Spain’s blackout was a $454 million hit to the economy

Spain’s largest blackout on record shaved almost €400 million from the economy, Spain’s biggest domestic bank says, after an hours-long power cut stopped shopping and travel across most of the mainland.

CaixaBank studied card payments, online orders, and cash withdrawals. It found that consumer spending on Sunday, 28 April, fell 34% during the blackout. Some spending returned later in the week, but the net loss still reached 15%. 

“We estimate that the blackout will have a one-off impact on quarterly GDP of less than one-tenth of a percentage point, less than €400 million,” the bank said.

The power blackout occurred around 12:30 p.m. local time. About 50 million people in Spain and Portugal lost power, which damaged trains, phones, and shops. Madrid is still probing the cause of the blackout. Grid operator Red Eléctrica said two separate faults combined to topple the system.

Bloomberg puts the direct dent at nearly 0.5% of quarterly GDP, though part of that should have been recovered. Even so, Spain is still forecast to grow 2.6% this year and 2.2% in 2026.

“The blackout was a wake-up call,” said Kristina Ruby, secretary general of Eurelectric. “It showed that the need to modernize and reinforce Europe’s electricity grid is urgent and unavoidable.”

Half of the European Union’s power lines are over 40 years old. Demand from data centers, electric cars, and the fast rise of wind and solar is adding stress, while cyber risks continue. 

Global spending on renewables has almost doubled since 2010, yet grid investment has stayed near $300 billion a year. The International Energy Agency says that figure must climb above $600 billion by 2030—a leap required for replacements, digital safeguards, and thousands of kilometres of new lines.

EU’s grids require upgrades worth trillions of dollars to avoid such blackouts

Spain accelerated its green shift after Russia invaded Ukraine in February 2022. In 2024, renewables supplied 56% of Spanish electricity. Across the EU, the share rose to 47% last year from 34% in 2019, Ember data shows. Fossil fuels fell to 29% from 39%.

Wind and solar power plants can be built in a few years, but new high-voltage lines often take a decade. Brussels estimates the total grid bill at up to $2.3 trillion by 2050. European firms spent about €80 billion on grids last year—up from the €50-70 billion range seen earlier, analysts at Bruegel say—but yearly investment may need to reach €100 billion.

Connections with neighbors are thin. Only about 5% of Spain’s capacity can move beyond the Iberian peninsula, far below the EU goal of 15% by 2030. A new link with France under the Bay of Biscay is planned, with extra lines to Morocco.

Back-up generation is another challenge 

Solar and wind generate direct current power, which must be turned into alternating current using inverters. If grid frequency falls below 50 hertz, safety devices cut power. Hence, if power generation drops, the grids require back-up AC power. If multiple plants drop off, it would lead to a blackout.

Spain plans to close all seven nuclear reactors by 2035, a move officials say could strain the power supply. Portugal, on the other hand, relies on one gas and one hydro plant that can start quickly, and Prime Minister Luís Montenegro wants more.

Other countries have faced similar challenges. A lightning strike in Britain in 2019, plus a separate fault, cut power to a million customers. The United Kingdom has since lifted battery storage to about 5 gigawatts. 

Europe as a whole has 10.8 gigawatts and could reach 50 gigawatts by 2030. That’s just a fraction of the required 200 gigawatts, according to the European Association for Storage of Energy. In Ireland, Siemens Energy installed the world’s largest flywheel that works as power storage and stabilizes the grid.

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