Costs of technical curtailments reach new records in Spain

Exacerbated grid stability concerns following Spain's April 28 blackout have substantially elevated technical curtailment costs in the country's short-term electricity market, system data from grid operator REE shows.

Such costs, which were on average Eur3.5 million/day during the first quarter of this year and Eur3.4 million/day across the entire year 2024, surpassed Eur13 million April 30 alone, after which they topped Eur18.5 million May 2.

Technical curtailment costs so far in May, totaling Eur386.5 million, have been more than twice as much as those of May 2024 and nearly five times the technical costs reported in the same month of 2023.

"Since the generalized blackout on April 28, operations in the Spanish power market have yet to fully normalize, with the grid being managed cautiously. This cautious approach is evident in post-day-ahead market operations, where the Spanish TSO REE has notably increased the redispatch level of Spanish combined-cycle gas plants, or CCGTs. After the day-ahead market closure, the TSO reworks the calling order program daily to incorporate current technical restrictions within the Spanish grid, both at the nodal and national levels, through two pay-as-bid auctions," Alexandre Mace, European power analyst at S&P Global Commodity Insights, said.

This month, CCGT electricity volumes scheduled after the first round of technical nodal curtailments (PVP) have been over 2.2 TWh, yet only 13.7 GWh have been scheduled day-ahead by TSO REE.

On the flip side, nearly 5.5 TWh of solar power have entered the Spanish day-ahead market schedule, but only 4.7 TWh -- equivalent to nearly 812 GWh less -- have been effectively dispatched in real-time.

It is the highest difference ever registered between the solar volumes selected by the day-ahead market and the solar volumes effectively entering the grid.

Losses of solar volumes due to technical constraints were only 334 GWh in March 2025 and 469 GWh in May of last year, data from REE showed.

"The first auction, occurring immediately after the day-ahead market closure, focuses on nodal adequacy, adjusting the program for certain plants. This poses a significant risk for renewable producers, as their programmed generation can be reduced if their assets are located in highly congested regions where transmission capacities cannot transport the total generation from the node to demand centers, resulting in further curtailment. Indeed, in addition to price risk, which lowers production due to economic curtailment, Spanish renewable assets face an 'integration' risk through downward redispatch made by the TSO that alters generation and ultimately turns up production in uncongested areas, typically using CCGT plants," Mace also said.

The blackout investigations might last up to six months, as Spain's Association of Electricity Companies, Aelec, urged further investigations due to "important voltage oscillations" in the grid April 22 and 24.

Solar technical constraints are likely to dissipate further out, as the high temperatures of the Spanish summer will be spurring power demand for cooling. Analysts at S&P Global Commodity Insights point to domestic demand rising some 1 GW month over month to 25.4 GW in June and over 29 GW in July.

In fact, solar losses due to technical curtailments fell to less than 250 GWh in the months of July and August of last year.

On EEX, the Spanish June contract changed hands last at Eur40.31/MWh, while the OMIE day-ahead pool stood at a May average of just Eur16.93/MWh.

Maximum temperatures in Madrid are expected to surpass 34 degrees Celsius this weekend and between June 9-12.