On 28 April 2025, an unprecedented collapse of the Iberian Peninsula’s electricity grid brought Spain and Portugal to a standstill. The likelihood of this ever happening was extremely low and – speculation about its causes aside – the episode has caused serious social disruption, as well as economic losses at all levels.
Spain’s electricity comes from a range of sources, including renewables (which are inconsistent by nature), fossil fuels, and nuclear power. A system operator centralises the power offers from producers, creating an aggregate supply that matches the demand requirements of the distribution companies. The electricity is then sold, either directly to consumers, or to smaller local companies.
These market clearings, as they are known, take place 24 hours in advance (the “day-ahead market”), leaving open a daily market (“spot”) for occasional fluctuations in order to prevent any system failure (“fall-out”). Producers also undertake to fulfil medium and long-term contracts, supplying the electricity that they have committed to in each period.
