Spain’s grid in "safe mode": Lessons from the blackout

April's huge blackout across the Iberian peninsula, and parts of France, triggered a storm of debate In Spain and more widely across Europe. Despite the publication of several reports, questions remain over the cause of the outage, what lessons the country’s power system has learned from it and how to strengthen grid resilience,

In this episode, Richard Sverrisson speaks to local experts to unravel the findings of a recent report into the outage, the reaction from grid operators, and how the industry is adapting in the aftermath. The discussion explores how Spain’s TSO has shifted into a ‘safe mode’, the renewed reliance on gas generation, and why distributed assets and batteries could hold the key to grid stability in the years ahead.

Host: Richard Sverrisson - Editor-in-Chief, Montel News
Contributor: Pablo Bronte - Spain Editor, Montel News

Guests:
Christina Rentell - Research Lead, Aurora Energy Research
Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie

Editor: Oscar Birk Hellenes
Producer: Sarah Knowles

Transcript

Richard Sverrisson - Editor-in-Chief, Montel News: 0:05

Hello listeners and welcome to Plugged In - the Energy News Podcast from Montel where we bring the latest news, issues and changes happening in the energy sector. We are six months on from the blackouts that brought parts of Spain, Portugal, and even France to a standstill. On the 3rd of October European TSO Body ENTSO-E published its much anticipated review of the system conditions around the time of the incident. Whilst the main conclusions drawn from the 264 page document was undoubtedly the overvoltage that triggered a cascade of generation losses. There are still many questions left unanswered crucially. What key information was missing from the report? Will we ever conclusively be able to identify the parties responsible? And how has the blackout become a much bigger political and problematic issue for Spain's energy markets? In this episode, I'm gonna be speaking to experts about the state of Iberia's energy market since April and what the political and market repercussions of the blackout have been. But first I'm joined by a Spain editor, Pablo Bronte. Pablo, a warm welcome back on the pod. Could you just take us back to that momentous day, the 28th of April what happened and what kind of investigations have been ongoing since then?

Pablo Bronte - Spain Editor, Montel News: 1:26

Well, we are used to once in a lifetime events in the last few years, right? The blackout was one of those. Certainly it's meant a massive disruption of daily life for 9, 12, 16 hours depending on the area of the country. Card payments, trains, telephone communications, even internet connection. Everything was disrupted. So after that, we've seen several investigations from the government, from power grid operator from that's Red Eléctrica, from Spanish utilities to. They all pointed to the same route course. Everything began with voltage issues that caused generation units to trip. This is also something that the last report from ENTSO-E highlighted, but the new reports from the European Body of TSOs, as you mentioned didn't really explain the reason for the first events triggering the blackout, or more importantly, who's to blame.

Richard Sverrisson - Editor-in-Chief, Montel News: 2:37

Perfect Pablo. And I think, it seems to me that renewables have taken a lot of the blame in this kind of blame game of the actual root cause of the blackout. But has it been politicized, do you think and how it has affected public opinion of green energy, wind, and solar in particular?

Pablo Bronte - Spain Editor, Montel News: 2:54

So the energy debate in Spain has been polarized for a while. Even more polarized after the blackout. Some say there was too much green generation. Others say renewables were not correctly managed and safeguards didn't act, but it wasn't really renewables fault. I guess that both sides are now cherrypicking data about the blackout just to defend their position. You can also see that there is some confrontation in the finger pointing between Red Eléctrica and Spanish utilities. After the blackout, it's easy to hear people debating nuclear power and green growth often with a very little scientific basis. So I guess the debate around the blackout is like taking a sports convertible off-road. And the car eventually breaks down. You could say it was the car's fault, the road's fault. You can also say the driver is to blame for choosing that car. Or maybe a four wheel drive wasn't really an option. So I don't even know how to change the tire. It's it's probably better if you ask the mechanics.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:10

Fantastic, Pablo, thank you very much. A a great analogy there.

