The Industry & Energy Transition Index: Spain

Network readiness

Progress in terms of network readiness to welcome additions

Based on REE data, there is a long queue of projects waiting to connect to the grid (both transmission and distribution)—for example, 89 GW of solar, 41 GW of wind, and 17 GW of batteries. A solid pipeline of additions is positive, but it is at too slow a pace and may undermine project viability.

Despite a 55 percent investment increase to €825 million in transmission grids in 2023,1 the latest PNIEC points at a necessary investment of a total of €6.6 billion per year (€3.5 billion for transmission and €3.1 billion for distribution) to achieve its targets. However, the legal maximum is fixed today at much lower figures: €1 billion for transmission and €2 billion for distribution—guidelines that the government is expected to review soon.

Indeed, REE is investing less than its peers—our analysis suggests Spain’s REE adjusted capex/EBITDA ratio is 1.2 times compared to Germany’s Eurogrid 1.8 times or France’s RTE 2.0 times.

Context

The network readiness to welcome additions is a critical enabler of electrification and of the decarbonization of the economy.

Additions can be energy suppliers, such as renewables; energy consumers, for example, industrial plants that were not using electricity but other sources of energy (such as fossil fuels); data centers that require a substantial amount of electricity to operate; and even increasing household needs as heating and transportation are electrified.

To cope with higher levels of supply and demand, there must be additional investments in grid capacity. The additions should be processed and operationalized in a fast manner to ensure smooth and competitive electrification of the economy.

Methodological note

There is no official reporting of a metric that captures the network readiness—a critical element of the energy transition.

We expect new reporting guidelines to come into force in the near future, which will provide clear data on demand and supply capacity. When this occurs, we will be able to update this indicator of the Index.

1 Press: Energia Estrategica and elEconomista; “Check the status of your applications,” Red Eléctrica, September 30, 2024.

Detail view

Energy transition KPIs
Greenhouse gas emissions reductionRenewables in energy mixElectric vehicle salesRenewable molecules adoptionEnergy dependencyNetwork readinessHousehold electricity pricesIndustry electricity prices
Industrialization KPIs
Industrial gross value addedVehicle productionInvestment in fixed assetsR&D investmentIndustry employmentIndustry exports

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