Has Spain’s power system decoupled from natural gas?
The closure of the Strait of Hormuz following the escalation of the war in Iran has sent natural gas prices surging across Europe. TTF (the Dutch virtual trading point for natural gas) spot prices rose by 62% between late January and mid-March 2026. In most European markets, electricity prices followed. Germany, Belgium, and the Netherlands saw day-ahead (DA) prices track the TTF closely over this period. In these cases, BESS can see revenue rise due to wider daily spreads. However, Spain’s day-ahead market barely reacted, except between March 5th and 12th.
This divergence has fuelled a growing narrative: Spain’s power system has decoupled from natural gas. Renewables dominate the day-ahead merit order. Combined cycle gas turbines (CCGTs) are increasingly absent from scheduling. But the headline day-ahead price does not tell the full story.
Spain has not fully decoupled from natural gas. While CCGTs rarely clear in the day-ahead market, they re-enter the system through the technical restrictions (restricciones técnicas, or TTRR) market. This mechanism added 78% of all CCGT generation between January 2025 and March 2026. This is especially the case after the Iberian blackout on the 28th of April. The cost of these technical restrictions is passed through to all consumers, and it is highly correlated with natural gas prices. As the Strait of Hormuz crisis pushes gas prices higher, Spanish consumers are exposed through a channel that does not show up in the day-ahead market.
In this research, we look at:
- Why Spain’s day-ahead prices appear decoupled from gas while other European markets do not
- How CCGTs re-enter the system through the technical restrictions market
- The direct link between natural gas prices and technical restrictions costs
- The cost impact of technical restrictions on Spain’s final electricity price
For additional information on this topic, reach out to the author - paulo@modoenergy.com
The gas-electricity price correlation depends on CCGTs entering the day-ahead market
In Spain’s day-ahead market, CCGTs have been increasingly pushed out of the merit order. However, when CCGTs clear in the day-ahead market, gas and electricity prices tend to move together. The TTF spot price and Spain’s day-ahead electricity price show clear coupling on days when CCGT generation enters the system through the day-ahead market. On days without CCGT scheduling, the correlation weakens from 0.78 to 0.68, and day-ahead prices consistently fall well below gas-equivalent levels.. Electricity prices are instead driven by the availability of hydro, solar, and wind.
Between January 22 and March 22, 2026, only 21 out of 55 trading days had any CCGT generation in the day-ahead market. On those 21 days, the average output by CCGTs was just 101 MW. The day-ahead spot price index ranged from 39 to 159 over this period, while the TTF index remained between 78 and 162. On days without CCGT scheduling, day-ahead prices frequently fell well below gas-equivalent levels.
This is why Spain’s day-ahead market appears bullet-proof to the Strait of Hormuz gas price shock. Gas is not setting the marginal price, but it does not mean Spain’s power system is immune.
CCGTs still enter the system via the technical restrictions market
The technical restrictions market runs after the day-ahead market clears, with the objective of maintaining grid reliability. In practice, Red Eléctrica schedules CCGTs to maintain system security by providing voltage support, frequency reserves, and minimum thermal generation in certain grid zones.
Between January 2025 and March 2026, the average daily CCGT generation scheduled through the day-ahead market was 598 MW. On 34% of days, no CCGT capacity was scheduled. Solar and wind output, combined with nuclear baseload and hydro flexibility, was sufficient to cover demand without gas.
After the technical restrictions market runs, the picture changes completely. Average CCGT generation in the Programa Viable Provisional (PVP), which reflects the schedule after technical restrictions, was 2,770 MW. That is 4.6 times higher than the day-ahead figure. Technical restrictions added 78% of all CCGT generation over this period.
This explains why Spain’s day-ahead price appears disconnected from gas. The day-ahead market clears largely without CCGTs, so the marginal price is set by the other technologies. But the actual volume of gas-fired generation running on the system is far higher than the day-ahead schedule suggests.
How do natural gas prices affect the cost of technical restrictions?
CCGT bids in the technical restrictions market closely track the TTF natural gas price, as they are based on their opportunity costs, which are closely linked to fuel costs. Between January 22 and March 19, 2026, indexed TTF spot prices and indexed CCGT TTRR bids were closely correlated. When gas prices rose, CCGT bids rose in near-lockstep.
The daily CCGT technical restriction cost (TTRR) cost over this period ranged from 9 to 29 M€. The total cost depends on two factors: the bid price, which is driven by gas, and the volume of CCGT generation called through technical restrictions, which is driven by grid needs.
As the Strait of Hormuz crisis pushed TTF prices higher through March 2026, the daily CCGT TTRR cost climbed from around 12 M€ in early March to 29 M€ by mid-month. This increase occurred even as day-ahead prices remained low. The gas price shock that appeared absent from Spain’s day-ahead market was arriving through the technical restrictions channel instead. However, the total cost for consumers would have been significantly greater if CCGTs had entered the day-ahead market and set the price.
Technical restrictions carry a cost, especially when the day-ahead price is low
The technical restrictions process imposes an additional cost on the final electricity price paid by consumers. Between January 2025 and March 2026, the weekly TTRR component of the final electricity price ranged from 2.1 to 25.2 €/MWh. On average, it represented 20% of the final price. But this average masks considerable variation.
The technical restrictions share is inversely related to the day-ahead price level. In weeks when the day-ahead component averaged above 80 €/MWh, the TTRR share was typically below 15%. But when the day-ahead price fell below 25 €/MWh, the TTRR share surged. In the week of March 15, 2026, the day-ahead component averaged just 6.2 €/MWh while the TTRR component reached 23.3 €/MWh, giving a TTRR share of 75%.
The “cheap” electricity prices visible in the day-ahead market do not fully translate into low final prices for consumers. The technical restrictions cost acts as a floor, maintained by the need for CCGT generation regardless of renewable output levels.
Spain's gas exposure is hidden, not gone. Can storage capture it?
Spain’s day-ahead electricity market has partly decoupled from natural gas. Renewables increasingly dominate the merit order, and CCGTs are absent from the day-ahead market on more than a third of days. This is why Spain’s day-ahead price has not followed the TTF surge triggered by the Strait of Hormuz crisis, unlike Germany, Belgium, and the Netherlands.
But decoupling in the day-ahead market is not the same as decoupling in the final price. The technical restrictions market reintroduces gas-fired generation, and its cost is passed through to consumers. When day-ahead prices are low, the TTRR component can represent up to 75% of the final electricity price.
For market participants, policymakers, and consumers, the headline day-ahead price is an incomplete measure of Spain’s energy cost. Until the grid can reduce its reliance on CCGTs for security services, natural gas will continue to influence final electricity prices, even in a system increasingly powered by renewables. The Strait of Hormuz crisis is a stress test: Spain’s day-ahead market passed, but its final electricity price did not.
For BESS investors, the fact that CCGTs are rarely cleared in the day-ahead market means BESS cannot capture the spread increases that occur when natural gas prices spike. However, there is a significant opportunity for storage to participate and capture revenues in the technical restrictions market, which will see price increases as natural gas prices rise.
