Chat with this content: Summary, Analysis, News...
Share on Reddit
Redeia: The Backbone of Spain's Energy Transition
I. Introduction & Episode Roadmap
On a cloudless Monday afternoon in late April 2025, at exactly 12:33 and 30 seconds, something catastrophic happened. In just five seconds, Spain lost approximately 15 gigawatts of capacity, equivalent to 60% of its national electricity demand. The remaining generation was insufficient to meet demand, triggering a cascading failure across the entire grid. Within minutes, 47 million Spaniards and 10 million Portuguese found themselves in darkness—trains frozen mid-tunnel, traffic lights dead, hospital generators roaring to life.
On April 28, 2025, the entire electrical system of Spain and Portugal shut down. Apart from the islands, which operate on separate grids, both countries — as well as parts of southern France connected to the Iberian network — were plunged into darkness. This was one of the most significant blackouts in the history of the European grid.
At the center of this crisis stood a company that few outside Spain know well, yet whose importance to Europe's energy transition cannot be overstated: Redeia, formerly Red Eléctrica de España, the operator of Spain's entire high-voltage transmission network.
Today, Redeia Corporación engages in electricity transmission and system operation and management of the transmission network for the electricity system in Spain and internationally. The company operates through three segments: Management and Operation of National Electricity Infrastructure; Management and Operation of International Electricity Infrastructure; and Telecommunications. It operates through a transmission network of approximately 45,592 kilometers and has 97,981 MVA of transformation capacity.
With a market capitalization hovering around €8.5 billion and roughly 92% of revenues derived from its regulated monopoly position in Spanish electricity transmission, Redeia presents a fascinating case study at the intersection of regulated infrastructure, renewable energy integration, and the real-world challenges of decarbonization.
The company's story raises fundamental questions for investors and policymakers alike: Is the regulated monopoly model—pioneered by Spain four decades ago—an anachronism ill-suited for the renewable energy age, or is it precisely the stable infrastructure platform needed to navigate the energy transition? Can a company earn above-market returns while serving as what the Spanish government calls "the backbone of the ecological transition"?
What follows is a deep dive into the company that invented the Transmission System Operator model, led the world in renewable energy integration, and now finds itself at the center of Spain's worst infrastructure failure in modern history.
II. The Birth of a New Model: Spain's Electric Revolution (1985)
The Fragmented Grid
To understand what Red Eléctrica created in 1985, you first need to understand what Spain's electricity sector looked like before it. Picture a patchwork quilt of overlapping fiefdoms: Iberdrola controlling the north and northwest, Unión Fenosa dominant in Galicia and central Spain, Endesa (then state-owned) commanding Catalonia and the Canary Islands. Each company built its own transmission lines, often in parallel, with no unified command structure and coordination achieved through lengthy negotiations rather than technical optimization.
The inefficiencies were staggering. Duplicate infrastructure ran through the same valleys. Power couldn't flow freely from where it was abundant to where it was needed. System planning happened company by company, not nation by nation. For a country racing to modernize after Franco's death in 1975 and entry into the European Economic Community in 1986, this fragmented infrastructure represented a critical bottleneck.
Creating the World's First TSO
The company was created in 1985 by the State-owned holding company Instituto Nacional de Industria (INI) to provide a unified national power grid.
On January 29th, 1985, Red Eléctrica de España was born as the first company in the world exclusively involved in electricity system operation and transmission. It is currently the solely Spanish Transmission System Operator (TSO).
The concept was radical: separate transmission from generation and distribution, creating a single neutral operator responsible for the entire high-voltage grid. When it was created in 1985, it took over the transmission grid and the operation of the Spanish power system, well before the recent world-wide trend towards the segregation of activities, establishing transmission as a separate activity from generation and distribution.
Red Eléctrica was the first TSO in the world (Transmission System Operator): the first company dedicated to the operation and transport of the electrical system. Later, other countries followed suit and today this model is the most widespread in the European Union.
The creation required delicate negotiations with the incumbent utilities, who were forced to sell their transmission assets to the new entity. The government compensated them, but the political achievement was remarkable: convincing private companies to divest core infrastructure in the name of national efficiency. This model—which Spain pioneered—would later be mandated across the European Union through successive electricity market directives.
The Regulatory Foundation
The 1985 founding established a crucial principle that persists today: transmission would be treated as a "natural monopoly" subject to regulated returns rather than market competition. This wasn't controversial at the time—it was simply obvious that building duplicate high-voltage lines made no sense. But the regulatory model established four decades ago now shapes everything about how Redeia operates, invests, and earns returns.
Red Eléctrica has the monopoly of its principal area of business: it owns and manages all electricity transmission in Spain and its infrastructure, as the electricity system operator. The Spanish State is its principal shareholder (20% of its share capital), a stake managed through the State Industrial Holdings Company (SEPI). Moreover, state control of this private and strategic company is also guaranteed by law: there are legal limits so that no shareholder may own more than 5% of its shares nor exercise political rights (decision-making) above 3%.
This ownership structure—20% state-owned with strict limits preventing any private party from accumulating control—creates a unique corporate governance dynamic. Redeia is private enough to trade on the stock exchange and answer to public shareholders, yet public enough that the government maintains de facto control over strategic decisions.
For investors, the early insight is this: Redeia's returns are fundamentally determined by regulation, not competition. The company does not compete for customers, does not set its own prices, and cannot decide how much to invest without government approval. Understanding the regulatory framework isn't just important—it's everything.
III. Building the Grid: The Early Decades (1985-1997)
Infrastructure Consolidation
Red Eléctrica's founding team inherited a system in need of rationalization. As company history notes, "The 90 pioneers who founded the company in 1985 have passed on their commitment, effort, and dedication to public service—the very essence of Red Eléctrica—to the more than 1,300 professionals who make up the company today."
