Iberdrola to Close Spanish Gas Plants by 2030

The heyday of Spain's combined cycle power generation is fading. Once vital for meeting energy demand, gas plants are on a path towards closure. Iberdrola, a major energy player, intends to shutter all its Spanish gas plants within the next five years, well before its 2030 goal of zero emissions from its own operations.

Iberdrola's 5.7 GW of Spanish combined cycle capacity represent a significant portion of both the company's generating assets and the country's overall gas power fleet. Notably, this move follows Iberdrola's recent sale of over 8.5 GW of combined cycles in Mexico.

Spain's energy mix is rapidly shifting. Renewables accounted for nearly 70% of Iberdrola's installed Iberian Peninsula power in March. Combined cycles generated under 9% of mainland Spain's electricity this year, down 30% from the same period in 2023. This decline reflects favourable conditions for wind, solar, and hydroelectric production, displacing more costly gas plants.

The low usage of gas plants is prompting closures across the sector. Naturgy, with the largest share of Spanish combined cycles, is legally contesting to shut down five unprofitable facilities. Spain's total combined cycle capacity stands at roughly 26.2 GW.

Energy Storage: The Key to Transition

Mass gas plant closures hinge on the growth of energy storage. Wind and solar are set to expand, but ensuring a stable grid necessitates parallel investment in pumped hydropower and batteries. These technologies will bridge the "thermal gap" during periods of insufficient renewable and nuclear generation (with the latter phasing out between 2027-2035).

Iberdrola's focus lies in pumped hydropower, leveraging Spain's terrain and existing dams for closed-circuit storage. This targets extended periods of low wind generation or extreme weather-driven demand.  Batteries, with costs rapidly declining, will be vital for managing daily consumption peaks.