Pablo Bronte - Spain Editor, Montel News: 4:14

Thank you, Richard.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:15

What impact has the political haze surrounding the blackout had on investment into Spain's energy market over the last six months? I'm very pleased to be joined by Christina Rentell, research leader, Aurora Energy Research. A warm welcome Christina.

Christina Rentell - Research Lead, Aurora Energy Research: 4:30

Hi Richard. Thank you.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:32

And Daniel Garasa Sagardoy is energy engineer and Europe Solar analyst at Wood Mackenzie, also warm welcome to you, Daniel.

Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie: 4:39

Thank you Richard.

Richard Sverrisson - Editor-in-Chief, Montel News: 4:40

I'd like to start by just asking asking you Daniel, are we any the wiser what happened on the 28th of April?

Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie: 4:48

We are getting close to it. Many things have been rejected, ENTSO-E polish part of it. I have read it. It doesn't provide like the root causes, but it provides you like some clues of what happened and what didn't happen.

Richard Sverrisson - Editor-in-Chief, Montel News: 5:05

Okay, fair enough. And, and Christina what's your view here? I mean, if I was to blame and I knew I was to blame, I'd probably keep quiet, wouldn't I? Because I could open myself for a lot of legal trouble.

Christina Rentell - Research Lead, Aurora Energy Research: 5:15

Yeah, I think they've got around that by the calling this the factual reports that they've very much stuck to the facts of what happened and what they know. And there will be another report in two months time, which will come out with more root cause analysis et cetera. So it maybe wasn't the silver bullet that we were maybe hoping for in the sector. A few takeaways that I've gone from this is I think we need to pay more attention to distributed assets. So behind the meter, the TSO has very limited visibility on those and they're shouting about that. And I think maybe that's played more of a role than perhaps we first thought unleashing kind of the events that happened. And we're already seeing actually just on Thursday, we saw a proposal going through for even more emergency measures being requested from the TSO. So I think we're definitely seeing some reaction, even if we haven't got a complete explanation yet.

Richard Sverrisson - Editor-in-Chief, Montel News: 6:06

I think, I'll return to the sort of, if you call it a blame game as a bit later. But Daniel, do you think the blackout has become weaponized. Has it become a stick with which to beat the sort of renewables? Solar and wind sectors?

Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie: 6:20

I think a little bit, yes. But because here in the sector, every lobby. It's always trying to get what it wants. And those who hate renewables will hate renewables no matter what happens. And those who hate fossil fuels or other technologies, or nuclear or whatever, they will still hate without any other reason. Like what I saw is after the blackout and some weeks later, there were a lot of analysis that were just about true political. And in the end, in my view, it's like, this was a technical issue about not using your tools properly. You have some kind of tools. You have a hammer, you have a screwdriver. And you have to use them in a properly way. But it's not the fault of the hammer if you use it wrong.

Richard Sverrisson - Editor-in-Chief, Montel News: 7:10

Yeah. Absolutely Daniel, what's your view here Christina? Do you think the whole debate, the discussion in Spain has become very politicized or polarized even?

Christina Rentell - Research Lead, Aurora Energy Research: 7:17

Yeah I think I actually agree with Daniel, I think it really depends on which side of this you come down on, right? And then who you talk to. So I think it's always been fairly politicized. If you think about the renewables, the nuclear, maybe not so much gas in Spain but definitely renewables and nuclear has always been a hot topic. I think what has happened is that. Let's just say like the everyday person is now getting involved. My parents were asking me what happened. My friends like people who are not in the sector, and now I'm much more interested in this. Those are the people who definitely look for someone to blame, let's say, but who, whose fault was it? I feel like when you're looking at it from a little bit inside, from a more technical perspective, you tend to look at it a little bit more holistically, right? You see these chain of events, very complex things. Suddenly everyone's brushing up on their physics that they did one class on at uni. So I think what has happened is that this really pushed the electrical sector to the forefront for the everyday person. And maybe that is where we get this feeling of it being a bit more politicized.

Richard Sverrisson - Editor-in-Chief, Montel News: 8:14

You, you said Christina you referenced the TSO that put a message to the market just very recently just before really when we went to air. But can you tell us a little bit about how power systems in Spain have changed since April in response to the blackout, if at all.

