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Market Trends

Spain Blackout Exposes Gaps in Grid Resilience and Reserve Market Design

 A large-scale blackout across the Iberian Peninsula on 28 April has sparked fresh concerns over gaps in grid stability and reserve adequacy in Spain’s power system.

On 28 April 2025, Spain experienced one of the most extensive blackouts in European history, with power supply dropping from 27 GW to near-critical levels in a matter of seconds. The incident, which also affected Portugal and parts of France, is still under investigation by Red Eléctrica de España (REE), Spain’s transmission system operator. Preliminary reports indicate that two nearly simultaneous disconnections of power plants in southwestern Spain triggered a rapid frequency drop, leading to a cascading failure across the grid.

Although automatic protections were in place and initially activated as designed, the magnitude of the drop surpassed their capacity, causing a systemic failure that could not be contained within a single zone. The sharp decline overwhelmed the system’s ability to maintain the standard 50 Hz frequency, resulting in the automatic shutdown of power stations and the severing of interconnections with France and Morocco.

A critical factor exacerbating the situation was the insufficiency of primary reserve capacity. In Spain, primary reserve services – essential for stabilising the grid during sudden disturbances – are traditionally provided for free by conventional generators and are not explicitly remunerated. The system was designed for a grid dominated by gas and coal plants, which naturally provide inertia and frequency support, though as renewables push these units out of the merit order, their stabilising role has diminished. Yet Spain has not introduced measures to support alternatives like BESS, which can provide synthetic inertia but currently lack a full revenue stack.

Currently, Spain’s installed BESS capacity stands at a modest 60 MW, significantly lagging behind countries like GB and Italy, which have 5.6 GW and 1 GW, respectively. The absence of a remunerated market for primary reserve services, as well as delays to the implementation of the country’s Capacity Market, has weakened the BESS investment case, limiting the participation of BESS in grid stabilization efforts.

According to Pepe Zaforteza, Regional Lead PPA Transactions for Southern Europe at Pexapark: “The Spanish Government might look into refining the regulation to improve the system robustness. This could potentially lead to measures like opening primary reserve services to market competition, accelerating the implementation of a capacity market, or tightening the technical operation requirements to renewable generators.”

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