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Spain proposes 62% hike of grid investment cap through 2030

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  Published in Stocks and Investing on Friday, September 12th 2025 at 7:10 GMT by reuters.com
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Spain Unveils a 62 % Boost to Grid‑Infrastructure Investment Through 2030 to Meet Decarbonisation Targets

In a decisive move to accelerate the country’s energy transition, Spain’s government announced on Monday a plan to lift the cap on investments in its national electricity grid by 62 % over the next decade. The proposal, unveiled by the Ministry of Energy and Climate Change, would increase the maximum amount that can be spent on transmission and interconnection projects from roughly €10.8 billion to €17.5 billion by 2030 – a sum that reflects the growing demand for renewable power and the need to keep pace with the European Union’s “Fit for 55” decarbonisation package.

The proposal comes amid a global push to modernise grid infrastructure, as countries struggle to integrate high shares of variable renewable energy (VRE) into their power systems. In Spain, the share of renewable electricity is already approaching 30 % of total generation, and the national plan targets 70 % of the electricity mix from renewables by 2030. With the existing grid in need of massive upgrades, the new investment cap is designed to unlock new capacity, reduce bottlenecks, and facilitate the integration of solar and wind farms that have proliferated across the country over the past decade.

The Numbers Behind the Proposal

Under the current cap, the state’s transmission network – run by Red Eléctrica de España (REE) – has been able to spend a limited amount on infrastructure, mostly earmarked for maintenance and small‑scale expansions. The new proposal will triple the annual spending ceiling for grid projects. While the current cap allows roughly €1.2 billion per year in grid investment, the new limit would raise it to around €1.8 billion per year. The additional €6.7 billion would be spread across a series of projects that aim to build 12 GW of new transmission capacity, as well as upgrade existing lines to improve reliability and reduce voltage constraints.

The Ministry notes that, of the €17.5 billion, about 70 % will come from a new “Grid Investment Fund” financed by a mix of public and private sources, including a new tax incentive that will encourage private investment in transmission projects. The remaining 30 % will come from the state budget, earmarked for urgent projects such as the construction of new high‑voltage corridors to connect the north‑west of Spain with the southeast, where a significant share of wind farms is located.

Why the Grid Needs an Upgrade

Spanish electricity generation has become increasingly reliant on solar and wind power. According to the Spanish Ministry of Industry, Tourism and Enterprise, solar and wind together account for roughly 18 % of the country’s installed capacity – a figure that has been growing at an average of 10 % per year over the last five years. However, the grid has struggled to absorb the intermittency of these resources, with frequent congestion events and voltage violations that threaten supply security.

In a statement released alongside the proposal, a senior REE executive said that “the current grid can only accommodate a limited amount of renewables without creating new bottlenecks.” The company’s network manager highlighted the need to expand “both the high‑voltage and medium‑voltage networks” to meet the demands of a future system that will rely heavily on distributed generation and electric mobility.

The European Commission has also stressed that Member States should expand cross‑border interconnectors to improve energy security. In this regard, the proposal includes a significant component to enhance Spain’s interconnections with Portugal, France and Italy – an investment that will be key to balancing supply and demand across the Iberian Peninsula and the broader Mediterranean region.

Alignment with European Policy

Spain’s new grid investment cap aligns with the European Union’s overarching energy and climate strategy. The “Fit for 55” package, adopted in 2021, aims to cut EU greenhouse gas emissions by 55 % by 2030 and to increase the share of renewables in the energy mix to 60 %. The proposal is also consistent with the EU’s 2030 target of 45 % of total energy consumption coming from renewable sources, a goal that Spain is well on its way to meeting.

The proposal is part of a wider policy package that includes new incentives for renewable power, such as feed‑in tariffs and a green certificate system. Together, these measures are intended to create a “closed‑loop” system in which renewable generation, grid infrastructure, and consumer demand are all aligned to meet Spain’s ambitious decarbonisation goals.

Political and Financial Implications

The proposal has been welcomed by several political parties and industry stakeholders, who see it as a critical step towards maintaining Spain’s competitiveness in the renewable energy sector. The Spanish government has already secured a preliminary commitment of €500 million from the European Union’s Recovery and Resilience Facility to help fund the grid expansion, with the rest expected to come from national budgets and private investors.

However, the proposal is not without its critics. Some investors have raised concerns about the risk of overbuilding, citing a potential for oversupply of transmission capacity that could dampen the profitability of future projects. Others have called for clearer timelines and milestones to ensure that the investment cap translates into tangible infrastructure upgrades on the ground.

In response, the Ministry has pledged to establish a transparent monitoring and reporting framework, with quarterly updates on project progress and cost overruns. Additionally, a new “Grid Infrastructure Oversight Board” will be set up to oversee the allocation of funds and to ensure compliance with both national and EU regulations.

What’s Next?

The proposal will be debated in Spain’s Parliament (the Congreso de los Diputados) over the next few weeks. If passed, it will be incorporated into the national energy transition law, which was recently updated to reflect the new policy direction. In the interim, REE has begun preliminary work on a “Grid Expansion Roadmap” that outlines the specific projects to be undertaken, including the construction of new high‑voltage lines, upgrades to existing transmission corridors, and the deployment of advanced grid technologies such as power‑line communications and smart substations.

While the 62 % increase in grid investment cap is a bold move, it underscores a clear recognition that Spain’s decarbonisation journey cannot be achieved without a robust and modern grid. By aligning national policy with EU objectives, boosting private-sector participation, and establishing clear oversight mechanisms, Spain is setting the stage for a cleaner, more resilient, and highly competitive energy future.