Christina Rentell - Research Lead, Aurora Energy Research: 8:29

Yeah, happy to. So I think yeah, rather than maybe changed in any additional markets, it's the changing in the way that the TSO is thinking about operating the current ones. Right. So we're seeing quite a much more proactive approach. So this kind of safe way of operating the system, which basically means on the kind of technical restriction side, so what we would call the curtailment, looking at this much more on a contingency basis where you say, okay, what happens if actually one of the elements in the network fails, being a little bit more proactive on that sense. And we're seeing just overall much more volumes in, in those markets. And that's consistent with actually what they've published just recently as well. They really want to try and shift a lot of the management of the grid of those services from real time to more on the day ahead, to try and be a little bit more proactive. So that's what we're seeing with a huge focus on voltage control as well I would say.

Richard Sverrisson - Editor-in-Chief, Montel News: 9:22

Absolutely, because, I think some said maybe the TSO could have been at fault for not being cautious enough. Do you think it's gone from being not cautious enough to being over-cautious? Daniel, what do you think?

Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie: 9:35

Probably because one of the things regarding solar and also wind is that these are intermittency power generation assets. What does it mean that they can switch from full power to almost no power in terms of seconds. How is that? Power, solar power assets they generate in cloudy days, and that's something many people don't know. But when there's a cloudy day, the generation safe, the curve, it's not a curb. It's more like a horizontal curb. And when there is sunny day and peak cloud happens to be around your power plant. You can have a spike like the generation drops a lot, and then it can increase a lot through seconds, minutes. We can say minutes. What happens when you have a huge power plant and something that you didn't count it for like a cloud happens to be around there. You can lose like 20, 30, 40% of your generation in seconds in minutes. What happens when all your generation, most of your solar generation is concentrated in the west of your country, that when something happens over there, then unexpected. You can have a lot of variation over there. This doesn't all also only applies to solar. Also applies to wind. It's the same concept. You can have some wind blowing and then stop and, but wind has some capabilities to manage that. Also, the solar, the point is this happens not only in the big EDT scale plants, but also in the distributed generation plants and the TSO does not have a lot of view over there. That's a problem. They are looking for what to solve, and in the end I feel that the way the TSO has been operating since the blackout is like, Hey, I want to use the safe mode. I'm gonna use way more gas. We have been burning like five TWh more than in 2024. And of course we have increased the solar generation. But not at the rate of we have increased the power, the installation in Spain. So this year we have, we are going to install around five uWatts of UDT scale more. So we are going to reach about, I have it here, 38 uWatts ofUDT scale. Plus around 13 uWatts of of distributed solar. You need to control this properly.

Richard Sverrisson - Editor-in-Chief, Montel News: 12:08

And I what you're saying for those listeners who you aren't unaware what the DSO is the distributed system operator, which, which deals with, it, especially with wind and solar plants lower, slightly smaller scales, if we could say. And that's and I think that's what, that's very interesting what you're saying now.'cause that's often, if you don't have visibility, what's happening there and you're talking huge amounts of volume, huge amount of capacity really, that you don't know what's going on, on that ground level. So it's not just the TSO that that's needs to react and react quickly here, or it's even at fault. I think that's clear. It's interesting you say that they're going very much in safety mode and burning more gas just to be absolutely on the safe side. That's maybe a clear reaction to what happened. Christina, if I can ask you, you mentioned as well voltage one key conclusion was that the one of the root causes of the incident was overvoltage. Could you explain what this is and how it has changed since April?

