Policy recommendations

Spain has established a robust and ambitious strategic framework for its energy transition, anchored in the Climate Change and Energy Transition Law and the National Energy and Climate Plan (NECP) and reinforced by recent legislation, notably Royal Decree‑Law 7/2026. These instruments provide clear objectives for decarbonisation, electrification, energy security, affordability and resilience. The central challenge is now consistent, economy‑wide implementation. Outcomes will depend on timely execution, effective co-ordination and sustained follow‑through across sectors and levels of government. Such co-ordination will be essential in order to maintain investor confidence, particularly given the scale of private capital mobilisation foreseen in the NECP; to sustain public support for the energy transition, notably where infrastructure deployment and behavioural change are required; and to preserve policy credibility at both domestic and international levels.

Key transition drivers, such as electrification, building renovation, adaptation and skills development, require co-ordinated action across ministries, regulators, autonomous communities, local authorities and private actors. This means that results are potentially vulnerable to governance bottlenecks.

To support economy-wide execution, Spain could reinforce implementation oversight of the NECP and other energy transition-related plans. This includes establishing regular, structured progress reviews focused explicitly on delivery and supported by independent assessment and predefined correction triggers. Building on existing EU and national reporting obligations, such reviews would help identify implementation gaps early, distinguish structural problems from temporary delays, and enable timely adjustment when deliveries deviate from agreed trajectories. Spain could gather inspiration for such reviews from the United Kingdom’s Climate Change Committee, a statutory, independent monitoring body that tracks delivery against climate and energy targets, regularly reports to Parliament and provides formal government responses (“comply or explain”). It could also derive lessons from the Netherlands, where independent assessments of climate and energy policy implementation by the Netherlands Environmental Assessment Agency systematically feed into government decision‑making, enabling timely policy reinforcement through additional policy packages (climate packages) whenever delivery risks emerge.

Spain should moreover consider further reinforcing structured co-ordination across governance levels and increasing the accountability of regional authorities for the powers and responsibilities that these bodies already have. This is particularly important given the central role of autonomous communities in permitting, infrastructure roll-out, building renovation and skills provision. More formalised co-ordination would reduce implementation bottlenecks, enhance accountability and ensure that national priorities are effectively translated into action across the territory. Spain could draw conceptual inspiration for this from Denmark, whose experience – albeit at a much smaller scale than Spain’s – highlights the benefits of clearly allocating delivery responsibilities to sub‑national authorities. This clarity has helped translate Denmark’s national targets into consistent territorial implementation, particularly in infrastructure‑intensive sectors such as heating and buildings.

Faster growth in electricity demand can unlock the potential of Spain’s rapid renewable electricity generation expansion, in particular by increasing renewables utilisation and reducing curtailment, increasing grid stability and lowering overall energy system costs. Electrification in the industrial sector offers a particularly large opportunity, since it can function as a flexible source of demand, able to adapt to the needs of the power system. However, accelerating electrification across the whole economy will ultimately depend on the affordability of electricity.

In order to incentivise electrification, Spain should therefore aim to reduce electricity taxation and remove non-energy related levies from electricity bills. In this context, it should consider making selected temporary measures under Royal Decree‑Law 7/2026 permanent, including the reduction of the 7% tax on electricity generation (IVPEE) – as is already planned by 2028 (and partially, or 50%, by 2027) by the Spanish government – and the special 5.113% tax on electricity (IEE). Rebalancing the tax burden across energy carriers would also strengthen incentives to switch from fossil fuels to electricity by better reflecting decarbonisation priorities and underlying system costs. Such reforms would need to be accompanied by thorough assessments of their potential impacts on affordability, industrial competitiveness and public finances, and may require gradual phasing‑in to ensure predictability, limit negative distributional impacts, and maintain public and political support. Several peer countries have already introduced similar reforms. For example, Finland gradually reduced the electricity tax for groups of industrial users to the EU minimum rate of EUR 0.5/MWh as part of its energy tax reform, while increasing taxation on fossil fuels.

