The European Union (EU) has set ambitious decarbonization targets—at least a 55 percent reduction in EU greenhouse gas (GHG) emissions by 2030 compared to 1990 levels.1 Achieving these targets can help to deliver greater energy sustainability, security, affordability, and competitiveness as the EU accelerates its energy transition. 

However, this transition is not as simple as deploying more renewable energy sources (RES). It involves shifting to a diverse, more sustainable power mix while managing intermittent supply, revamping infrastructure, aligning technology innovations and policies, and engaging consumers. All of this requires massive capital deployment and collaboration from all stakeholders—both public and private. 

Scaling the energy transition will also bring challenges across the value chain, from sourcing raw materials to manufacturing, infrastructure, and capital availability. Despite these challenges, Spain is well positioned to decarbonize and embrace the new opportunities from this journey. The country has the potential to become a leader in the energy transition, harnessing electrification and renewables to decarbonize energy end-uses and power supply, respectively. 

In this article—the second in our series looking at the Iberian decarbonization opportunity—we highlight that, although natural endowments are necessary for Spain’s decarbonization, they are not sufficient alone. We further highlight that electrification is already a cost-competitive solution to decarbonize multiple processes, but slow adoption could hinder the ability to deploy further RES. Also, Spain has sufficient renewables capacity in the pipeline overall, but faces execution challenges and favors solar over wind. Enabling the transition requires grid expansion and modernization, as well as implementing updated power market design constructs.