Spain’s €9 billion power plan misses blackout cause

The European Commission last week approved a Spanish €9 billion capacity mechanism that will pay power plants to stay available during peak demand. Spain first notified the plan to Brussels in December 2024, but the April 2025 blackout, which cut electricity to 50 million people, accelerated the political timeline. The engineering investigation found the blackout was caused by voltage instability. The grid lost control of the flow, not the supply. Capacity payments do not fix this.

What the Engineers Actually Found

When Spain's grid collapsed on 28 April 2025, the country had more than enough generating capacity to meet demand. ENTSO-E, the body that coordinates Europe's power grids, spent a 472-page investigation establishing what went wrong. Gas plants failed to deliver reactive power, the electrical force that keeps voltage stable, even though they were contractually required to provide it. Solar panels, operating under decades-old rules, couldn't contribute to voltage management despite being technically capable.

None of ENTSO-E's 21 recommendations mention capacity mechanisms. The Clean Air Task Force notes that capacity mechanisms simply don't target the voltage control services that failed. The new €9 billion mechanism just ensures enough megawatts exist. It says nothing about whether the grid can manage them in real time.

Who Gets Paid, Who Gets the Bill

The programme's €900 million annual cost (El País, Concurrences) will arrive on electricity bills as a regulated charge, adding roughly 4 euro cents per day for a typical household on standard pricing, according to government estimates. Generators that win competitive auctions run by Red Eléctrica, Spain's grid operator, collect the payments.

The incumbents stand to gain most. Iberdrola, Naturgy, and Endesa earned €4.25 billion in Q1 2026, up 27.2% year-on-year, lifted partly by post-blackout emergency measures that prioritised gas generation.

The pricing gap on the service that actually failed tells the real story. Gas plants earn €100–200 per unit of voltage-control service delivered, while renewables receive about €1. Spain's energy regulator proposed doubling the renewable rate to €2. The solar industry demanded €50.

Spain Is Not the Only Country Misdiagnosing This

Over the past decade, more than two-thirds of some €87 billion in total European capacity payments went to thermal generators, according to Aurora Energy Research. The spending is accelerating. EU-wide costs now run €6.5 billion per year according to ACER (the EU's energy regulator), up 40% in a single year. Germany is designing its own mechanism, where the German New Energy Economy Association estimates costs could reach €340–435 billion through 2050. Auction prices vary more than tenfold across member states, according to Bruegel, suggesting political urgency rather than engineering evidence drives the spending.

Cheaper, more targeted fixes are already working. Spain updated its grid code (the technical rulebook governing how power plants connect to the network) in 2025 to let renewables contribute to voltage control, and by April 2026, 14.5 GW had enrolled in the programme, including 6 GW of renewables. Battery storage capacity grew 589% since the blackout. The market moved without a €9 billion push.

Spain updated its grid codes to fix the engineering problem, but is still spending €9 billion to solve a political one. Consumers pay for both.