Spain should also continue to prioritise the permitting of grid reinforcement, which enables the electrification of industry and the connection of emerging loads. However, as capacity availability is often not the issue (35% of transmission grid nodes showed firm access capacity availability in October 2026), it is particularly important to accelerate the implementation of authorised projects and to improve access and connection procedures. This should be complemented by leveraging and continuing to adjust as needed the capacity maps introduced in 2026, ensuring that they are transparent, regularly updated and easily usable for guiding investment decisions. Ongoing reforms to introduce flexible access arrangements represent a promising development and could be scaled up as well. In parallel, Spain could further leverage the use of allocation mechanisms, such as auctions and the prioritisation criteria established in Royal Decree‑Law 7/2026, in order to ensure that scarce grid capacity is directed towards projects that deliver the highest social value, where scarcity does exist.

Transition in the transport sector remains limited and risks of adoption becoming concentrated in larger cities and among higher‑income households exist. Accelerating progress will require reinforcing Spain’s holistic approach to sustainable mobility, combining demand reduction, stronger price signals, co-ordinated infrastructure deployment and targeted measures for lagging segments.

Further building on improvements by expanding investments in the accessibility of public transport and incentivising its use is both effective and efficient. Spain should reinforce efforts to support a modal shift, in particular from private car use and domestic aviation to rail and other collective transport modes. Continued investment in high‑quality rail services - supported by competitive pricing and scheduling, including on short‑ and medium‑distance routes - can reduce oil demand, ease pressure on road infrastructure and enhance connectivity. In parallel with reinforcing rail services, Spain could advance its legislative initiative to restrict short domestic flights where competitive rail alternatives exist. This could take inspiration from France’s ban on domestic air routes with direct rail alternatives of less than 2.5 hours.

According to Spain’s draft National Action Framework for electric vehicle charging and alternative fuels, the country has made solid progress in electromobility, rapidly expanding publicly accessible charging stations and EV uptake. Ensuring the effectiveness of EV support schemes remains however important. While Spain has introduced significant financial incentives, their impact will depend on clear communication, accessibility and timely delivery. Strengthening price signals would further reinforce uptake. This could include increasing the tax differential between ICE and EVs, particularly for corporate fleets. In developing its national charging master plan, Spain could learn from existing examples, such as the Dutch National Charging Infrastructure Agenda. The plan should aim to improve alignment across government levels and stakeholders and provide a clear framework for corridor charging, urban and rural deployment, grid connection planning and interoperability, while helping to address remaining coverage and reliability gaps.

Greater focus is needed on segments where electrification is lagging, notably heavy‑duty transport and workplace charging. Targeted measures for buses, freight vehicles and commercial fleets, including dedicated infrastructure and tailored support, will be essential for decarbonising road transport beyond passenger cars. Expanding workplace charging can further broaden access – particularly for drivers without home charging options – while supporting charging patterns that are better aligned with periods of high renewable generation.

Additional innovative schemes and initiatives could further broaden transport decarbonisation options for specific types of users. Spain can build on the measures included in its draft Social Climate Plan to support the uptake of electric vehicles among vulnerable groups, including targeted support for the acquisition of light-duty EVs by self-employed workers and microenterprises, as well as the electrification and renewal of commercial and heavy-duty fleets.

As buildings undergo renovations, policy should more strongly favour the deployment of heat pumps or other low‑emissions solutions. This would help disincentivise investment in fossil‑fuel‑based systems that risk long‑term lock‑in. Some of these measures have already been included in Royal Decree‑Law 7/2026. Clear, forward‑looking signals improve investment certainty for households, installers and manufacturers. They also facilitate decarbonisation in multi-household buildings, prevent fossil‑fuel lock‑in and help align construction decisions with Spain’s emissions‑free building stock objectives for 2050. Existing funding instruments already provide a basis for such an approach but could be leveraged further to support electrification at scale. Aside from rebalancing taxation, as discussed in Recommendation 2, the government could consider tightening bans on the installation of oil and gas boilers in new and renovated buildings, while balancing affordability concerns and providing targeted support where needed. Ireland's ongoing policy development in this area could serve as a valuable reference.