The first decade focused on unsexy but essential work: standardizing equipment, optimizing load flows, building missing links between regional grids, and establishing unified operational procedures. The company developed Spain's first national electricity control center (CECOEL) in Madrid, bringing real-time monitoring and dispatch under a single roof.
Grid expansion proceeded methodically across mainland Spain, with particular focus on connecting industrial centers to generation sources and strengthening the backbone corridors between major load centers. By the early 1990s, the efficiency gains from unified operation were becoming apparent: fewer blackouts, better utilization of existing generation, and more rational infrastructure planning.
The Spain-Morocco Interconnection: Connecting Continents
In 1997, Red Eléctrica achieved something unprecedented: the first intercontinental electricity link.
The initial connection was established in 1997 with a 700-megawatt capacity, connecting terminal stations in Tarifa, Spain, and Fardioua, Morocco. In 2006, responding to increased energy exchange demands, a second connection doubled the technical capacity to 1,400 MW, strengthening both countries' electrical systems' reliability and stability.
The infrastructure consists of three submarine cables stretching 29 kilometers across the Strait of Gibraltar's seabed, reaching depths of up to 620 meters.
This wasn't just an engineering achievement—it represented strategic vision. Spain was positioning itself as Europe's southern gateway for electricity trade, with ambitions to eventually import Saharan solar power. The project required a €115 million investment, split equally between both entities, with support from the European Investment Bank and the African Development Bank.
The Morocco interconnection would prove critically important decades later. To assist in restoring power during the April 2025 blackout, Morocco supplied 900MW of electricity to Spain through the Spain-Morocco interconnection which was established in 1997. This interconnection line was expanded in 2006 and has a total capacity of 1,400MW.
Telecommunications Pivot: Reintel
Red Eléctrica recognized early that its physical infrastructure had value beyond electricity. High-voltage transmission lines create rights-of-way across the country, and the company began installing fiber optic cables along these routes.
Reintel was founded in 1997 and is today the largest dark fibre optic operator in Spain and one of the leading players in the field of telecommunications nationwide. It manages a network of more than 52,000 km of cable deployed over the transmission grid of the electricity system and the railway network. Its main activity is the leasing of dark fibre as well as sites and technical spaces for housing electronic telecommunications equipment.
This represented Red Eléctrica's first diversification play—leveraging infrastructure assets for adjacent revenue streams. The telecommunications business would grow substantially over the following decades, eventually becoming a key element of the company's strategic plan before partial divestiture.
By 1997, Red Eléctrica had transformed from a startup entity cobbling together inherited assets into a mature transmission operator with ambitions extending beyond Spain's borders.
IV. Privatization & Going Public (1999)
The IPO Decision
The company was born in 1985, with Felipe González as president. It was a state company that combined contributions from other public companies, such as Endesa and ENHER, and nationalized assets—generously compensated—from private companies like Iberduero and Unión Fenosa. In the mid-90s, the socialist government began its privatization, a process that concluded with its stock market listing in 1999, now with José María Aznar as president.
Red Eléctrica began its stock market journey on July 7, 1999 at a price of 8 euros per share.
The timing proved fortunate and unfortunate simultaneously. At the IPO, the impression was that we were looking at a defensive company with limited risk. At that moment, the Internet boom affected the valuation of all listed stocks, and interest in Red Eléctrica was limited. It was always easy to appreciate its earnings resilience, the secure nature of its high [dividend]...
The privatization maintained the 20% state stake through SEPI while opening the remaining 80% to public investors. This partial privatization model—keeping a blocking minority while allowing market pricing and governance—has become the template for infrastructure privatizations across Europe.
According to the Court of Auditors, the privatization of Red Eléctrica was carried out 'with lack of clarity and transparency,' and to the 'exclusive benefit' of companies in the electricity sector. Critics argued that the utilities—who had been forced to sell transmission assets at regulated prices—were among the primary beneficiaries of the IPO, recovering value they had lost during the initial consolidation.
International Expansion Begins
The IPO coincided with Spain's broader Latin American expansion—this was the era when Spanish banks, telecom companies, and utilities were aggressively acquiring assets across the Americas.
Red Eléctrica created Red Eléctrica Internacional in 1999 specifically to pursue overseas opportunities. The initial focus was Peru, where the company saw opportunities to apply its transmission expertise to a market undergoing similar liberalization.
The company owns 100% of Peruvian utility company REDESUR (Red Eléctrica del SUR) in south of Peru. REE reached 100% in this firm in 2017, after acquiring the final 45%. Redesur operates the electricity system of southern Peru, and controls 100% of Transmisora Eléctrica del Sur (Tesur) and 75% of Transmisora Eléctrica del Sur 2 (Tesur2).
The Latin American strategy represented an attempt to escape the growth constraints of a regulated domestic monopoly. In Spain, Red Eléctrica could only grow as fast as the regulator permitted. Abroad, there was the potential for faster expansion—though also, as events would demonstrate, significantly higher political risk.
V. Regulatory Evolution: Cementing the Monopoly (1997-2010)
The 1997 Electricity Sector Act
Spain's 1997 Electricity Sector Act (Ley 54/1997) represented the transposition of European Union liberalization directives into Spanish law. The legislation separated generation, transmission, distribution, and retail supply into distinct regulated activities.
For Red Eléctrica, the law was transformative: it formally designated the company as Spain's sole transmission system operator, granting it exclusive rights to own and operate the high-voltage grid. This wasn't merely a continuation of the status quo—it was an elevation. The company moved from being one solution to the fragmented grid problem to being the legally mandated solution.
