meed-logo

line1 line2 line3
SIGN IN / REGISTER

Iberian power outage offers valuable lessons

2 May 2025

Commentary
Jennifer Aguinaldo
Energy & technology editor

The root cause of the power outages that gripped parts of the Iberian Peninsula on 28 April has yet to be established, pending a detailed investigation into what triggered the loss of power in large swathes of Portugal and Spain.

Ongoing investigations aside, Spain’s national electricity grid operator, Red Electrica, has ruled out a cyber attack or sudden spike in renewables as the main cause of the outage, which affected transport, retail and healthcare services, among others.

Insurance claims arising from the outages could reach between $300m and $600m in Spain and significantly less in Portugal, according to some sources, while the Riyadh-based Digital Cooperation Organisation cites losses of up to €1.3bn ($1.47bn) for the Spanish economy, based on Spain’s self-employed workers’ association, ATA.

But the highest cost could come in a non-monetary form. It would require probing into Spain’s utility infrastructure, which Red Electrica describes as Europe’s “best and most resilient”, and that of every European country and everywhere else.

Red Electrica president Beatriz Corredor has been quick to defend her firm, saying there is no such thing as zero risk.

The speed at which Spain, which exports renewable power to Portugal, restored power in affected areas lends credence to Red’s best-in-Europe claim if one is willing to forego the question of how it could have happened or been avoided in the first place.

Pending the results of the investigation, analysts and experts have offered their insights on the subject.

Writing on Linkedin, Thierry Lepercq, founder and president at Hydeal, describes the Spanish blackout as “the most significant power event in decades”, adding it is likely the first of a series of crippling crashes that will result from the inherent conflict between decarbonisation, or aiming at 100% renewables; security of supply; and energy affordability.

Lepercq is confident that the lesson will soon be clear: the power outage was all about inertia.

He predicts that the lack of electricity system planning will necessitate radical action. This could involve the “near complete” stop of new variable – solar and wind – installations and the fast ramp-up of fully-dispatchable, inertia-providing capacity from combined-cycle gas turbines (CCGTs) initially powered by natural gas, and as soon as possible, from competitive green hydrogen.

Another senior consultant at an international engineering services firm with offices in Dubai tells MEED that, considering a lot of caveats, the blackout resulted from a mix of high solar reliance, low grid inertia, voltage oscillations and insufficient backup systems, with no single cause confirmed. Some tripping, which catalysed the inertia problem, has also been reported, he notes. 

Prevention strategies could include enhancing firm power, expanding storage, improving monitoring and strengthening interconnections.

Morocco, for instance, played a key role in restoring power to Spain, highlighting the benefits of power pooling, where countries share an integrated generation capacity and grid stability across borders.

Reviewing energy policies is also key, such as looking at grid codes with clearer requirements on how much energy storage should be on the system in proportion to renewable energy development, according to the consultant.

This event offers valuable lessons for regional utility stakeholders, particularly their capacity planning divisions. Over 100GW of renewable energy capacity is planned to be built across the GCC states before 2030, excluding those catering to private clients, with certain developments and projects looking to be powered 100% by renewable energy by 2030.

The Iberian story shows there are as many potential solutions or measures, with none offering zero risk, to address potential points of failure in today’s electricity system, which has been undergoing major re-engineering works to fit the 2030 net-zero scenario.

It is also worth mentioning that certain jurisdictions in the Gulf and broader Middle East and North Africa region regularly suffer from power outages in the summer, mainly due to rising temperatures and underinvestment in electricity generation and distribution networks, and notwithstanding a very negligible amount of renewable power on their grids.

Credit: Crowd at Malaga Maria Zambrano train station entrance due to blackout in Spain and Europe, 28 April 2025. Shutterstock

https://image.digitalinsightresearch.in/uploads/NewsArticle/13802518/main.gif
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Financial challenge tests Iraq’s resolve

    13 May 2026

     

    On 21 April, as a fragile ceasefire held between the US and Iran, the Trump administration halted a $500m shipment in cash headed for Iraq, as it sought to clamp down on Iranian-backed Shia militias in the country. 

    That cash, derived from Iraqi oil exports and routed via the US Federal Reserve to the Central Bank of Iraq (CBI), is a vital cog in Iraq’s financial arteries, enabling it to cover foreign exchange demand.

    This was not the first time that Iraq’s financial system has felt the US’s warm breath on its neck.

    Back in February 2025, the US Treasury Department blacklisted five Iraqi banks from participating in dollar transactions, citing concerns about their role in illicit financial flows that benefited Iran’s Islamic Revolutionary Guards Corps.

