Energy shift may be spearheaded by Iberian Peninsula
Portugal and Spain are poised to play a significant role in the future European green hydrogen market, thanks to their growing installed capacity for solar, wind, and hydro energy. This positioning is a result of the countries' strong support for the energy transition, viewing it as an economic opportunity.
The energy transition in these countries is centred on green hydrogen development and enhanced electricity interconnections with the European Union. Both nations have set ambitious targets in their National Energy and Climate Plans for 2030, focusing on renewable energy growth, electrification, and green hydrogen as industrial opportunities.
According to the study "After the Energy Crisis: Policy Responses in the Iberian Peninsula," prepared by Gonzalo Escribano, Ignacio Urbasos, Ana Fontoura Gouveia, João Fachada, and the American Brookings Institution, Portugal's National Energy and Climate Plan (PNEC 2030) targets a 93% renewable electricity share by 2030. This ambitious goal involves substantial capacity expansion, with the focus on onshore and offshore wind (40%) and solar (42%). The plan also sets a 2 GW target for energy storage through pumped hydropower and batteries to support grid reliability and flexibility.
Spain's National Integrated Energy and Climate Plan (PNIEC 2030) aims for 81% renewable generation by 2030, with a focus on rapid electrification and a progressive phase-out of nuclear energy. Despite the ambitious targets, Spain faces challenges in wind energy deployment and incentives for storage regulation. The plan highlights green hydrogen production and expansion of interconnections with the EU to integrate renewables effectively.
Both countries recognise green hydrogen as a strategic industrial opportunity, aiming to leverage their abundant renewable resources and technical expertise to become leaders in the European green hydrogen market.
A critical challenge is increasing electricity grid interconnections with the rest of Europe, which remain limited. This includes addressing bureaucratic hurdles in project licensing and involving local communities more actively to share the benefits of renewable energy projects, thereby ensuring inclusiveness and social acceptance.
Recent power grid issues, including a large blackout in April 2025, have revealed weaknesses in grid voltage control and regulation. Spain and Portugal are implementing policy and regulatory changes to enable renewable resources (wind, solar, batteries) to actively provide voltage regulation. This will improve grid resilience, lower costs, and reduce emissions, aligning with a fair and competitive transition ensuring system stability.
However, Spain’s energy policy has faced political contestation impacting some anti-blackout and grid reliability plans, highlighting the importance of political consensus in supporting coherent energy transition policies.
In conclusion, Portugal and Spain are pursuing integrated policy frameworks that combine ambitious renewable energy targets, green hydrogen industrialization, grid modernization, enhanced EU interconnections, and community engagement to ensure their energy transition is competitive, fair, and socially inclusive within the broader European context.
References: 1. After the Energy Crisis: Policy Responses in the Iberian Peninsula, Francisco Manuel dos Santos Foundation (FFMS) and the American Brookings Institution. 2. Iberian Green Hydrogen Strategy, Portuguese Government and Spanish Government. 3. Regulation on the Participation of Renewable Energy Sources in the Balancing Market, Spanish Energy Regulatory Commission. 4. Portuguese Electricity Market Regulation, Portuguese Energy Regulatory Authority. 5. Spanish Energy Policy and the Challenge of Political Consensus, El País.
- In light of the ambitious renewable energy targets set by Portugal's National Energy and Climate Plan (PNEC 2030), a significant focus is on expanding onshore and offshore wind (40%) and solar (42%) energy capacities, as well as energy storage through pumped hydropower and batteries.
- Spain's National Integrated Energy and Climate Plan (PNIEC 2030) identifies green hydrogen production as a strategic opportunity, aiming to expand interconnections with the EU to effectively integrate renewables into their energy grid.
- Both Portugal and Spain view the energy transition not only as an environmentally-friendly move, but also as an economic opportunity, with green hydrogen production being a key industrial destination for their abundant renewable resources and technical expertise.
- As a critical step for effectively integrating renewable energy into the European grid, enhancing cross-border interconnections is necessary, requiring the resolution of bureaucratic hurdles and active community engagement to ensure project inclusiveness and social acceptance.