Christina Rentell - Research Lead, Aurora Energy Research: 13:02

Yeah, so maybe I'll try and do it as simply as possible. So at the moment the kind of voltage how it was managed previously was through this technical restrictions market. It's mostly provided by these services are mostly provided by gas, which is why at the moment this safe mode is effectively asking gas to, to generate more. You have this really helps. I think what happened was when the plants started tripping. Some of those plants were actually providing what was called reactive power, which was helping the over volted situation. So as soon as they trip, this just all goes kind of way worse. So it's just a compounding effect, and we just see that this is when the tripping of all of the plants came. So I think government, although has been on the table for a long time about separating out this market from the technical restrictions, having actual incentives for plants to provide voltage control services and or inertia. I won't go into too much detail on the technical of maybe Daniel can, could even speak more to that. But providing these services that basically give stability to the grid in a specific, incentivized way in the specific areas that need it. So as Daniel was saying, you have a lot of solar in the south, you have your gases actually in the north or kind of closer to, you know, more on the Catalonian coast. So you have, your large thermal plants much further away from the renewables and it really starts to become localized. When you have these issues and this is what we're really seeing. It's been going on for a while, but I do think there's been an acceleration and it's been pushed to the fore of we really need to get these, services set up in, in the right way that incentivize those plants to actually participate in those services and provide those services. And of course, batteries are perfect for these services and we barely have any installed battery capacity in Spain.

Richard Sverrisson - Editor-in-Chief, Montel News: 14:40

So that could be part of the solution there.

Christina Rentell - Research Lead, Aurora Energy Research: 14:42

Absolutely.

Richard Sverrisson - Editor-in-Chief, Montel News: 14:43

Do you think Daniel, then this is part of the problem in Spain that you have these very, these concentrations of different generation capacity and technologies in different parts of the country and it's hard for them to react to each other?

Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie: 14:56

Yeah, that's a problem, but how can you solve that? Because in the end, if you are a solar owner, what you want is to produce in the cheapest location, and that's going to the sunniest places in Spain of course. So what has happened that we had record year installations 2022 ,2023 was around 90 watts installed in Spain. Last year was regular installations, and this year we are also going to have around five-six gigawatts, round of solar PV installed in Spain. It's all located in the south, not, but it's mostly located in this Estramadura and Sevilla, Ciudad Real, this southwest areas. It can be a problem to manage properly because any kind of, not only in terms of operation, in terms of revenues, like we have one big problem in the solar sector in Spain called cannibalization. It means that sunny days we have really. We could power Spain just with the solar capacity that we have, for instance, in April or in September because there is low demand and we have enough capacity to power the country with that. The problem is that you want owners don't get revenues during sunny hours. And some substations in these areas they have cool contains means that you could produce, but the TCO says, Hey, this is highly saturated. You can't produce more. And this is another problem apart from the blackout. So there are some issues in the solar system currently in Spain, and I feel that the blackout was just another issue in what in this sector currently.

Richard Sverrisson - Editor-in-Chief, Montel News: 16:47

And I think to be fair, Daniel, these, these are problems experienced all over Europe as well. Certainly we have the same, in, in northern, in Sweden, when there's a glut of wind, that this impacts brings, negative or even very low prices. I call it the challenge of the energy transition, the three C´s, isn't it? It's congestion, curtailment, and cannibalization. But absolutely key issues that need to be resolved if we're gonna succeed in the path to net zero. But Christina, I mean, you mentioned the safe mode the TSOs operate. How long will the TSO be operating in this safe mode? And is this a question that the industry in Spain needs answers to?

Christina Rentell - Research Lead, Aurora Energy Research: 17:25

Maybe that's about the last one, because I think the answer is definitely yes. I think it's a question that we get a lot. It's very difficult to actually predict how far, I do think that the announced measures will help. Because it will give more clarity on exactly what they're looking, what issues they've identified and what they're actually looking to solve. Which again, is moving this. I've only had a quick look, but being more proactive, shifting from real time. Reactive to the day ahead phase, and that will help generators have a little bit more clarity. Does it then stop impacting them? Not necessarily. And I think obviously it has an impact on the system cost. At the end of the day, the consumer's paying all of the any time that a gas is activated in one of these ancillary services or technical restrictions, that cost feeds right through to the consumer, so it has been stated that these measures need to be. They're extraordinary and temporal in nature. And I think that's right. So it's still depending on how long that actual temporary nature will be. But I do think until we're able to have services set up for voltage control for potentially inertia. More batteries in the system, it's maybe it'll be a slightly less safe mode. But I do think that the TSO will consider, will continue operating in a very conservative manner. At least until the real root causes have, and then there's already been a lot of, and one of the issues that I've seen. It's just the data and the exchanging of data, the communication the what A lot of the measures that have come out since you need to give me information not every minute, but every 30 seconds or, for example, or much more in detailed information much more frequently so that I can actually understand what's going on to actually make use of the hammer. To go back to the. The Daniels phrase.

