Spain’s €9 billion grid fix misses fault

The European Commission last week approved Spain’s €9 billion capacity mechanism, a scheme that pays power plants to remain available when demand peaks. Spain first notified Brussels in December 2024, but the April 2025 blackout, which left 50 million people without electricity, gave the plan its political urgency.

The problem is that the blackout was not caused by a shortage of power stations. The engineering inquiry found voltage instability. The grid lost control of the electricity flowing through it, not the amount being generated. Paying plants to exist does not solve that.

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 coordinating Europe’s power grids, set out the failure in a 472-page investigation.

Gas plants failed to deliver reactive power, the electrical support that keeps voltage steady, although they were contractually obliged to provide it. Solar panels were operating under old rules that stopped them from helping with voltage management, even though the technology can do it.

None of ENTSO-E’s 21 recommendations calls for a capacity mechanism. The Clean Air Task Force makes the point plainly: capacity mechanisms do not buy the voltage-control services that failed. Spain’s new €9 billion scheme ensures that enough megawatts are available. It does not ensure the grid can control them second by second.

For Malta, the distinction matters. A small system can feel every technical failure quickly, whether through Enemalta’s network, the interconnector or emergency generation decisions. Security of supply is not only about having enough plants on paper. It is about whether the system can hold together when conditions move fast.

Who Gets Paid, Who Gets the Bill

The programme’s €900 million annual cost (El País, Concurrences) will appear on electricity bills as a regulated charge. Government estimates put the cost for a typical household on standard pricing at roughly 4 euro cents per day. The payments will go to generators that win competitive auctions run by Red Eléctrica, Spain’s grid operator.

The main incumbents are best placed to benefit. Iberdrola, Naturgy and Endesa made €4.25 billion in Q1 2026, up 27.2% on the previous year, helped in part by emergency measures after the blackout that gave priority to gas generation.

The sharper signal is in the pricing of the service that actually failed. Gas plants earn €100–200 per unit of voltage-control service delivered. Renewables receive about €1. Spain’s energy regulator proposed doubling the renewable rate to €2. The solar industry asked for €50.

That gap explains the politics better than the engineering does. The money is flowing to the established plants, while the system still underpays the services that would help prevent the same kind of failure.

Spain Is Not the Only Country Misdiagnosing This

Europe has been moving in the same direction for years. 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 rising.

ACER, the EU’s energy regulator, says EU-wide costs now run at €6.5 billion per year, up 40% in one year. Germany is designing its own mechanism, where the German New Energy Economy Association estimates costs could reach €340–435 billion through 2050. Bruegel says auction prices vary by more than tenfold between member states, which suggests political pressure is doing at least as much work as engineering evidence.

There are cheaper and more targeted fixes. Spain updated its grid code in 2025, the technical rulebook that governs how power plants connect to the network, so that renewables could help control voltage. By April 2026, 14.5 GW had enrolled in the programme, including 6 GW of renewables. Battery storage capacity grew 589% after the blackout. The market moved without a €9 billion subsidy.

Spain has changed its grid rules to address the technical failure. It is still spending €9 billion on a political answer. Consumers will pay for both.