Meanwhile, ensuring that the benefits of building renovations are socially inclusive should remain a priority. Spain should continue support for vulnerable households, notably through the implementation of the forthcoming Social Climate Plan and access to the EU Social Climate Fund. Targeted renovation programmes for low-income and energy-vulnerable households, combined with simplified administrative procedures and tailored support, can deliver durable reductions in both energy demand and energy bills while improving comfort. These measures would complement existing consumer protection mechanisms and reduce households' exposure to energy price volatility over the long term. Further strengthening the role of one-stop shops would help inform citizens about available options, facilitate access to financial incentives and support them throughout the administrative and practical aspects of the renovation process.

Finally, Spain could strengthen its national energy saving system in order to better support long‑term efficiency gains in residential renovation. Although Energy Saving Certificates (CAE) have become an important policy tool, they tend to favour measures with immediate impacts, making them more suited to industry than housing. Households face persistent barriers such as high upfront costs and long payback periods, particularly for major renovations. Apart from the CAE system, targeted support for deep renovations, alongside stronger implementation capacities for the National Energy Efficiency Fund (NEEF), could accelerate comprehensive residential projects, especially in multi‑apartment buildings. These measures should be accompanied by robust monitoring and evaluation. Spain should also carefully assess the impact of the crisis‑related correction applied to the CAE system under Royal Decree-Law 7/2026 and continue to accelerate the replacement of fossil fuel-fired boilers with heat pumps using well-suited and targeted support instruments.

The energy transition is also a transition for workers, employers and institutions. While it is generating employment opportunities, skills shortages and administrative capacity constraints may impede the timely and cost‑effective delivery of Spain’s energy and climate objectives. Spain has already taken important steps to address these challenges, but the pace, scale and cross‑sectoral nature of the energy transition now require a more integrated, forward‑looking and data‑driven approach to private and public workforce planning.

Spain should consider strengthening the monitoring of relevant skills in order to systematically inform policy design and implementation related to the energy transition. This should be grounded in up‑to‑date labour‑market intelligence, the mapping of current and projected needs across sectors and regions, and the explicit linking of workforce planning to the targets and timelines set out in the NECP, National Building Renovation Plan, Social Climate Plan and electricity system planning frameworks. Even stronger co-ordination between energy, labour, education and regional authorities would help ensure that skills policies respond dynamically to evolving needs and reduce mismatches between training provision and project pipelines.

In parallel, Spain should continue to expand and adapt upskilling and reskilling programmes, with particular focus on sectors where delivery risks are increasing, notably buildings, transport, electrification and energy efficiency. Accelerating renovation and electrification will require a rapid scale‑up of skilled installers, electricians, energy auditors, construction workers and site managers, while grid expansion and digitalisation will demand more specialised technical profiles. Spain’s experience with the coal phase‑out and just transition policies provides a strong foundation for this effort and highlights the importance of proactive workforce planning, territorial targeting and sustained stakeholder engagement. Extending these lessons beyond coal regions to other sectors affected by decarbonisation will help anticipate labour market disruptions, support worker mobility and reskilling, and promote a fair and inclusive transition.

Finally, the government should address human‑resource constraints within the public sector as these risk becoming a limiting factor for the energy transition. The government plays a central role in administering and enabling the transition, notably through permitting, environmental assessments, grid‑connection approvals and regulatory oversight. This role is set to expand due to legislative changes to permitting and grid connection requests, which require a more detailed project-by-project assessment and tighter follow-up on development trajectories. Ensuring adequate public‑sector staffing, alongside targeted training for permitting and regulatory authorities, would help reduce bottlenecks, improve predictability for investors and project developers, and support timely delivery of Spain’s energy and climate objectives.

Electrification and the structural shift away from fossil fuels, including natural gas, are two important drivers of Spain’s energy transition. Spain’s NECP projects electricity demand to increase significantly in the coming years, reaching around 35% of total final energy consumption by 2030. As electrification expands across buildings, transport and industry, and efficiency improvements reduce overall energy use, gas demand is expected to decline. These shifts are not independent developments, but rather two sides of the same transformation. The growing importance of low‑emissions gases also plays an important role, with hydrogen and other renewable gases requiring co-ordinated decisions on network infrastructure, connection points, storage and end‑use applications.

