This review analyses the energy challenges facing Spain and provides critiques and
recommendations for further policy improvements. It finds that since the last IEA
in-depth review in 2005, Spain has made significant progress in improving its energy
policy. In Europe, the country is now leading in gas diversification and LNG development.
Together with Portugal, it has set up the common Iberian electricity market, MIBEL,
and has strong ambitions in developing it further. It has also become prominent in
developing wind and solar energy technology, and succeeded in integrating large amounts
of intermittent power in the electricity grid.
Along with other IEA member countries, Spain has set ambitious climate and energy
security targets. Achieving these will require a transition to a low-carbon economy.
Spain will need to increase its efforts to reduce CO2 emissions, particularly in the
transport but also the critical power sector. As fossil fuels still provide more than
half of electricity,Spain will need to keep open all the options - including nuclear,
renewables, and the technology of carbon capture and storage - for making its power
sector less carbon-intensive. The country should also increase its efforts to limit
peak electricity demand through energy efficiency.Spain has substantially de-regulated
its electricity and gas tariffs, and developed a financial plan to end the large deficit
that had built up under the previous tariff regime. Prices for many small electricity
users, however, are still regulated and low enough to potentially distort the market.
In addition, the still remaining subsidies for domestic coal production should be
eliminated and replaced by direct social policy measures.