Power and Gas Grids: The Toll That Will Decide Whether Spain Electrifies on Time

Spain has set its sights on an accelerated electrification of consumption: electric vehicles, heat pumps, self-consumption, electrolysers, and increasingly, data centres that devour power. All of that depends on physical infrastructure that rarely makes headlines: the electricity and gas transmission and distribution networks. And here lies the problem that, in my view, we’ve been putting off for too long: the model we use to pay these networks was designed for a country that consumed energy differently, and we keep patching it instead of rethinking it.

A model built to contain spending, not to prepare for the future

Grid remuneration in Spain is set administratively: the CNMC recognises a return for the companies that own the infrastructure, based on the assets they operate, with annual investment caps and a regulated rate of return. The design had a legitimate goal at the outset, containing spending in a power system that was once saddled with an unsustainable tariff deficit, and on that front it worked. But a model built to rein in spending isn’t automatically the right model to spur the investment we now need. When investment caps are calculated by looking backward, with reviews that lag behind actual demand, the predictable result is a grid that stays one step behind the electrification it’s being asked to support. You don’t need a major incident to see it: delayed connections, saturated points on the grid with no room for more capacity, or renewable and industrial projects waiting in line are enough. Those warning signs have been showing up for a while.

My argument is simple: if we want electrification to be real and not just a line in a strategic plan, grid remuneration needs to stop being treated as an expense to be contained and start being treated as a lever of industrial policy. That doesn’t mean writing utilities a blank cheque, they remain regulated businesses with guaranteed returns and deserve strict scrutiny. It means designing incentives that reward getting ahead of the curve, building capacity before demand exhausts it, rather than rewarding only efficiency in spending already committed.

Who pays the toll, and who will feel it if the grid isn’t ready

Grid remuneration is passed on to consumers through the tolls and charges built into electricity and gas bills, for households and businesses alike. That’s where the underlying tension lies, and every regulator has to resolve it: raising remuneration to encourage more investment pushes up bills in the short term; keeping it contained keeps today’s bill lower but shifts the risk of bottlenecks onto tomorrow. And that tomorrow isn’t abstract for a small business that wants to electrify its fleet or install self-consumption panels and finds there’s no available capacity on its local grid, or for a self-employed worker whose livelihood depends on a reliable connection. The cost of the grid isn’t paid only in euros per kilowatt; it’s also paid in waiting time, in projects that never get off the ground, and in business opportunities left on the shelf.

That’s why I favour grid regulation that is more transparent and built around longer, more predictable planning horizons, one that gives network companies the certainty to invest ahead of need while subjecting that investment to service-quality and available-capacity indicators the regulator can audit rigorously. The alternative, reworking remuneration frameworks in a rush once saturation is already being felt, ends up costing everyone more, even if the monthly bill looks cheaper today.

At Zythos Business, we see first-hand how these seemingly distant regulatory decisions end up shaping the day-to-day of the self-employed and small businesses: in the energy costs that need to be planned for, in the viability of a self-consumption or electrification project, in the fine print of a bill worth checking before signing on to a new tariff. We work alongside our clients precisely so that these decisions, big or small, get made with clear numbers on the table.