technology—hydropower—whereas today we make better use of all available sources, such as wind and solar, and we reliably and safely integrate 98% of them into the system.”

Beatriz Corredor, Chairwoman of Redeia, the parent company of Red Eléctrica.

2024 is a record year for Spain! Red Eléctrica recorded renewable generation of 148,999 GWh, representing a 10.3% increase compared to 2023, equivalent to 56.8% of the total energy mix. By increasing its installed renewable generation capacity, Spain has significantly expanded its renewable energy capabilities. Hydropower now accounts for 13.3% of the energy mix, wind power 24.9%, and solar power 25.1%. Regarding the latter, Spain has broken its record for the sixth consecutive year, making solar energy the leading technology in the country’s generation fleet.

This technological and ecological leap has also led to a sharp reduction in CO₂-equivalent emissions from electricity generation, falling from 160.71 MtCO₂eq to 27 MtCO₂eq. The growth of renewable energy production then raises the issue of storage. This is why, for the first time, Red Eléctrica has introduced energy storage indicators in its annual reports. The results show that Spain currently has 3,356 MW of installed storage capacity.

But that’s not all! As electricity demand increased by 1.4% in 2024 compared to 2023, the power grid was expanded both nationally and internationally. In 2024, more than 480 km of new lines were added, bringing the total length of high-voltage lines to 45,674 km. For comparison, in 1985 Spain had barely 10,000 km of lines.

The Spanish Regulatory Framework

To meet its carbon neutrality targets, Spain has put in place a regulatory framework favorable to renewable energy through bilateral guaranteed feed-in tariffs, subsidies, and tax incentives. Among the various laws promoting the energy transition, Law 7/2021 provides measures to encourage sustainable development, such as the deployment of infrastructure dedicated to storage or self-consumption. Law 24/2013, Royal Decree 436/2004, and Royal Decree 661/2007 emphasize the importance of supporting energy efficiency and renewable energy.

Legislative measures have also been introduced to address inflation and protect consumers. Royal Decree-Law 12/2021, introduced in 2021, froze VAT at 10% (instead of 21%) and suspended the Tax on the Value of Electricity Production (IVPEE) until 1 January 2025. Royal Decree-Law 17/2021 temporarily reduced various electricity taxes to counter the rise in natural gas prices on retail gas and electricity markets.

Climate Objectives and Commitments

The PNIEC is a national strategic guidance tool that integrates energy and climate policy through 2030, in line with national and European regulations. In short, it defines the country’s roadmap. Aligned with the ambitions of the European Union and the REPowerEU plan, it sets out Spain’s objectives to accelerate the energy transition toward a more sustainable, competitive, and decarbonized model.

To achieve carbon neutrality by 2050, Spain aims to reach the following targets by 2030:

• reduce greenhouse gas emissions by 32% compared to 1990 levels;
• reach 48% renewable energy in final energy consumption;
• produce 81% of electricity from renewable sources;
• reduce external energy dependence to 50%;
• reach a total installed capacity of 214 GW by 2030, including 160 GW of renewables (76 GW of solar PV—up from 39 GW—and 62 GW of wind power, including 3 GW offshore) and 22.5 GW of storage capacity;
• exceed 12 GW of installed green hydrogen capacity.

Committed to achieving carbon neutrality by 2050, Spain is projecting strong growth in renewable energy in the coming years. This ambition could make the Iberian Peninsula a key global player in the energy transition.

What Role Do the Autonomous Communities Play in Deploying the PNIEC?

In Spain, the autonomous communities play a crucial role in implementing the PNIEC. Given the country’s decentralized governance, many responsibilities are delegated to them. Among their duties, they are responsible for land-use and urban planning, including authorizing the installation of energy infrastructure.

At the same time, they issue permits and environmental assessments for projects below 50 MW that are not prioritized by the traditional banking system. This enables developers to benefit from a framework better suited to the size of their projects, as well as from subsidies. Through calls for projects, regional authorities encourage citizens to participate in the development of green energy. Social criteria are also increasingly being integrated into tenders, with the aim of favoring projects that generate positive local impacts—fully aligned with the principles of responsible investment and territorial anchoring.

In short, the autonomous communities act as key intermediaries between developers and central government, serving as powerful levers for achieving the PNIEC’s objectives.

In Portugal

Overview of the Portuguese Market

The Portuguese renewable energy market is highly promising. The APA (Portuguese Environment Agency) reports that greenhouse gas emissions have declined thanks to the growing share of renewable energy, the introduction of natural gas, and the gradual phase-out of coal-fired power generation. Concretely, Portugal reduced its emissions by 67%, from 24.6 MtCO₂eq per MWh in 2005 to 8.2 MtCO₂eq in 2021.