At present, these interlinked dynamics are not sufficiently reflected in institutional arrangements. While strategic tools such as the NECP provide an integrated vision, this is not systematically translated into joint infrastructure planning, operational decisions or investment frameworks. Electricity and gas planning remain largely separate processes, led by different operators and governed through distinct regulatory frameworks. As a result, system operators and regulators risk making decisions based on only partially aligned assumptions. This can lead to inefficient investment, stranded assets and security of supply risks.

Spain should move towards a more co-ordinated approach to infrastructure planning that actively brings together the regulator, system operators and key stakeholders across electricity, gas, hydrogen and other renewable gases. As the Spanish government is creating the structure to advance integrated planning, it should ensure that this approach is clearly reflected in regulations that can drive effective progress across energy sectors. The government should consider establishing a formalised framework for joint planning and co-ordination between system operators (REE and Enagás), built on shared, long‑term scenarios and structured co-ordination to align network development, flexibility needs and investment decisions across electricity, gas and emerging energy carriers. It will be particularly important to clarify the long‑term operational, financial and decommissioning responsibilities of system operators as natural gas demand declines.

Clear guidance will ensure that gas infrastructure adapts to evolving system needs, with transparent cost allocation and early definition of pathways for repurposing or retiring assets. Overall, a more integrated and co-ordinated planning approach would improve predictability, reduce transition risks and support a cost‑effective evolution of the energy system, ensuring energy security in both the long and short term.

Nuclear energy is a low-emissions electricity source that provides firm and stable capacity and supports security of supply by reducing reliance on natural gas imports. While not typically suitable for delivery of dynamic voltage control, nuclear energy supports system stability as a source of synchronous generation, contributing to the secure and reliable functioning of the electricity grid.

In 2025, the Spanish Congress approved a motion for the government to reconsider the nuclear phase-out. Around the same time, the operator of the Almaraz nuclear power plant formally requested a three-year operational extension to 2030. In August 2026, the government approved this extension citing international energy-market uncertainty and the need to mitigate consumer exposure to price volatility. Spain should build on this precedent and further develop a transparent assessment framework to provide the basis for case‑by‑case approval decisions. Such decisions should be grounded in criteria for safety (ensured by the regulatory body), energy-security adequacy, and costs and benefits for both consumers and the power system. Taxes and levies associated with nuclear energy should thereby ensure that the economic framework recognises both the contribution of nuclear power to the energy system and the costs associated with externalities, such as waste management and decommissioning costs.

Finally, the government should establish a long‑term workforce planning outlook reflecting its decisions on operation extensions as well as eventual phase-outs of nuclear plants. This would support skills retention and knowledge management across the nuclear supply chain and help ensure that nuclear‑related skills can be effectively redeployed to other parts of the energy system and the wider economy.

By strengthening the role of low-cost domestic generation, the rapid expansion of solar PV has created important benefits for Spain’s electricity security, affordability and decarbonisation. However, it has also resulted in a structurally imbalanced renewables portfolio that is increasingly exposed to the declining capture prices that characterise solar-dominated systems. If not addressed, these trends could weaken project economics, slow capacity additions beyond the near term, and put additional pressure on Spain’s target of reaching 81% renewable electricity generation by 2030.

Spain needs a policy shift towards a more diversified and system-oriented framework. Greater priority should be given to wind, hybrid and storage technologies, alongside measures to increase electrification of demand. This should be reflected in upcoming grid capacity tenders, future auction design and broader market arrangements. Well-designed support mechanisms could help steer investment towards projects that deliver the most benefits to the system. In this context, and considering planned increases in demand, Spain could introduce a dedicated competitive auction to award contracts for difference (CfDs) specifically for hybrid projects that combine wind, solar and storage. This would improve both project bankability and system value.

Measures adopted in 2025 and 2026 to accelerate permitting, support repowering, promote flexibility and remove barriers to co-located renewable generation and storage are moves in the right direction. The priority now is to ensure that these reforms translate into faster project delivery, clearer grid-access procedures and stronger co-ordination across permitting authorities. This will be particularly important for wind, storage and hybrid projects, which often face longer development timelines, more complex permitting requirements and greater social acceptance challenges than solar PV.