Richard Sverrisson - Editor-in-Chief, Montel News: 18:59

Yeah, absolutely. That makes a lot of sense. But do you think, obviously interconnection would also help, but they take a long time to construct and obviously are very costly. In the meantime you mentioned batteries. What's the outlook for batteries in Spain? Are you seeing, obviously, the low prices and the the curtailment and the glut of supply that Daniel mentioned should incentivize more batteries, should it not? Are we seeing that in Spain?

Christina Rentell - Research Lead, Aurora Energy Research: 19:24

Yes. So I would say this is also a kind of a little bit of a complex answer because the easy one is yes, we've got a huge pipeline gigawatts of batteries in, in the queue with with grid connection, grid connection to eject. Or on the generation side, what is causing a large delay is actually on the demand side. So you need this connection for demand. So to charge from the grid, which is obviously fundamental for the battery business case. And a lot of developers are waiting on that, and that is causing quite a delay. And this is true for demand, industrial demand hydrogen data centers. This is true for all demand. We're in a place where there's a lot of not to repeat myself, but the demand for the demand injection points, let's say. And this is really causing a lot of issues. And I think going back to how you can solve some of these issues, the technical aspects, if you think about the curtailment, for example, incentivizing demand, where you have that generation and especially things like hydrogen data centers that don't necessarily need to be in a specific place like the solar wants to be in the good solar region. If you can incentivize in a certain way either by tariffs as they do so in France for some battery assets, you can really have a you can really focus in on where are those areas that are having issues and where do I actually want that demand and how can that help me? And I think that's one of the things that, we're lacking in Spain and that could definitely come out of this, and that would also help the battery business case as well.

Richard Sverrisson - Editor-in-Chief, Montel News: 20:48

Daniel, what's the current investment climate like for solar in Spain? Have investors, got a bit of a kind of been a bit shocked by this. Are they being very holding back maybe from the country? And also in terms of, in terms of what Christina's saying in terms of batteries and also data centers, is that an area that's increasing in investor interest in Spain?

Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie: 21:09

So in the short term, I will say that we are still going to see a lot of installations less than 2023, 2024, but at least more than 40 Watts this year on the following one. But the investment claim for the medium term is bad. There are bad prospects to be honest, and has nothing to like, we already account for that before the blackout. It's not because of the blackout, it's because of the market dynamics. Currently we expect for the next three years to cap solar capital prices. So the revenue that you get for generating during solar hours. Merchant price at solar hours is gonna be below 30 euros, and that's below LCOE is the costs that you have. So it's a PPA for the generator for the owner. I need to sell above that cost to have revenue, to have profit, sorry to have profit. So if you go merchant, you won't have profit the next years. I'm looking forward to sign a PPA. Okay. No, off takers don't want to sign PPAs in Spain. Why? Because they could just get merchant prices. They're pretty low at sunny hours. So standalone PV, there's prospects are not good, are not great. What we see is that in 2028, 2029, there will be an increase in capital prices. Why is that? Another topic in Spain, nuclear phaseout calendar. So every time there is a nuclear power plant that goes off, that switch off, prices will go up. That will be not great, but will be, it will enhance a little bit solar installations of course. But the prospects for standalone PV and I meaning standalone PV are not good. What are the store owners, what are they doing? Those who are ready in the market without a PPA or they didn't have they didn't got awarded a in an auction while they're looking to install batteries to colocate some batteries over there. But is that great? You need to invest more, more CapEx if you are losing money currently, it's not great to ask for more equity to, try to save your business when it's not warranted. Because you don't know how many like what your competitors are going to do. And that's probably one of the things that we have in the end. There is solar oversupply in Spain, and then you have distributed generation that's growing. We are seeing that in the next four five years, Spain is gonna change from a utility scale market we have where developers were installing big power plans. Two a more. Residential, commercial and industrial market. That will be a change in terms of the solar landscape in Spain.