The law created the wholesale power market that required an efficiently managed transmission grid to function. Red Eléctrica's role as neutral operator became even more critical: it had to ensure that generators could sell power and buyers could purchase it without transmission constraints distorting market prices.
The 2007 Law & TSO Model Consolidation
Act 17/2007 of 4 July amended the previous law to adapt it to European Directive 2003/54/CE which established the common guidelines for the internal power market. This law has resulted in the definitive consolidation of the Red Eléctrica's TSO Model (Transmission System Operator). In this regard, Red Eléctrica, as the system operator, guarantees the continuity and security of the power supply and the proper coordination of the production and transmission system.
The 2007 law went further than simply confirming Red Eléctrica's role—it mandated ownership unbundling. Any remaining transmission assets held by generation or distribution companies would need to be transferred to Red Eléctrica. This set the stage for the final consolidation of transmission ownership.
Acquiring the Final Transmission Assets
In 2010, Red Eléctrica completed the acquisition of remaining transmission assets from distribution companies—a process that had begun in 2002. This purchase represented a defining milestone, establishing Red Eléctrica as Spain's sole transmission owner, not just operator.
The acquisitions were not voluntary from the sellers' perspective. As noted in company descriptions, "Redeia owns and operates the Spanish electric transmission system. The company has acquired almost all of the nation's power grid, which other owners were forced to sell to it by government decree."
For investors, the regulatory evolution from 1997-2010 is crucial context. By 2010, Red Eléctrica had achieved maximum market position: 100% of Spanish transmission operations and ownership, with legal barriers preventing any competition. The only constraint on growth was how much the regulator would allow the company to invest—and at what return.
The regulatory framework established returns based on approved asset bases and government-set remuneration rates. Each euro of approved investment would earn the company a regulated return over the asset's useful life. The business model was now locked in: invest at regulated rates, earn predictable returns, pay stable dividends. This framework continues to define Redeia's investment case today.
VI. The Renewables Pioneer: CECRE & Grid Innovation (2006-2015)
World's First Renewable Energy Control Center
In the mid-2000s, Spain was experiencing an unprecedented renewable energy boom. Government subsidies had unleashed a wave of wind and solar investment, and the country was on track to become one of Europe's renewable energy leaders. But there was a problem: the grid wasn't designed for intermittent generation.
Traditional power systems relied on dispatchable generation—plants that could increase or decrease output on command. Wind farms and solar panels don't work that way. Their output depends on weather, not operator instructions. Integrating large amounts of variable renewable generation required a fundamental rethinking of system operation.
The Renewable Energy Control Centre (Cecre), a pioneering centre and the first to be dedicated exclusively to the supervision and control of clean technologies, was set up in 2006. A pioneering control center worldwide dedicated exclusively to renewables, Cecre maximizes the safe integration of renewable energy generation into the Spanish electricity system. The Renewable Energy Control Centre (Cecre), a pioneering centre and the first to be dedicated exclusively to the supervision and control of clean technologies, was set up in 2006.
In order to address the peculiarities of renewable energies, since 2006 in Spain we have counted on CECRE (Control Centre of Renewable Energies), a pioneering initiative set up by Red Eléctrica. Cecre is the first centre in the world for controlling and managing the electricity generation obtained from renewable energy producers, primarily wind farms, which makes it possible to integrate the maximum production of renewable energy into the electricity system whilst maintaining the levels of quality and guaranteeing the security of supply.
By means of 23 control centres of the generation companies, which act as interlocutors, CECRE receives, every 12 seconds, real time information about each facility regarding the status of the grid connection, production and voltage at the connection point. This data is used by a sophisticated tool which makes it possible to verify whether the total generation obtained from renewable energies can be integrated at any moment into the electricity system.
The CECRE represented genuine innovation. Red Eléctrica developed proprietary software and operational procedures that became models for other grid operators worldwide. Its pioneering nature and its constant desire for evolution focused on continuous improvement have made CECRE a facility visited by representatives from more than 80 countries from five continents, including the United States, Mexico, Brazil, Argentina, Jordan, China, Japan, South Korea, Ghana, Morocco, Algeria and Australia, as well as from the 40 ENTSO-E member states.
CECRE came into operation in 2006 and was the first centre in the world specifically designed for the safe and efficient integration of renewable energy into the electricity system. Since its commissioning, this control centre has contributed to the integration of more than 1,338 TWh of green generation; an amount of energy that could cover the demand of the European Union for 5 months.
By 2024, the renewable generation management model has also been key, allowing its active participation in the electricity system's services through Red Eléctrica's Renewable Energy Control Center (Cecre), which this year integrated more than 98% of renewable production at the peninsula level, a value far higher than that of surrounding European countries.
The France Interconnection
While CECRE addressed the operational challenge of renewables, Red Eléctrica also pursued the infrastructure solution: more interconnection with Europe.
INELFE (Interconexión Eléctrica Francia-España or Electricity Interconnection France-Spain) is a joint company that was set up on 1 October 2008 by the national grid management companies of Spain and France - REE (Red Eléctrica de España) and RTE (Réseau Transport d'Électricité) - with each partner holding an equal stake. Following the Madrid Summit on 4 March 2015, INELFE was made responsible for the construction and start-up of the electricity interconnections between France and Spain aimed at increasing the electricity interchange capacity between the two countries.
Commissioned in October 2015, it doubled the electricity exchange capacity between France and Spain from 1,400 to 2,800 MW, providing greater security, stability and quality of electricity supply to the two countries. In addition, this interconnection also made it possible to improve the quality of supply to border towns, to guarantee the electricity supply for the high-speed train on the Spanish side, and to encourage the integration of a greater volume of renewable energy.