Spain should continue implementing all of the ambitious measures contained in Royal Decree-Law 7/2026. This includes the designation and active roll-out of renewable acceleration areas, the digital permitting platform to improve co-ordination across authorities, streamlined judicial and administrative timelines, and the promotion of concrete measures to facilitate wind repowering and hybrid projects, including the hybridisation of projects with battery storage. These efforts should be underpinned by full implementation of the EU Renewable Energy Directive III, including the principle that renewable energy projects can be considered of overriding public interest. At the same time, stronger local value-sharing and community-ownership mechanisms would help reinforce public acceptance of, and secure the social licence needed for, the next phase of investment in renewables and flexibility.

Spain should continue to incentivise system‑friendly deployment of storage, including grid‑scale batteries and co‑located and hybrid projects with renewables, in order to reduce congestion, increase the system value of renewable generation and enhance electricity security. This requires the full and effective implementation of recent policy measures, including the flexibility framework and network access reforms introduced under Royal Decree‑Law 7/2026.

Spain could draw on international experience from other countries facing similar system flexibility needs. One example is Australia, where battery energy storage systems – especially those with grid-forming capacities – have expanded rapidly amid targeted government incentives and system-service procurement. Spain should also ensure that storage resources are fully recognised and remunerated through its capacity market, as envisioned under the government’s initiative. This would reflect their contribution to adequacy, system reliability and peak capacity, and provide long-term investment signals.

Spain could also build on its strong self-consumption framework by taking inspiration from Australia’s Cheaper Home Batteries Programme. Such an approach would be consistent with the country’s ongoing efforts to modernise its approach, including recent regulatory proposals aimed at facilitating the integration of distributed battery storage. A clear, nationwide and easily accessible support scheme for residential batteries that offers predictable, upfront incentives would help mobilise household-level flexibility and complement large-scale storage investments. This would strengthen system resilience and improve peak demand management while increasing consumer participation in the energy transition.

In order to unlock demand‑side response across industry, buildings and transport, Spain should improve network tariff design by ensuring that grid charges better reflect system conditions. Further, it should improve dynamic pricing mechanisms, strengthen the role of independent aggregators and adjust regulatory frameworks to enable participation across sectors while lowering administrative barriers. Other countries with high shares of VRE in their electricity mix have taken strides in this direction. For example, Norway allows retail tariffs to reflect hourly market outcomes, unlocking the flexibility potential of demand response.

Interconnectors can also play a significant role in supporting flexible power system operations, in addition to being sources of resilience. Spain should continue efforts to strengthen existing interconnections and develop new projects where there is a business case, deepening regional integration to support balancing, security of supply and cost-effective decarbonisation. The focus should be on the most mature and near-term viable further interconnections beyond those currently under construction. Maturity and deliverability should be the decisive criteria.

Spain should continue to strengthen governance, oversight and enforcement across all power system actors, including transmission and distribution network operators, generators and market participants. This should include the consistent implementation and enforcement of network codes, a strengthened role for the system operator in system stability, and enhanced co-ordination mechanisms during normal operations as well as emergency conditions. Regulatory authorities should further increase their in-house technical expertise in order to effectively oversee evolving system needs and technologies and grid use, while enabling cost-effective investments.

Tightening voltage regulation and minimum technical requirements for grid connections will be essential for ensuring that resources contribute appropriately to voltage and frequency control, particularly in the case of converter-based generation and storage. This includes updating grid codes to reflect system conditions under high renewable penetration rates and in view of the future integration of large loads. It will also be important to ensure compliance across both existing and new assets. Spain’s ongoing regulatory reforms aimed at adapting technical requirements to the needs of an increasingly decarbonised and renewables-based power system have already made important steps in this direction.

Finally, the government should continue to monitor network planning implementation and deployment of targeted investment in grid stability technologies, such as synchronous condensers and advanced power electronics, where system studies identify local or regional stability constraints. A good example of this is the modification of current planning that is being carried out to accelerate the introduction of these types of devices. Strategic deployment of these assets can help maintain inertia, fault current and system strength as conventional synchronous generation is retired. At the same time, investments for resilience and stability measures should go hand in hand with rigorous cost benefit analysis to ensure that investments are proportionate, efficient and targeted to identified risks. Transparent evaluation frameworks can help manage impacts on electricity consumers and industry while safeguarding system reliability and public confidence.