Evolution of Electricity Prices in Spain (2023 – 2025)

The price of electricity in Spain has fluctuated significantly in recent years. Changes in pricing methods, global energy crises, and variations in supply and demand have all played a role in determining electricity costs. Below is an analysis of past trends and what to expect for 2025.

Spain, the 14th cheapest in Europe

Due to the recent political decissions in Spain and Portugal during the recent years, separating the valuation of energy costs from Gaz, the evolution of the electric in Spain has been really positive in comparison with the rest of European countries. 

As result, the 14th cheapest in Europe, and 20 % less than european cost average.

Electricity Prices by European Countries KWh 

Source: Eurostat

How is Electricity Pricing Determined in Spain?

Electricity prices in Spain are set through the wholesale market, where energy producers sell electricity and commercial providers purchase it for distribution to consumers.

Key Factors Influencing Prices:

• Supply and demand: Prices are set based on the last bid needed to meet demand.
• Renewable energy availability: When wind or solar production is low, more expensive energy sources like gas or coal are used.
• Natural gas prices: Higher gas costs increase electricity prices.
• European regulations: New rules affect how regulated tariffs are calculated.

Since 2024, the regulated tariff has been calculated based on 25% future price and 75% daily price, with plans to adjust this proportion until 2026.

Why Does the Cost of Electricity Increase?

Electricity price hikes result from multiple factors:

• Natural gas price increases: Gas is a key resource for power generation, and global events such as the war in Ukraine have raised costs.
• Higher energy demand: Extreme weather conditions increase electricity consumption, especially for heating and air conditioning.
• Lower renewable energy production: When solar and wind energy are insufficient, reliance on more expensive sources grows.
• CO2 emissions costs: Power plants must pay for emissions, increasing operational expenses.
• Taxes and distribution fees: Government-imposed charges also affect final prices.

How to Reduce Electricity Bills

Since energy prices are unpredictable, implementing smart consumption strategies can help reduce costs:

1. Use electricity during off-peak hours. If your tariff allows it, shift high-energy activities like laundry and dishwashing to nights and weekends.
2. Invest in energy-efficient appliances. Devices with an A+++ energy rating consume significantly less power.
3. Install solar panels. Generating your own electricity can lower dependence on the grid.
4. Optimize heating and cooling systems. Maintain indoor temperatures between 19-21°C in winter and 24-26°C in summer for better efficiency.
5. Reduce standby consumption. Unplug devices or use power strips with switches to eliminate wasted energy.
6. Review your electricity contract. Comparing providers and tariffs can result in lower costs.

Government Assistance for Electricity Costs in 2025

To support consumers, the Spanish government has extended several energy aid programs:

• Electricity Social Bonus

  • 50% discount for vulnerable consumers
  • 65% discount for severely vulnerable consumers (gradually decreasing over time)

• Tax deductions for energy efficiency improvements

  • Discounts in income tax (IRPF) for home renovations that improve energy efficiency.

• Incentives for electric vehicles

  • 15% deduction for the purchase of electric cars and charging points.

Conclusion

Electricity prices in Spain remain volatile due to market fluctuations. While some stabilization is expected in 2025, reliance on gas, regulatory changes, and the energy transition will continue to shape pricing.

To save on electricity costs, consumers should optimize their energy use, invest in efficiency improvements, and take advantage of government aid programs. Small changes in consumption habits can lead to significant reductions in electricity bills.