The project was technically ambitious: The new interconnection is a construction which breaks records. The project also marks a record in terms of length, boasting the world's longest underground high-voltage cable. To keep the pristine eastern Pyrenees mountain-range free of obstructive power pylons, it has been entirely buried. The high-tech DC cables, designed by Italy's Prysmian, came to a cost of EUR 250 million.
The interconnection was declared a project of European interest and involved an investment of 700 million euros.
The CECRE and the France interconnection represented Red Eléctrica's dual strategy for the renewable era: operational innovation to manage variability, and infrastructure investment to provide backup through European connections. As we shall see, the latter would prove dramatically insufficient.
VII. Latin American Adventures & Setbacks (2002-2017)
Bolivia: The Nationalization Drama
Red Eléctrica's Latin American expansion delivered mixed results. The Bolivia experience stands as a cautionary tale about political risk in emerging markets.
TDE was said to have been acquired for 92 million euros for over 99% of the company from Union Fenosa in 2002. The acquisition gave Red Eléctrica a substantial position in Bolivia's transmission network, covering 74% of the country's grid.
On 1 May 2012, the Bolivian government announced its plans to nationalise REE's subsidiary in the country, Transportadora de Electricidad (TDE).
President Evo Morales announced that his government is completing the nationalization of Bolivia's electricity sector by seizing control of its main power grid from a Spanish-owned company. Morales took advantage of the symbolism of May Day, the international day of the worker, to order troops to occupy installations of the company.
President Evo Morales said though REE would be compensated, it had invested US$81 million since the grid's privatisation in 1997 and the government had "invested $220m in generation and others profited. For that reason, brothers and sisters, we have decided to nationalise electricity transmission. Just to make it clear to national and international public opinion, we are nationalising a company that previously was ours."
Following the measure, soldiers took over the corporate headquarters in Cochabamba peacefully and raised Bolivian flags. It also follows the partial nationalisation of the electric grid in 2010, including hydroelectric plants.
The Spanish government responded with diplomatic protests but limited leverage. Spanish Finance Minister Luis de Guindos added that "the Spanish government does not like these sorts of decisions as we believe it's fundamental to maintain legal security when investing in countries like Bolivia." REE shares also fell 3.6% in early trading, though they recovered slightly later in the trading session.
TDE contributed approximately some 1.5% of Red Electrica's total revenues and EBITDA. The financial impact was manageable, but the reputational damage and the precedent were concerning for international investors.
On 13 November 2014, Bolivia's government agreed to pay $36.5 million to Red Electrica in compensation for the nationalisation of TDE. This represented a fraction of the investment Red Eléctrica had made in the country—a reminder that sovereign risk in emerging markets can result in substantial losses even with international arbitration protections.
Peru: The Success Story
Peru offered a contrast to the Bolivian experience. Red Eléctrica built its position patiently, eventually achieving 100% ownership of REDESUR in 2017, after acquiring the final 45%. Redesur operates the electricity system of southern Peru, and controls 100% of Transmisora Eléctrica del Sur (Tesur) and 75% of Transmisora Eléctrica del Sur 2 (Tesur2).
The company expanded in Chile and Brazil as well. For more than 20 years, Red Eléctrica Internacional has shared Redeia's knowledge in the energy sector with Latin America, specifically, in the field of electricity transmission. It currently provides essential electricity services in Brazil, Chile and Peru through the management of 7,500 km circuit kilometres of transmission line.
The Latin American experience offers lessons for investors evaluating Redeia's international ambitions. The regulated model that works so well in Spain—where property rights are secure and regulatory frameworks stable—translates imperfectly to markets with different political economies. Today, international operations contribute modestly to group results, with the domestic Spanish business dominant.
VIII. The Hispasat Detour: Telecommunications Ambitions (2019-2025)
The Acquisition
In 2019, Red Eléctrica made its most ambitious diversification play: acquiring Spain's satellite operator Hispasat.
On 3 October, Red Eléctrica Corporación (REC) formalized the acquisition of Hispasat after obtaining the permits and authorisations from both the Spanish State and other countries in which the Company operates. The acquisition price for 89.68% of the satellite manager's shares, until then held by Abertis, totalled 933 million euros. The shareholdings of Hispasat are now distributed as follows: Red Eléctrica Corporación, 89.68%, SEPI, 7.41% and CDTI, 2.91%.
The closing of this operation positions the Red Eléctrica Group as a global operator of electrical and telecommunications infrastructures, both in Spain and internationally, in line with the goals established by the Company in its Strategic Plan 2018-2022. This is undoubtedly a definitive step forward in its consolidation as a strategic global infrastructure operator managing electricity transmission grids, fibre optic networks and satellites.
Hispasat is the leading satellite infrastructure operator in Spain and Portugal by turnover, the fourth largest operator in Latin America and the eighth largest in the world. It currently has a fleet of 7 satellites, covers Europe and the American continent and distributes more than 1,250 radio and television channels.
The strategic logic was ambitious: Red Eléctrica would become a comprehensive infrastructure provider spanning electricity transmission, fiber optics, and satellite communications. Management argued that these businesses shared commonalities in terms of heavy capital investment, regulated or quasi-regulated returns, and long asset lives.
The 2023 Rebrand to Redeia
To reflect its diversified ambitions, the company was formerly known as Red Eléctrica Corporación, S.A. and changed its name to Redeia Corporación, S.A. in June 2023.
The rebrand signaled a strategic intent to be seen as more than an electricity company. "Redeia" combined "Red" (network) with "eia" (suggesting energy and beyond), positioning the company as a multi-infrastructure conglomerate.
