Will the electricity price rise because of the war in Iran?

The international situation is once again putting the spotlight on the energy market. The war in Iran is generating tension in the gas market, which could raise electricity bills for households on the regulated tariff in Spain. More than eight million households are on the PVPC, the tariff that updates its price daily based on the electricity market.

Since January 1, 2026, a new methodology for calculating the regulated tariff blends 45% of the price from the daily market with 55% from futures markets. This hybrid system considerably reduces volatility: more than half of the price no longer depends on gas fluctuations and instead rests on more stable signals from futures markets.

Spain does not depend directly on Iran for its energy supply, but it is part of a global market. In 2025, Spain imported gas mainly from Algeria (34.6%), the United States (30%), Russia (11.5%) and Nigeria (7.3%). Although Iran is not a major supplier to Spain, it does influence a critical chokepoint: the Strait of Hormuz, through which a substantial share of the world's oil and gas trade passes.

Spain's electricity system operates on a marginal-pricing basis: the last technology to be dispatched — usually combined-cycle gas plants — sets the final price for all the others. So when the price of gas rises, the price of electricity rises too, even though a large share of the energy comes from renewable or nuclear sources.

The energy crisis triggered by the invasion of Ukraine in 2022 showed just how sensitive prices can be to international tensions. The long-term structural solution is clear: more renewable energy, more storage and less reliance on natural gas as the backup technology for the electricity system.