Richard Sverrisson - Editor-in-Chief, Montel News: 24:16

I think, there are important lessons for the rest of Europe, and I think there'll be a lot of eyes to follow what's happening in, in the Iberian peninsula. Certainly in terms of what you're describing here with the residential, commercial and industrial solar. Because that obviously reduces the demand for grid for power from the grid as well. I'd like to just round off with a couple of questions. Maybe quite, I dunno whether they're easy to answer, but do you think we'll ever get a conclusive answer over who was to blame for the blackout, Christina?

Christina Rentell - Research Lead, Aurora Energy Research: 24:46

Yes, but I think the answer will be a number of things slash bodies. I think the answer would be, yes. There were probably things along the way. But I do think we'll find out eventually.

Richard Sverrisson - Editor-in-Chief, Montel News: 24:58

What's your view, Daniel?

Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie: 25:01

Yes, I think they will serve the blame. In the end, it was a human hero and operational or strategic planification, whatever. There wasn't an earthquake in Spain. Nothing special happened that day. It was a day with low demand, system failed. Well, many things to address further.

Richard Sverrisson - Editor-in-Chief, Montel News: 25:23

Do you think we've learnt enough from what happened in Spain so that to ensure that it doesn't happen again, Daniel? Not just in Spain, but elsewhere in Europe?

Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie: 25:32

I think so. Obviously I don't think any blackout will happen. I hope so, but yes, we need to allow renewables to participate in every market, also in regulation, in all the aspects of grid control because they can do that. They have to. They must to, and the TCO needs to be really strict. And renewables are capable of doing grid control nowadays with the power electronics that we have. Both wind and solar can do it. And you need to start to get importance through the generation. You need to start getting serious with that.

Richard Sverrisson - Editor-in-Chief, Montel News: 26:16

Absolutely. What's your view here? What do you think Christina, in terms of, do you think we've learned enough, enough so that, steps can be put in place to, to avoid this happening in the future?

Christina Rentell - Research Lead, Aurora Energy Research: 26:25

I'm probably a little bit more on the pessimistic side here. I'll try to explain why. I feel like those of us who are looking at this beforehand, we're probably already raising, saying look this is gonna become an issue. I don't think anyone expected a blackout. I'm not saying, we forecast the blackout, but, more issues in the grid, more curtailment. We were already seeing that, since around 2022, so quite a few years before there was a blackout. And I think what this has done is, as I said, like really push it to the forefront. So people are starting to prioritize it now. But I do think that there is, it's very slow to with the learnings that you take to then actually implement them. This, unfortunately usually takes quite a lot of time. So if we're talking new markets, we're talking new procurement, we're talking, power, electronics or, changing the regulation this can take quite a while. So I would encourage other countries to, to really try and preempt. This is coming across all countries that are gonna have more renewables and less thermal generation. And that's basically all of Europe. We're interconnected. So I think it's put it into the forefront of the conversation, which is great. That's the first step. But in terms of the learnings and actually seeing those learnings applied, I'm not so sure we're at that stage yet. I'm hopeful we'll get there, but I think it might be fairly slow, unfortunately.

Richard Sverrisson - Editor-in-Chief, Montel News: 27:36

Some time to go yet. But Christina and Daniel, thank you very much for being guests on the Plugged In - podcast from Montel. Fascinating discussion looking at what actually happened, but also the repercussions and a glimpse into the future of how to learn from what, from those lessons. Thank you very much.

Daniel Garasa Sagardoy - Europe Solar Analyst, Wood Mackenzie: 27:52

Thank you very much, Richard.

Christina Rentell - Research Lead, Aurora Energy Research: 27:54

Thank you very much, Richard,

Richard Sverrisson - Editor-in-Chief, Montel News: 27:55

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