When the lights went out across almost all of Spain and Portugal last year in one of the biggest blackouts since the war, experts quickly blamed the explosion of renewable generating capacity as the cause. They were partly right.
Europe’s electricity generating profile has been transformed in recent years with the share of renewables soaring in many countries. Almost half of all Europe’s power came from clean sources last year, but while investment has been heavy in new solar and wind generating capacity, that has not been matched by investments needed into modernising the distribution grid.
“Europe doesn’t have an energy shortage — it has a grid problem,” according to Marco Sagusstinn, President of the European Renaissance Institute. The result is that “some regions waste cheap power while others burn gas.”
Why is that a problem? Green energy may be cheap, but it is fickle. The output of solar and wind generation surges and wanes as the weather changes. While gas, coal and nuclear power output can be regulated by the turn of a dial to match demand, renewables cannot be. You get it when Mother Nature determines you get it and spikes and troughs. That is a problem for grids which were built for the traditional steady power output from traditional fuels and if the surges are too strong, that will trigger shutdowns to protect the integrity of the equipment.
That is what happened last year. Experts say that a surge in green energy supply – this year Spain produced 100% of its power needs from its renewable generating capacity – triggered a shut down that then cascaded throughout the entire peninsula.
Too much sun and too little stability has led to an unstable system that now relies heavily on the vagrancies of the weather. The Iberian blackout was not a renewable energy failure. It was a grid failure.
Spain and Portugal have built one of Europe's most solar-heavy electricity systems with impressive speed. During peak hours, solar production reaches levels that would have seemed implausible a decade ago. The surrounding grid architecture has not kept pace.
What the investigations found
Voltage instability developed faster than the system's automated responses could manage. Reactive power management — the unglamorous engineering discipline that keeps voltage levels stable across a network — proved insufficient for the conditions. Cascading inverter disconnections followed: as individual solar installations detected abnormal grid conditions and automatically disconnected to protect their equipment, the problem accelerated rather than stabilised. At the same time, Iberia's grid has limited interconnections with France, which is a well of highly stable nuclear power. The cross-border transfer capacity toward France — and through France, to the rest of continental Europe — remains relatively constrained compared to the scale of what Spain and Portugal now produce. This part of the grid also needs to be expanded to give better stable Europe-wide power backup options.
Excess solar and wind power that could, in a better-connected system, flow northeast and be absorbed elsewhere in Europe instead creates pressure within the Iberian peninsula itself as it reaches the border bottlenecks: curtailment, negative pricing episodes, and the kind of grid balancing stress that, under the wrong conditions, tips into instability. Under the existing system, Iberia still behaves partly like an "energy island."
The France problem
The interconnection deficit between Spain and France is not new, but it has acquired new urgency. For decades, the limited capacity of the Pyrenean crossing was a minor inconvenience — an occasionally frustrating constraint on cross-border trade in a system where Spain was a modest net importer of French nuclear power. Today, the asymmetry runs in the opposite direction. Spain generates more solar electricity per capita than almost any other European country. Portugal is among the continent's leaders in wind and hydro. On a clear spring afternoon, the Iberian peninsula can produce more electricity than it needs, more cheaply than anywhere else in Europe — and it cannot reliably export the surplus.
France, for its part, has been slow to prioritise the interconnection upgrades that would resolve this bottleneck. The political economy of French energy infrastructure has historically centred on the country's nuclear fleet, and EDF's challenges in maintaining and extending that fleet have consumed much of the attention and capital available for energy investment. The result is a border crossing that functions as a structural choke point in what should be one of the continent's most important renewable energy corridors.
Grid operators in Spain, Portugal and France were, at the moment of the cascade, working with information systems that were not fully adequate to the speed at which the instability developed. Modern inverter-based generation — solar panels and wind turbines feeding electricity into the grid through power electronics rather than rotating turbines — responds to grid disturbances in milliseconds. The monitoring and response infrastructure across much of the Iberian system was calibrated for a slower, more mechanical world.
The investment gap
The blackout, stripped of its political framing, is an argument for aggressive investment in grid modernisation. Europe's grid was largely built in the second half of the twentieth century to carry electricity from large centralised generators — nuclear plants, coal stations, gas turbines — to passive consumers. That architecture is in the midst of a very big shake up and a marriage of very different systems.
Iberia has millions of distributed generators, highly variable output, bidirectional power flows, as well as an increasing requirement for real-time balancing across borders. France has a powerful but predictable steady state output and is also a net exporter of power. That also makes a difference in the investment needed in scale from anything the continent has undertaken since the original grid was built.
The Iberian interconnection with France alone would require multi-bn euro investment on both sides of the border and sustained political commitment from governments that have, historically, found it easier to subsidise generation than to fund the wires that carry it.
The most recent Spain-France interconnection, a 64.5-kilometre underground direct current line through the Pyrenees completed in 2015, cost €700mn and doubled cross-border capacity from 1,400 to 2,800 megawatts. It was, at the time, considered sufficient. The renewable buildout that followed made it obsolete within a decade.
The replacement — the Bay of Biscay interconnector, currently under construction and due for completion in 2028 – was originally budgeted at €1.75bn in 2017, but costs have since soared to €2.85bn, with a further risk envelope of €250 mn, driven by surging prices for subsea cables and converter substations.
The European Investment Bank committed €1.6bn in financing in June 2025, supplemented by a €578mn EU grant. When complete, the 400-kilometre link — 300 kilometres of it underwater — will raise cross-border capacity to 5,000 megawatts. Many analysts consider even that insufficient given the pace of Spain's renewable expansion.
"EIB support for the France-Spain electricity interconnection will be key to ensuring that the Iberian Peninsula is no longer an energy island," said Nadia Calviño, president of the EIB Group, in June 2025 — a statement that, coming four months after the blackout, carried rather more urgency than its diplomatic phrasing suggested.
Independent analysis suggests that by 2040, every euro spent expanding cross-border transmission capacity will reduce system-wide generation costs by more than two euros — a return that would be considered exceptional in any infrastructure category.
The problem is time. The average lead-time for a major European interconnection project exceeds ten years. The Bay of Biscay link was conceived before the renewable surge that made it urgent, and will be completed a decade after it was needed. The next one — whatever form it takes — needs to be commissioned now, for a grid that will exist in 2035.
And the gaps are already big and growing as the green energy revolution gathers momentum. The largest constraints are found at transmission level, where large-scale wind and solar projects connect. Ember identifies a 104 GW shortfall across 17 reporting countries, with 10 already facing capacity gaps.
Of the 158 GW of renewables expected to be deployed by 2030 in these countries, as much as 66% may not materialise due to connection barriers. In several of the most constrained markets, available grid capacity can accommodate less than 10% of planned additions.
The pressure is near-term. By 2028, nine of the 17 countries are expected to face acute grid shortages, including the Netherlands, where congestion has already begun to delay projects and increase system costs.
Grid congestion is compounded bya growing backlog of projects awaiting connection. Nearly 700 GW of renewable capacity is currently in connection queues across eight reporting countries.
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