Power and Gas Grids: The Investment Spain Can No Longer Postpone

Every time we switch on an appliance or fire up the gas boiler, we take it for granted that energy simply arrives. Behind that everyday gesture lies an infrastructure of cables, substations, transformers and gas pipelines whose construction and upkeep is paid for — almost invisibly — through a fixed line item on our bills: the remuneration for transmission and distribution networks. It’s a dry, technical subject, hardly glamorous for public debate, but I’d argue that how it’s designed will largely determine whether Spain manages to electrify its economy in time, or ends up with an ageing grid unable to absorb the demand headed its way.

A Model Built to Manage the Past, Not to Build the Future

Spain’s regulatory system sets grid remuneration by combining recognition of investments already made with a rate of return meant to be reasonable while also keeping spending in check. That approach made sense during a period of overcapacity and efforts to rein in the tariff deficit, when the priority was stopping the electricity system from piling up more debt. The problem is that we’re still applying — with a few tweaks — a logic designed to slow grid growth at a historical moment when we need exactly the opposite: more capacity, more digitalisation and more flexibility to accommodate distributed renewable generation, the mass rollout of electric vehicle charging, and the electrification of industry and heating and cooling.

When the financial rate of return is perceived as insufficient or unstable, the effect is anything but abstract: distribution companies postpone investments, prioritise maintenance over expansion, and leave renewable project developers facing long waits for grid connection. I’ve spoken to enough self-employed workers and small businesses wanting to install self-consumption solar, charging points or higher power capacity to see that the bottleneck is no longer just administrative permits — it’s the physical grid itself.

The Hidden Cost of Regulatory Inertia

Here’s my central argument: delaying grid modernisation doesn’t save money — it just shifts the cost elsewhere. Every connection denied or delayed for lack of capacity is a productive investment that never happens: a self-employed worker who doesn’t electrify their fleet, a small business that never installs solar panels to cut its energy costs. The cost of regulatory indecision doesn’t show up on the electricity bill, but it shows up in lost competitiveness. And in a country hoping to attract energy-intensive industry and data centres, a weak grid is just as much a deterrent as high taxes.

The easy answer — cutting remuneration to bring bills down in the short term — is the most tempting move politically and the most short-sighted one economically. Regulation that squeezes grid operators today guarantees an inadequate grid tomorrow, and we all end up paying that cost eventually — just later, and with far less room to manoeuvre.

What Needs to Change

I’d argue for three common-sense principles. First, predictability: regulatory periods need to give grid companies enough visibility to plan multi-year investments without depending on erratic revisions. Second, remuneration tied to outcomes rather than just assets — rewarding lower losses, digitalisation and faster connections, not merely the volume of capital tied up in the network. Third, a clear distinction between electricity and gas: while the power grid needs to grow to support electrification, the gas network faces a horizon of shrinking demand and deserves a framework that manages that transition in an orderly way, without dumping sunk costs onto consumers who are gradually switching to electric.

None of these ideas comes free for consumers’ pockets in the short term. But the alternative — continuing to put off the decision — costs more, only in a way that’s harder to see. Spanish energy policy has spent years getting the rollout of renewables right while failing to build the highway they need to travel on. Fixing that isn’t an ideological question — it’s a matter of medium-term arithmetic.

At Zythos Business, we see up close how these seemingly distant regulatory decisions end up hitting the bottom line of the self-employed and small businesses directly: through energy costs, through the time it takes to electrify a facility, or through the returns on investing in self-consumption solar. That’s why, when we advise a business on its tax and investment planning, we keep the energy and regulatory context it operates in firmly in view — because understanding those rules of the game, even the most technical ones, is part of making sound business decisions.