Despite strong competition from China, major national and international players are established in Portugal, including Acciona, EDF Renováveis, EDP Renewables, Efacec, Enercom, Engie Portugal, Iberdrola Renováveis, RWE, and Vinci Energies.

A fast-growing market, Portugal is unlocking its potential, particularly in solar energy. In 2024, it became the first European country to achieve 1 GW of growth in photovoltaic capacity. According to SolarPower Europe, solar energy expanded by a record 1.77 GW in 2024, making Portugal the first country to exceed 1 GW per year.

Opportunities for French Companies

Located close to France, Portugal is an attractive market for French companies seeking growth opportunities. Major groups such as EDF and Engie were already present in Portugal. Now, SMEs are also positioning themselves, including Akuo Energy, Movhera, Legendre Énergies, Omexom, and Voltalia.

The presence of French companies creates a win-win alliance: Portuguese firms benefit from partnerships, while renewable energy deployment accelerates, helping Portugal meet its PNIEC objectives. Portugal aims to increase the share of renewables in electricity generation to 85% by 2030 and reach 43.2 GW of installed renewable capacity.

Climate Objectives and Commitments

To achieve carbon neutrality by 2045, Portugal aims to:

• reduce greenhouse gas emissions by 55% compared to 2005 levels;
• exceed 5.5 GW of installed green hydrogen capacity;
• reach 2 GW of offshore wind power;
• produce 85% of electricity from renewable sources.

Trends

In Spain

While we may not be able to predict the future, market data and studies provide strong indications. The outlook for renewable energy in Spain remains highly promising, driven by the commitment of industry stakeholders, citizens, and policymakers. In 2023, electricity infrastructure projects attracted €6.5 billion in investment and are expected to reach €280 billion by 2030.

The PNIEC, adopted by the Spanish government in 2021, targets a 39.5% reduction in primary energy consumption and an increase in the share of renewables to 74% of electricity production. Achieving these goals would position Spain as a global leader in renewable energy.

To support this ambition, the Spanish government has allocated 39% of the Spanish Recovery Plan funds to energy transition initiatives, particularly renewable energy development. At the same time, it promotes industrial decarbonization through PERTE programs (Strategic Projects for Economic Recovery and Transformation).

Which Renewable Energies Will Be Strategic by 2030?

The future will bring significant technological advances, and green infrastructure will be no exception. Solar panels are evolving toward next-generation photovoltaics, including solar tiles, bifacial panels, organic solar panels, thin-film technology, concentrated photovoltaics, and back-contact technology.

These innovations will drive growth in building-integrated photovoltaics, particularly on rooftops and façades, as well as in rural areas through agrivoltaics. Floating offshore wind is also a high-potential technology, with the government targeting 3 GW installed by 2030, notably off the coasts of Galicia, Andalusia, and the Canary Islands.

Spain also plans to promote green hydrogen, setting a national target of 11–13 GW of electrolyzer capacity by 2030.

The electricity grid must also evolve toward smart grids—modern, flexible systems capable of managing supply and demand in real time. In Spain, this is essential, as the aging grid (1980s–1990s) needs modernization to reduce losses, limit outages, and increase resilience during peak demand periods. Energy decentralization will therefore play a key role by facilitating bidirectional energy flows.

All these developments point to a clear trajectory: an increasingly technological and innovative energy transition. By 2030, renewables will be fully integrated into the Spanish energy ecosystem, positioning Spain as a European frontrunner in sustainable development.

What About Energy Prices?

Several short- and medium-term trends are emerging regarding energy prices. While Spanish electricity prices remain highly volatile today due to structural and geopolitical factors, a gradual stabilization is expected thanks to the growing share of renewables with near-zero marginal costs.

Although technological advances should continue to reduce renewable production costs, a moderate price increase cannot be ruled out due to grid modernization and infrastructure deployment. In short, while the current period remains uncertain, the long-term outlook points toward a more accessible energy model.

In Portugal

As a secondary market targeted by Enerfip Iberia, Portugal also offers compelling future prospects. To meet its 2030 targets, the Portuguese government has developed an ambitious ecological strategy.

Through the PNIEC, it plans to install more than 15 GW of renewable energy over the next decade, including 8 GW of photovoltaic projects, 1.5 GW of hydropower, and 3.9 GW of wind projects, including repowering initiatives to increase the capacity of existing wind farms. Total investment for these projects amounts to €20 billion.

In parallel, under its National Hydrogen Strategy, Portugal aims to develop 2–2.5 GW of installed capacity, representing 5% of the European target set by the European Commission. This strategy entails a total investment of €7–9 billion by 2030, including €900 million in public aid.

A national priority, the energy transition is expected to be boosted by the development of the renewable energy sector and, in particular, by job creation. Today, more than 50,000 people work in the sector—a figure expected to rise to 160,000 in the future.

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