Electricity contracts in Spain: What you need to know

The Spanish electricity market differs in several aspects from models in other European countries. If you live in Spain as a foreigner or plan to move there, it is helpful to understand the basics of electricity tariffs and cost structures.

The electricity bill in Spain is divided into three main components:

• Fixed charge (Potencia): Refers to the maximum power capacity a household can use
• Energy costs (Consumo): These vary depending on consumption and are billed in kilowatt-hours (kWh)
• Taxes and fees

The Fixed Charge (Potencia contratada)

The fixed charge, also known as “Potencia contratada”, refers to the maximum electricity capacity that a household can use at any one time from the grid.

This value is measured in kilowatts (kW) and determines the monthly standing charge, regardless of actual consumption. By analyzing your energy needs and reviewing them regularly, the contracted capacity can be optimized, as it represents a significant portion of the bill.

If the contracted power capacity is exceeded, the smart meter will automatically cut off the power supply. For this reason, it is important to adapt the use of household appliances to the contracted capacity.

Energy Costs and Consumption Charges (Consumo)

Consumption costs in Spain are usage-based and billed in kWh. The country offers different time-based pricing models such as the PVPC tariff, fixed tariffs, and time-of-use tariffs. Depending on your consumption habits, different tariffs may be more advantageous.

Fixed-price tariffs: A set price per kWh, regardless of when electricity is used.

Time-of-use tariffs: Electricity costs are calculated based on three different time periods:

• Hora valle (off-peak, cheapest): from 00:00 to 08:00, plus 24 hours on weekends and public holidays
• Hora llano (mid-peak, medium price): from 08:00–10:00, 14:00–18:00, and 22:00–00:00
• Hora punta (peak, most expensive): from 10:00–14:00 and 18:00–22:00

There are also tariffs linked directly to the wholesale electricity market price. However, these are generally not recommended, as they are subject to strong fluctuations and provide no price stability.

Thanks to the fact that 99% of Spanish households are already equipped with smart meters, billing by time periods is straightforward.

If you know at which times you consume the most electricity, you can choose the most suitable tariff. If most of your consumption occurs during peak times, a fixed-price tariff per kWh is usually more economical. If, however, your main usage is during off-peak hours, a three-period tariff will likely save you money.

Taxes and Government Charges

Spanish electricity bills include several taxes and charges, such as the IVA/IGIC (Value Added Tax) and the electricity tax. In addition, there is a small rental fee for the smart meter. A government levy also applies to finance the “Bono Social”, a social tariff that provides discounts to low-income households.

Choosing a Supplier and Switching Options

The Spanish electricity market is liberalized, meaning consumers are free to switch providers. Comparing tariffs and reviewing contract terms can help reduce electricity costs.

From our experience, Octopus Energy is currently the most transparent and cost-effective provider in Spain, offering a variety of tariffs depending on usage (via the link you could switch directly if desired, on the page you also can change the language to English on the top-right). They even provide specialized tariffs for solar panel owners and electric vehicle drivers. Octopus Energy also offers an English-language website, English-speaking customer support, and direct debit from non-Spanish SEPA accounts.

Of course, there are also other major providers such as Endesa, Total Energies, Iberdrola, Gas Natural Fenosa, E.ON, and many others.

Switching suppliers is fairly simple: all you need is the meter number, which can be found under CUPS on your current or previous electricity bill. Once the application is submitted, your new provider will handle the process. The switch is usually completed within a week.

Conclusion

In summary, an electricity contract in Spain involves several cost factors and opportunities for optimization. Choosing the right contracted capacity (Potencia contratada) and the most suitable tariff are crucial steps to avoid unnecessary expenses. By carefully analyzing your individual consumption habits and selecting the right plan and capacity, you can significantly reduce your electricity costs in Spain in the long term.

We hope this new blog post helps clarify the topic of electricity suppliers and bills in Spain.

Please note: This blog entry is for general informational purposes only. It may contain inaccuracies or omissions. For further or detailed information, please do not contact us in this regard. As a real estate agency, our expertise is, of course, focused on advising clients on buying, selling, or renting properties in Gran Canaria.