In 2019, Spain and Italy stood at roughly the same starting point. Both countries had similar shares of renewables in their electricity mix, and both relied heavily on natural gas to set the wholesale price. In the years that followed, they made sharply different choices. Looking back now, this is not merely a policy comparison — it is one of the clearest natural experiments in European energy history.
Spain accelerated. Over the past five years, it added more than 40 gigawatts of wind and solar capacity, more than any EU country except Germany, whose electricity market is nearly twice the size. By 2024, renewables accounted for around 57% of Spain’s electricity generation. More importantly, the share of hours in which gas set the wholesale price fell from 75% in 2019 to just 19% by 2025. Spain’s electricity price has, to a significant degree, decoupled from the volatility of global gas markets. The Bank of Spain estimates that wholesale prices would have been around 40% higher today had wind and solar capacity remained at 2019 levels.
Italy took the opposite route. Its share of renewables has grown modestly, but gas has retained — and in some respects tightened — its grip on the electricity system. Italy’s foreign energy dependence stands at roughly 75%, the highest among major European economies. That structural reliance on imported gas means Italian power prices remain acutely sensitive to any disruption in supply or spike in commodity markets. In the first four months of 2025, Italy’s average wholesale electricity price reached €136 per megawatt-hour, compared to €81 in Spain — a gap of nearly 70%. This is not a temporary divergence. It is a structural one.
The consequences extend well beyond household electricity bills. Energy costs are a direct input into industrial competitiveness. Spain’s manufacturing sector has benefited visibly from cheaper power, while Italian industry continues to absorb costs that its Spanish counterparts no longer face at the same scale. Energy policy, in this sense, quietly rewrites a country’s industrial geography.
The underlying logic is not complicated. European electricity markets are priced at the margin — the most expensive generator operating at any given hour sets the price for everyone. As wind and solar flood the grid with low-cost electricity, gas-fired plants are pushed further to the margins, setting the price less often. Spain has exploited this mechanism deliberately and at scale. Italy has not, and continues to pay accordingly.
Spain is not without its own vulnerabilities. Grid investment has lagged badly behind the pace of renewable buildout — during the five years to 2024, Spain spent just 30 cents on grid infrastructure for every euro invested in renewables, against a European average of 70 cents. A major blackout in April 2025 laid bare the consequences, with balancing costs spiking sharply in the months that followed. The problem, however, is one of infrastructure rather than direction of travel. It has solutions. Italy’s predicament is more fundamental.
For the United Kingdom, this story is not a distant one. Britain possesses some of the finest offshore wind resources in the world and could, in principle, have followed a trajectory closer to Spain’s. Instead, the 2023 AR5 offshore wind auction ended with zero bids from the sector after the government refused to raise the administrative strike price cap despite surging construction costs. Given the typical three-to-four-year build timeline for offshore wind projects, the capacity that should have been secured in that round would have been coming online in 2026 and 2027 — precisely now. What was lost was not abstract future capacity. It was electricity that British households and businesses would already be using. The cost of that decision continues to be paid, quietly, on every energy bill.
