In 2024, Spain's electricity market achieved a historic milestone: 59% of its generation came from renewable sources.
Combined cycle gas turbines (CCGTs), which account for only 16% of total electricity by volume, continue to set the highest marginal prices during peak demand. This defines Spain's energy transition, a renewables success story where fossil fuel costs still drive wholesale pricing.
This analysis examines how gas plants operate in Spain's renewable-dominated system, why they remain price-setters, and what this means for peak pricing and energy storage opportunities.
Key Takeaways
- Spain's 26 GW CCGT fleet sets the price in only 7% of hours, but when it does, the average clearing price is €142/MWh.
- Technical restrictions costs increased to €400M in May 2025 (+100% month-on-month); this is mainly due to the TSO activating more CCGTs after the April 28 blackout.
- CCGT activation increased after the blackout to ensure grid stability. May 2025 saw a 1 TWh increase in the activation of technical restrictions compared to the previous month.
- 600+ hours of zero/negative prices since 2024 create storage arbitrage opportunities
1. The economics of being marginal
CCGTs bid at their marginal cost. If the market price clears higher than their marginal cost, they produce electricity, generating a profit. The marginal cost is made up of gas prices, carbon emissions prices, and operational and maintenance costs.
In this graph, we see that when demand is sufficiently high, CCGTs clear in the wholesale market. The electricity price is above €110/MWh. During the middle of the day, demand rises, but solar supply increases more than demand, leaving gas generation out of the system.
2. The CCGT model in a renewable world
The market operator for Spain and Portugal is OMIE. Spain's wholesale electricity market operates through OMIE's marginal cost-clearing mechanism. While renewable sources like wind and solar bid at zero marginal cost, they rarely set high system prices. Gas plants and some hydroelectric assets consistently submit the most expensive offers in the market.
