Spanish Spot to Deliver Well Below Feb Expectations

Why It Matters

The sharp price dip highlights how extreme weather‑driven renewable output can destabilise spot markets, squeezing revenues for conventional generators and underscoring the need for flexible resources and storage.

Key Takeaways

• Spanish spot fell to €12.66/MWh, far below €50.55 contract.
• Wind generation up 123% YoY, averaging 11.2 GW.
• Gas‑fired output dropped 25% YoY to 3.6 GW.
• Portugal net exported ~580 MW to Spain, first February since 2021.
• Hydro reserves at record levels, pressuring March forward prices.

Pulse Analysis

Spain’s February power market illustrates the growing volatility introduced by weather‑dependent renewables. An unprecedented wind surge linked to Storm Kristin lifted generation to 11.2 GW, more than double the three‑year average, flooding the grid with low‑cost electricity. Simultaneously, gas‑fired plants curtailed output, and abundant hydro inflows from record rainfall further suppressed the spot price, leaving the index at roughly one‑quarter of the forward contract level. This confluence of factors demonstrates how renewable spikes can compress margins for traditional generators and reshape price formation.

The price divergence between Spain and Portugal underscores the strategic importance of cross‑border capacity. Portugal’s net export of about 580 MW, driven by its own wind boom, widened the Iberian spread to €7.31/MWh, a stark contrast to the near‑parity seen in 2025. Such differentials create arbitrage opportunities but also signal the need for coordinated market mechanisms to manage surplus renewable output and prevent congestion. For conventional generators, the environment calls for greater operational flexibility, demand‑side response, and investment in storage solutions that can absorb excess wind and hydro generation.

Looking ahead, March forward contracts remain under pressure as hydro reservoirs sit near record levels and snowpack promises additional inflows in April. The sustained high hydro stocks could keep forward prices depressed unless demand rebounds or storage assets come online to balance supply. Policymakers and market operators must consider these dynamics when designing capacity mechanisms and incentive structures, ensuring that the transition to a renewable‑heavy mix does not compromise grid reliability or economic viability for all participants.

Spanish spot to deliver well below Feb expectations

By James Doran · 19 Feb 2026 17:35 GMT

London, 19 February (Argus) — The Spanish spot index is set to deliver significantly below forward expectations in February owing to high wind generation during and following Storm Kristin, while heavy rainfall over the period has weighed heavily on March.

The Spanish spot index averaged €12.66/MWh for delivery over 1‑20 February, down sharply from an average of €116.88/MWh across the same period last year. The spot is on track to average about €18.85/MWh across the full month, based on its weighted average over 1‑20 February as well as the latest assessments and trades for the weekend and week 9. This is well below the February contract's expiry at €50.55/MWh.

Very high wind generation has weighed on the February spot index. As of today, wind output has averaged 11.2 GW in Spain, up by about 123 % on the year and substantially higher than the 6.6 GW average over the past three years. Looking forward, wind output over the remainder of February is expected to return closer to the norm, with an average output of 6.9 GW over the next eight days, according to data from global trade and analytics firm Kpler.

Wind output has been particularly high owing to extreme weather conditions in February, especially at the beginning of the month when Storm Kristin brought extreme conditions to Spain and Portugal.

The storm also brought exceptionally high rainfall, with hydro stocks in Spain recording three of their five highest ever week‑on‑week increases in the past three weeks.

Despite the strong rise in hydro stocks, this has had little impact on output so far this month, with generation essentially equal to the level over the same period last year. However, the extreme rise in hydro reserves in Spain has weighed strongly on the front‑month contract. Since the storm hit Spain, March has shed €13.75/MWh, and is €21.65/MWh below where the equivalent contract was at this time last year.

The record‑breaking hydro stocks are particularly consequential for March, which has recorded the highest average output from the technology of any month in Spain in the past three years. Snowpack is also at record highs for the season, indicating that large volumes will continue to reach Spain's Ebro basin reservoirs when Pyrenean snowmelt begins, typically in mid‑April.

Gas‑fired output has dropped in February, also contributing to low spot prices in Spain. Generation from combined‑cycle gas turbines has dropped by about a quarter on the year to an average of just 3.6 GW. This is also down by about 30 % from the 5.1 GW average for the equivalent period of February over the past three years.

February has also been marked by a significant divergence in Spanish and Portuguese spot prices. The Portuguese spot has cleared below the Spanish almost every day so far in February, often by a sizeable margin. On average, there has been a daily price differential of €7.31/MWh between the two spot indexes, overwhelmingly with Spain at a premium. Across the same period of 2025, the average price differential was just €0.13/MWh, with the two spot indexes clearing at parity on 16 out of 20 occasions.

Portugal has net exported to Spain across February at an average of about 580 MW. This is the first month that Portugal has held a net export position to Spain since March 2024, and the first time this has occurred in February since 2021. Very high wind in Portugal so far in February — also in part owing to Storm Kristin — has supported Portuguese wind generation, which is up by about 130 % on the year and by more than 80 % compared with the three‑year average.

Portugal's hydro reserves currently stand at about 3.1 TWh, equivalent to 94.1 % of total capacity. This is 18.7 percentage points higher than reservoir levels at the same point last year. Generation from hydro in Portugal has been low so far in February, averaging just 2.7 GW, down by about a fifth from last year. Generation is likely to have to increase in the coming weeks in order to prevent overspill, or controlled releases, as was seen in Spain last year as reservoirs neared record capacity.

Spot price comparison ES‑PT (1‑20 Feb) €/MWh