The Exit: Selling Hispasat to Indra
The diversification strategy proved short-lived. In early 2025, Redeia announced the sale of Hispasat to Indra, the Spanish defense and technology company.
The transaction has been finalised at 725 million euros, representing an enterprise value of 966 million euros for the entirety of Hispasat. This step strengthens Redeia's financial ability to continue driving the energy transition in Spain through its flagship and TSO Red Eléctrica.
Once it has sold its stake in Hispasat, acquired in 2019, the group will have received a total of 821 million euros, which includes the agreed price plus 96 million euros in dividends received from Hispasat during the period. The transaction involves the recognition of a cash impairment of 112 million euros. With this divestment, added to the disposal of Reintel in 2022, the group will have achieved the targets set in its current Strategic Plan for the telecommunications sector, having achieved capital gains of around 800 million euros after taxes.
Indra shareholders approved on Friday the acquisition of 89.68% of Hispasat from Redeia for 725 million euros, an operation that will also allow the company to take control of Hisdesat, the military branch of the satellite operator.
The numbers tell the story: bought for €933 million, sold for €725 million, with €96 million of dividends collected in between, resulting in a net cash loss of €112 million. The six-year diversification experiment destroyed value.
This step strengthens Redeia's financial ability to continue driving the energy transition in Spain through its flagship and TSO Red Eléctrica. This will be the main focus of its next Strategic Plan: to deploy and commission infrastructures that will support the future 25-30 Planning.
The Hispasat episode offers important lessons. Management believed they could apply infrastructure operator skills to adjacent markets, but satellite communications faced different competitive dynamics—particularly the emergence of low-earth-orbit constellations that threatened traditional geostationary operators. Redeia's core competency was managing a regulated monopoly with guaranteed returns, not competing in technology markets facing disruption.
The silver lining: the sale freed up capital and management attention precisely when Spain's grid investment needs were accelerating dramatically.
IX. The April 2025 Blackout: A Defining Crisis
What Happened
On 28 April 2025, at 12:33:30, a system-wide blackout left the entire Spanish and Portuguese mainland grid without power, following a sequence of uncontained voltage events.
The blackout's speed was terrifying. In just five seconds, Spain lost approximately 15 gigawatts of capacity, equivalent to 60% of its national electricity demand. The remaining generation was insufficient to meet demand, thus triggering a cascading failure across the entire grid.
The timing was particularly revealing. Just minutes before collapse, the grid was running on an unusually high proportion of renewable generation. Solar power was near its daily peak, with conventional thermal plants reduced to minimum levels.
The power failure was caused by a "surge in voltage that the grid was unable to absorb". A combination of technical, structural, and managerial factors contributed. There were two major fluctuations in the electrical grid, the second of which caused Spain's power system to disconnect from the European system and collapse the Iberian electricity network itself.
The Investigation & Blame Game
The report published on 17 June confirms insufficient voltage control capacity, planning failures, and premature disconnections that worsened the blackout. Red Eléctrica is now under scrutiny, with regulatory measures and potential sanctions expected.
The Spanish government and Red Eléctrica released separate reports with divergent conclusions.
The technical reports published by the Ministry for the Ecological Transition and the Demographic Challenge (MITECO) and by Red Eléctrica de España (REE), 50 days after the 28 April blackout, share common ground in their core findings but diverge in their technical criteria, timeline definitions and implicit allocation of operational responsibilities. Both documents confirm that the peninsular electricity system collapsed at 12:33:30 due to an uncontrolled overvoltage phenomenon and cascading disconnections.
Spanish grid operator Redeia blamed power plants for the massive blackout that affected the Iberian peninsula in April, as it disputed a government report that said its failure to calculate the correct energy mix was a key factor. While agreeing that a surge in voltage was the immediate cause of the outage, REE-owner Redeia blamed it on some conventional power plants - thermal power plants using coal, gas and nuclear - for failing to help maintain an appropriate voltage. "Based on our calculation, there were enough voltage control capabilities planned" by Redeia, operations chief Concha Sanchez told a news briefing. "Had conventional power plants done their job in controlling the voltage there would have been no blackout," she said.
Redeia Chair Beatriz Corredor told the same news briefing she had absolute faith in the company's calculations and that the operator had complied with all procedures and rules. "Red Electrica didn't breach any procedure and has acted diligently," Chief Executive Roberto Garcia Merino said at the briefing, adding that as a result he did not expect the company to face any claims.
The government report took a broader view. One of the report's most decisive findings is the confirmation that the grid lacked sufficient dynamic voltage control capacity on the day of the blackout. This shortfall was not due to a structural lack of resources, but to the low operational availability of synchronous power plants. Of the ten units scheduled by the System Operator (Red Eléctrica de España) to provide voltage control—three nuclear and seven combined-cycle plants—one was declared unavailable on 27 April due to a fault and was not replaced, reducing effective capacity at a critical time.
On 18 September 2025, Mrs Marta Castro Pérez-Chirinos, Director of Regulation at the Association of Electricity Companies (AELEC), testified that Red Eléctrica bore sole responsibility for the incident owing to its failure to anticipate synchronous capacity requirements within the system, which resulted in the nationwide blackout. According to her statement, voltage surges had already been observed in the transmission grid on 16, 22, and 24 April 2025, occurrences that should have prompted preventive measures. On 25 September 2025, Dr Manuel Fernández Ordóñez, Doctor in Nuclear Physics, also attributed responsibility to Red Eléctrica.
