Systemic Fracture

The government announces a reduction in electricity prices while Iberdrola reports record profits. The contradiction goes unnoticed in the headlines because no one explains how a company can earn more by selling at lower prices. The answer lies in the 847 pages of the Royal Decree that regulates the electricity market. Pages that no one reads but that we all pay for.

I've worked in energy consulting for twelve years. I've seen these regulations drafted. The process is always the same. You convene the stakeholders, bring the companies to the negotiating table, listen to their technical proposals, and incorporate their suggestions into the draft. In the end, the regulator regulates what the regulated entity suggests it should regulate. They call it public consultation. It should be called corporate dictate.

The Spanish electricity market operates like a reverse auction, where the highest bidder wins. It sounds irrational until you understand the catch. All power plants are paid the price of the last one to come online, even if they bid zero. A wind farm that generates free electricity receives the same price as a gas-fired power plant that bids €180 per megawatt-hour.

My largest client is a renewable energy company with an annual turnover of €2.4 billion. Its variable production costs are practically zero. Wind and sun energy are free. Its revenue depends on the bids of thermal power plants, not on the cost of its own production. Every gas price increase automatically boosts its margins. That's why the electricity companies never really push to accelerate the renewable energy transition. Their business model relies on artificial scarcity.

I've calculated the net transfer from consumers to shareholders in 2023. Eighteen billion euros in energy surcharges. Enough to finance four new hospitals every month or reduce the public deficit by a third. But these calculations don't come up in the boardrooms I frequent. There, they talk about optimizing the profitability of renewable assets and maximizing shareholder value.

Spain produces the cheapest electricity in Europe and sells it at German prices. The difference evaporates in a chain of intermediaries, taxes, tolls, and regulated margins that turn a natural competitive advantage into a domestic disadvantage. It's like Saudi Arabia paying the highest price for gasoline in the world.

The system has a more subtle perversion. Energy companies fund think tanks that publish studies on sustainability and just transition. They sponsor university chairs that train the regulators of the future. They hire former high-ranking ministerial officials as external advisors. They create foundations that organize conferences where politicians and business leaders talk about the climate emergency while designing regulatory frameworks that perpetuate their profits.

I acknowledge my own contradictions. I make a living advising these companies while criticizing the system that enriches them. My salary depends on optimizing the very mechanisms I later denounce. Every report I write maximizes corporate profits, which are ultimately paid for by the same citizens I supposedly represent as an independent consultant.

The algorithm works with mathematical precision. Privatize profits, socialize costs, capture regulation, repeat. The state builds infrastructure with public money, transfers it to private hands at a politically motivated price, then buys its own electricity at market price. Like selling your house and then paying rent to the buyer.

Every electricity bill contains a silent transfer from your bank account to investment funds listed on international stock exchanges. Your bill finances dividends paid to shareholders who have never set foot in Spain but own its energy matrix.

The day my daughter asks me why Spain has the most abundant sunshine in Europe and the highest electricity bills, I'll show her the 847 pages of the Royal Decree. I'll explain that the cleanest energy in the world gets tainted by passing through the most opaque regulatory filter in the West.