    Iraq has also itself often circumscribed dollar use within its own financial system.

    In July 2023, the CBI banned 14 banks from conducting dollar transactions in a crackdown on dollar smuggling. In February 2024, it banned a further eight banks from dollar transactions as part of a crackdown on fraud and money laundering.

    Dollar pressure

    The recent halt in US dollar cash shipments has nevertheless added pressure to Iraq’s parallel currency market gap, says Lucila Bonilla, lead emerging market economist at Oxford Economics.  

    “The gap between the parallel exchange rate has widened noticeably against the official peg, to around 20%,” she says.

    “Dollar demand has risen as citizens and traders seek to hedge uncertainty – dollar deposits are up, and there are reports of a notable shift in the composition of cash holdings toward dollars.”

    Ratings agencies see the US move on Iraqi dollar use as a challenge, but one that might not prove too onerous.

    “Iraq can overcome a short-term war as it has $100bn of reserves and its debt profile is bearable,” says Gilbert Hobeika, a director at Fitch Ratings.

    “But a longer-term conflict will hurt Iraq as the economy is reliant on oil revenues and government involvement, while facing at the same time risk from the US stopping delivery of US dollars.”

    How persistent the pressure proves will depend largely on the duration of the Hormuz shock and how the relationship with the US evolves.

    “Forming a new government that is palatable to the US could ease the pressure, though Iraq’s protracted government formation process adds uncertainty to that timeline,” says Bonilla.

    The US-Iran war is putting even more pressure on banks.

    “There are uncertainties with regard to depositors,” says Hobeika. “The public sector banks have weak management and governance structures. Financial reporting is weak, and that puts pressure on asset quality and capitalisation.”

    If the conflict lasts a long time, the government will start withdrawing funds to pay salaries and contractors.

    “That will affect deposits at the public sector banks in the near term,” says Hobeika.

    State-heavy system

    Iraq’s banking system is dominated by a handful of state-owned banks with a market share of 75%-80%, and then 60-plus private banks competing for the remaining 20%-25% of the pie. 

    “Private banks have struggled to compete in a market with limited opportunities, small deposit bases and a narrow range of products, often focusing on very basic activities,” says Lea Hanna, an analyst at Moody’s.

    “In 2019, we had a wave of Islamic banks getting bans on dealing with US dollars – reducing what had been a primary source of business.”

    A few private banks have benefitted since then, namely those with majority ownership by foreign banks such as National Bank of Iraq, a subsidiary of Capital Bank of Jordan, and Bank of Baghdad, a subsidiary of Jordan Kuwait Bank.

    “Supported by their affiliates, these banks are relatively well run compared to domestic peers and have ample capital buffers,” says Hanna.

    “They have captured a large market share of US dollar transfers thanks to their strong US correspondent banking relationships that allow them easier access to US dollars. They have seen a surge in their profitability and an increase in their deposit base.”

    Financial reform

    The CBI has attempted to introduce reforms to the banking system, as part of a wider effort to enable it to channel funding to the private sector.

    In early 2025, it increased the minimum issued and paid-up capital requirement to ID400bn ($305m), along with a requirement to establish correspondent banking relationships for foreign-currency trading. The plan was to increase these in ID50bn increments every six months, to hasten sector consolidation.

    However, of Fitch’s rated banks, just two – state-owned Trade Bank of Iraq and Mansour Bank, a subsidiary of Qatar National Bank – met the full capital requirement.

    “While a lot of banks managed to increase their capital, a number of them didn’t and have been struggling to improve their systems and compliance with anti-terrorism and anti-money laundering regulations,” says Hobeika.

    “These systems take a long time to improve, and it costs the banks too. For that reason, they have agreed with the central bank to postpone implementation to 2027/28.”

    The expectation is that the number of private Iraqi banks will shrink from 60 to about half that number by 2028.

    “Iraq’s banking sector is undergoing a significant overhaul, with the Central Bank pushing through higher capital requirements, improved anti-money-laundering compliance, and a shift towards commercial banks managing their own international correspondent relationships. These moves are welcomed,” says Bonilla.

    But the harder work remains, argues Bonilla: state-owned banks still carry high levels of non-performing loans, weak governance and a history of politically directed lending, while private sector credit remains among the lowest in the region.

    “The stakes are high as the IMF estimates that a comprehensive reform of the financial sector, alongside broader governance and regulatory changes, could double Iraq’s non-oil growth potential over the medium term, adding around 4 percentage points to GDP,” says Bonilla.