A parliamentary inquiry was established. On 12 June 2025, the "Committee of Inquiry into the Interruption of Electricity and Communications Supply on 28 April 2025" was established under the 15th Parliamentary Term of the Spanish Senate, with the aim of analysing the technical, operational and organisational causes that led to the blackout, and assessing the actions of the Government, Red Eléctrica de España (REE), and other entities involved. Since 23 July 2025, hearings have been held in accordance with a previously approved work plan. Energy experts and senior business figures have participated, among them Beatriz Corredor, Chair of Redeia.
Root Causes: The Structural Issues
Beyond the immediate technical failures, the blackout exposed structural vulnerabilities that had accumulated over years.
Spain and Portugal are especially vulnerable. Despite the two countries' electricity markets being connected over ninety-five percent of the time, the Iberian Peninsula is an "energy island," poorly connected to the rest of Europe. As of 2022, Spain and France shared only 2.8 GW of interconnection capacity, and Spain's total cross-border capacity with the Central European network was close to 3000 MW, far below the European Commission's fifteen percent target of interconnection by 2030.
The European Council set a target for member countries to reach an interconnection level of at least 10% by 2025 and 15% by 2030 with the rest of the European Union. Spain remains far below these targets.
Spain is also interconnected with Morocco by two submarine cables that cross the Strait of Gibraltar, each with a capacity of 700 MW. The interconnection with France is the most important with a total capacity of 2.8 GW currently.
The isolation meant that when Spain's internal system failed, external support was limited. Morocco and France could provide backup, but not at the scale needed to prevent cascading collapse.
Lessons Learned
However, renewables themselves were not the root cause of these sweeping outages. The key lesson is that ensuring the stability, reliability, and resilience of a grid dominated by variable renewable energy sources requires more than simply increasing the number of solar panels and wind turbines. These technologies should be supported by a grid specifically designed to accommodate their characteristics and variability.
From Redeia, CEO Roberto García Merino publicly acknowledged that "the risk of another blackout is there" and announced sustained annual investment increases in the grid, reaching €1.5 billion per year. He also emphasised the need to expand international interconnections to improve system security, which currently stands at 3%, compared to the 15% EU target.
The blackout's immediate financial implications remain uncertain. The consequences of the April blackout for Redeia are uncertain and are analysed from three perspectives: 1) credit risk: S&P has placed the outlook on negative credit watch due to the potential implications of the blackout, based on its view of the regulator, pending hypothetical compensation for the sale of Hispasat. 2) Legal risk: maximum penalty of €60 million, although the greatest risk lies in potential consumer claims. 3) Operational risk: CNMC implemented PO 74 to relax voltage control.
ENTSO-E is still working on the preparation of a final report, scheduled for the first quarter of 2026, which will include a detailed analysis of the causes of the incident, as well as recommendations to avoid similar situations in the future. In addition, investigations by the CNMC and the Audiencia Nacional are ongoing. At the date of the results for the first nine months of 2025, it is not yet possible to objectively assess the volume of complaints in relation to the incident.
The company maintains it has no liability. The company also addressed the April 28 incident, noting that investigations by the CNMC and the National Court are ongoing. No provision has been recorded in the interim financial statements as Redeia maintains it "acted with the utmost responsibility and professionalism" in applying operating procedures and restoration protocols.
For investors, the blackout represents a crystallization of regulatory and operational risk that was previously theoretical. Spain's energy transition is proceeding faster than grid modernization, creating reliability vulnerabilities that the April incident made painfully visible.
X. Current State: The Business Today
Core Operations
Redeia Corporación engages in electricity transmission, and system operation and management of the transmission network for the electricity system in Spain and internationally. The company operates through three segments: Management and Operation of National Electricity Infrastructure; Management and Operation of International Electricity Infrastructure; and Telecommunications. It operates through a transmission network of approximately 45,592 kilometers and has 97,981 MVA of transformation capacity. The company also provides advisory, engineering, and construction services; and telecommunications, financing, reinsurance, line and substation maintenance, technical consultancy, and satellite telecommunications services.
Following the Hispasat sale, electricity transmission dominates even more. Management and operation of electrical networks represents over 92% of revenues.
Recent Financial Performance
The company's 2024 results reflected the transition period:
Gross operating profit (EBITDA) reached €1,210.1 million, while net operating profit (EBIT) stood at €761.4 million. On the other hand, the group's net profit stood at €368.4 million. Without the effect of the sale of Hispasat, the group would have made profits of more than €500 million, in line with the company's forecast. As regards net financial debt, it stood at €5,369.9 million, €394 million more than the figure for 2023.
Revenue (business turnover and share of profits from companies) reached €1,647.5 million. This figure reflects the impact of the end of the regulatory useful life of assets licensed before 1998, known as pre-98 assets. It is a change in the transmission remuneration calculation methodology.
First half 2025 showed resilience:
Redeia delivered revenue growth of 3.0% year-over-year, reaching €424 million in Q1 2025 compared to €412 million in Q1 2024. This growth was primarily driven by the company's regulated businesses, both in Spain and internationally. Net profit increased by 4.2% to €138 million, up from €132 million in Q1 2024.
The company reported stable net profit of €269 million for H1 2025, unchanged from the same period last year, while revenue grew by 2.2% to €843 million.
Investment Acceleration
The investment story is where Redeia's narrative shifts from defense to offense.
Redeia has closed 2024 with an unprecedented level of investment in the transmission system operator (TSO), Red Eléctrica. This outstanding financial investment has enabled the company to keep driving the ecological transition and industrial development in Spain. As a result of this strong commitment to increased investment, 2024 was a turning point for the group, which is now entering a period of revenue growth. The company's investments in Red Eléctrica in 2024, allocated to the transmission grid and operation of the electricity system, amounted to €1,104.9 million, which is 34% higher than the same period in 2023. Much of this volume—€976.3 million—was allocated to developing and strengthening the transmission grid.
A standout element in Redeia's Q1 results was the significant 70% increase in TSO investments, which rose from €139 million in Q1 2024 to €237 million in Q1 2025. The company highlighted progress on several strategic projects, including interconnections with France, Tenerife-La Gomera, Peninsula-Ceuta, and Galicia-Portugal.
The Bay of Biscay interconnection with France represents the largest project. The future interconnection will double the electricity exchange capacity between the two countries to 5,000MW, equivalent to the consumption of 5 million homes.
The government has approved new investment plans with an additional €750 million, bringing the total investment in the 2021-2026 Planning to €8,203 million. The company also secured support from the European Investment Bank (EIB) for financing strategic projects, with €150 million and €400 million tranches secured as part of an €800 million financing package.
Regulatory Outlook
The crucial regulatory update concerns remuneration rates for 2026-2031.
A significant regulatory development is the proposed new Financial Remuneration Rate (FRR) for the 2026-2031 period. The methodology under consideration would increase the FRR to 6.46% from the current 5.58%, potentially improving Redeia's future financial outlook.
The proposed financial remuneration rate is 6.46% (against 5.58% previously) and includes significant investments in the network for this period. As a result, Redeia's regulated income would grow from €1.217 billion forecast for 2025 to €1.858 billion in 2031, representing an average annual growth rate of 7.3%.
The CNMC has indicated materially higher allowed revenues than in its initial proposal, representing a 10% increase over the 2026-31 period, or approximately €0.9 billion. Additionally, the final allowed return for Spanish networks activities has not yet been definitively set and could potentially improve from the initially proposed 6.46%, which already represents an increase from the current 5.58%.
For investors, this regulatory upgrade is critical: higher allowed returns on a growing asset base should support earnings growth even as the blackout investigations proceed.
XI. Bull Case & Bear Case
The Bull Case
The Essential Infrastructure Story
Spain has legislated aggressive decarbonization targets: 74% renewable electricity by 2030. Achieving this requires massive grid investment—strengthening internal transmission to handle variable renewables, building storage, and expanding interconnections with Europe and Africa. Redeia is the only company legally permitted to make these investments.
The regulatory framework guarantees returns on approved investments. With the proposed increase in remuneration rates from 5.58% to 6.46%, each euro invested should generate higher regulated returns. The 7.3% annual growth in regulated revenues projected through 2031 provides unusual visibility for equity investors.
Defensive Characteristics
Redeia's business model offers recession resistance: electricity demand is relatively inelastic, and regulated returns don't depend on economic cycles. The dividend policy (€0.80 minimum per share for 2024-2025) provides income stability.
Regarding the dividend, the Board of Directors will propose the distribution of a dividend of €0.80 based on the results of the 2024 financial year, in line with the dividend policy established in the company's strategic plan. This policy establishes a minimum of €0.80 per share for the dividend charged to the results of 2024 and 2025.
ESG Alignment
With 70% of financing now ESG-linked and 94% of investments taxonomy-eligible, Redeia offers ESG-focused investors exposure to the energy transition through a regulated utility with investment-grade credit ratings.
The Bear Case
Regulatory and Political Risk
The April blackout has placed Red Eléctrica under intense political scrutiny. Legal risk: maximum penalty of €60 million, although the greatest risk lies in potential consumer claims.
Beyond immediate penalties, the political environment could shift. Red Eléctrica's monopoly position and regulated returns depend on continued political support for the current regulatory model. A change in government or public sentiment could result in pressure to reduce returns or alter the regulatory framework.
Since then, at least thirty senior political figures linked to the PP and PSOE have transited through its board of directors. The company's close ties to successive governments create perception risks.
Execution Risk on Investment Program
Redeia must dramatically scale investment spending while managing the aftermath of a major operational failure. Construction supply chains are constrained globally, and the company must simultaneously build domestic infrastructure and international interconnections.
The Interconnection Dependency
The blackout exposed Spain's vulnerability as an "energy island." Even with planned investments, Spain will remain poorly interconnected with Europe through 2030. Another renewable-heavy day with grid stress could trigger similar problems.
Porter's Five Forces Analysis
| Force | Assessment |
|---|---|
| Threat of New Entrants | Very Low - Legal monopoly, massive capital requirements |
| Bargaining Power of Suppliers | Moderate - Dependent on specialized equipment suppliers for transformers, cables |
| Bargaining Power of Buyers | Low - Captive generators and distributors must use the grid |
| Threat of Substitutes | Low (but increasing) - Distributed generation/storage could reduce transmission needs long-term |
| Competitive Rivalry | None - Legal monopoly eliminates direct competition |
Hamilton Helmer's 7 Powers Analysis
Cornered Resource ✓ - Redeia owns the only legal transmission network in Spain. This is perhaps the strongest possible cornered resource: ownership conferred by law.
Scale Economies ✓ - Fixed-cost infrastructure with declining unit costs as volume grows. However, returns are regulated, so scale benefits accrue to consumers via lower tariffs rather than shareholders via profits.
Switching Costs ✓ - Generators and distributors have no choice but to use the grid.
Network Effects - Limited in the traditional sense, though a more interconnected grid becomes more valuable.
Process Power ✓ - CECRE represents genuine operational expertise that other operators have sought to replicate. However, this expertise failed to prevent the April blackout.
Branding - Not applicable for a regulated utility.
Counter-Positioning - Not applicable; incumbents cannot choose to become transmission operators.
XII. Key Metrics to Monitor
For long-term investors tracking Redeia, three key performance indicators deserve particular attention:
1. Regulated Asset Base Growth
The regulated asset base (RAB) is the foundation of Redeia's earnings power. Under the regulatory model, allowed revenues are calculated as a function of the RAB multiplied by the remuneration rate. RAB growth, therefore, directly drives future earnings potential.
Monitor: Annual growth in transmission RAB, approved investment volumes, and commissioning rates for new assets. The gap between investment spending and commissioning indicates execution efficiency.
2. Achieved Remuneration Rate vs. Allowed Rate
The CNMC sets an allowed rate, but the company's actual achieved return can differ based on operational efficiency. A company that controls costs below regulatory benchmarks earns excess returns; one that exceeds cost allowances earns less than the headline rate.
Monitor: Actual EBITDA margin on regulated activities versus regulatory assumptions. Post-2026, track whether the new 6.46% rate translates into higher realized returns.
3. System Reliability Metrics
Following the April blackout, operational reliability is no longer a background assumption. Regulators, politicians, and the public are watching.
Monitor: System availability statistics, curtailment rates for renewable generation, and any penalties or adjustments related to operational performance.
XIII. Leadership
The company's leadership has been thrust into the spotlight following the April 2025 blackout.
Corredor will face a new mandate at the head of Redeia, after being appointed in February 2020 as president of the then Red Eléctrica Corporación, and ratified at the shareholders' meeting that same year, following the resignation of Jordi Sevilla.
A graduate in Law from the Autonomous University of Madrid, Corredor has been a property registrar since 1993. A member of the PSOE since 2003, she was Secretary for Women and Equality in the San Blas-Canillejas group in Madrid. She was Minister of Housing in the IX Legislature, between April 2008 and October 2010, under the Government of José Luis Rodríguez Zapatero.
García-Merino has held the position of chief executive of Redeia since 2019, when he was appointed CEO following the dismissal of Juan Francisco Lasala. A graduate in Economics and Business Studies from the University of Valladolid, PDG from IESE and MBA from Instituto de Empresa, García-Merino has a long career in the group since joining in 2004, where he has held various positions linked to strategic planning and business development, especially in the international and telecommunications fields.
CEO Roberto García Merino received 890,000 euros last year, while chair and former socialist minister Beatriz Corredor received 546,000 euros.
Both executives were re-elected in June 2024 for four-year terms. Corredor and García have obtained the confidence of 95% and 99% of shareholders, respectively.
XIV. What the Future Holds
Near-Term Catalysts
Hispasat Sale Completion: The company is progressing with the divestment of its Hispasat satellite business, with the transaction expected to close in Q4 2025. The €725 million proceeds will reduce net debt and clear the decks for grid investment.
2026-2031 Regulatory Framework: Final approval of new remuneration rates, expected in late 2025, will provide visibility on returns for the next six years.
Investigation Conclusions: ENTSO-E is still working on the preparation of a final report, scheduled for the first quarter of 2026, which will include a detailed analysis of the causes of the incident. The conclusions could either vindicate Red Eléctrica or result in penalties and litigation.
Medium-Term Developments
Bay of Biscay Interconnection: The future interconnection will double the electricity exchange capacity between the two countries to 5,000MW. Completion expected by 2028, this will reduce Spain's energy island vulnerability.
2025-2030 Planning: Investment of 750 million euros [additional], so that the total investment of the Planning with a 2026 horizon increases to 8,203 million.
On September 12th, the Ministry for Ecological Transition and the Demographic Challenge submitted a Royal Decree draft to hearing and public information, to modify the investment limits for transmission and distribution networks. In the case of transmission, an additional 720 million euros per year from 2026 to 2030.
Long-Term Vision
Redeia's long-term value proposition rests on a simple premise: Spain's energy transition requires massive transmission investment, and Redeia is the only entity permitted to make it. The question is whether the regulatory framework will provide adequate returns on that investment, and whether management can execute without repeating the operational failures of April 2025.
The company's own vision emphasizes its role as "the backbone of the ecological transition." If Spain succeeds in reaching 74% renewable electricity by 2030, Redeia will have built the infrastructure that made it possible. If the energy transition falters—whether due to grid reliability problems, regulatory changes, or political shifts—Redeia will bear much of the blame.
Conclusion
Redeia presents a genuinely unusual investment case: a regulated monopoly facing both its greatest investment opportunity and its greatest operational crisis simultaneously.
The April 2025 blackout was not just a technical failure—it was a revelation of the gap between Spain's renewable energy ambitions and its grid's actual capabilities. Closing that gap requires exactly the kind of investment Redeia is uniquely positioned to make. The question is whether management, regulators, and the political system can coordinate effectively to do so.
For investors, Redeia offers regulated returns with unusual visibility into future earnings. The company will invest billions of euros over the coming years at remuneration rates set by the regulator. Unlike technology companies dependent on market success, Redeia's future revenues are largely determined by government decisions already made or in process.
The risks are equally visible: blackout-related litigation, political backlash, and the ever-present possibility that regulatory returns will be squeezed if governments prioritize lower electricity costs over utility profitability.
In short, we are responsible for ensuring that electricity is always available wherever you need it and for making it sustainable by promoting renewable energies. For all these reasons, Red Eléctrica is the backbone of the electricity system in Spain and the cornerstone of the ecological transition process that the country is undergoing. This is the result of four decades of effort, commitment, and excellence from our teams. Thanks to them, Red Eléctrica today is a diverse, innovative company, at the forefront of sustainability, committed to the environment and the general interest.
The company that invented the TSO model forty years ago now faces the ultimate test of that model: can a regulated monopoly deliver both the investment needed for the energy transition and the reliability that modern economies demand?
The answer will be written in high-voltage cable, submarine interconnections, and the binary outcome of whether the lights stay on.
Spotify
Apple Podcasts
Amazon Music
Audible
YouTube
Castbox
Pocket Casts