    “For now, the reforms address the plumbing. The structural transformation of a banking system to serve the private sector is still largely ahead.”

    Clouded outlook

    So far, Iraq’s financial system seems to have averted a worst-case scenario of large-scale deposit withdrawals related to the Iran conflict.

    Any deposit withdrawals seem to be more related to the introduction of a digital custom system ASYCUDA (Automated System for Customs Data) aimed at helping the government collect revenues, which saw a lot of traders trying to bypass the custom charges.

    “This drove some exporters or traders to source US dollars outside the banking system, in the parallel market, to avoid stricter requirements and up-front payment of customs duties. That has now eased,” says Hanna.

    Looking ahead, Fitch anticipates that most government financing is likely to come from the CBI through indirect purchases of government securities.

    The central bank’s total claims on the central government represented about 52% of the domestic debt stock and 25% of the total debt stock at end-2024, notes the agency.

    It envisages that a smaller portion will come from the government’s cash deposits, anticipated to fall to an average 12% by 2027.

    Fitch says the CBI’s balance sheet limits refinancing risks, while the FX reserves are large enough to absorb the expansion of that balance sheet without putting pressure on the exchange-rate peg with the US dollar.

    Surging foreign direct investment comes as a source of comfort, with annual inflows rising from around $2bn in 2022 to $5bn-$7bn from 2023 onwards. 

    Reform of the financial system will remain at the top of the new government’s in-tray.

    The regional environment is unconducive to this mammoth task, and it can only hope that an end to the conflict would support ongoing Iraqi efforts to build a financial system comparable to that of some of its Gulf neighbours.

    MEED’s June 2026 report on Iraq also includes:

    > OVERVIEW: Iraq enters era of resilience, reform and rising risks
    > OIL & GAS: Iraqi oil and gas sector in crisis
    > POWER & WATER: Focus shifts to delivery of Iraq utilities expansion
    > CONSTRUCTION: Momentum builds in Iraq’s post-war construction sector

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16799540/main.gif
    James Gavin
  • JinkoSolar signs 2GW deal for Abu Dhabi solar project

    13 May 2026

    China’s JinkoSolar has signed an agreement with Abu Dhabi Future Energy Company (Masdar) to supply 2GW of photovoltaic (PV) modules for the round-the-clock renewable energy project in Abu Dhabi.

    The agreement covers the supply of JinkoSolar’s Tiger Neo series modules for the project, which is being developed by Masdar in collaboration with Emirates Water & Electricity Company (Ewec).

    The landmark $6bn project combines a 5.2GW solar PV plant with a 19 gigawatt-hour battery energy storage system (bess).

    It entered construction in October 2025 with India’s Larsen & Toubro and Power China working as contractors. It is known as the world’s first gigascale round-the-clock renewable energy project.

    Masdar had earlier selected JinkoSolar and JA Solar as preferred suppliers for solar PV modules, and CATL (Contemporary Amperex Technology) as preferred supplier for the bess segment.

    The project is designed to provide baseload renewable power and address intermittency challenges associated with solar generation. The developers said the scheme will serve as a model for similar projects internationally.

    JinkoSolar said the Tiger Neo modules supplied for the project are based on N-type TOPCon technology and have been adapted to meet the technical requirements of the development.

    Senior executives from both companies attended the signing ceremony in Abu Dhabi, including Mohamed Jameel Al-Ramahi, CEO of Masdar, and Charlie Cao, CEO of JinkoSolar.

    Jinko has won several major contracts in recent years, including a contract to supply solar PV modules with a capacity of 3GW for Saudi Arabia’s Haden and Al-Khushaybi solar projects.

    It also recently announced the signing of a 2GW solar PV module supply agreement with China Energy Engineering Corporation (CEEC) for Saudi Arabia’s Phase Six Khurais PV project.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16813268/main1816.jpg
    Mark Dowdall
  • Dubai opens prequalification for Jebel Ali STP expansion

    13 May 2026

     

    Dubai Municipality has issued a request for qualifications for the Jebel Ali sewerage treatment plant (STP) expansion – phase 3 project.

    The DS150/3 project will be delivered under a public-private partnership (PPP) model on a design, build, finance, own, operate and transfer basis.

    The project involves the development of a new water resource recovery facility with an ultimate treatment capacity of up to 1 million cubic metres a day (cm/d).

    It is being procured through Dubai Municipality’s Sewerage and Recycled Water Projects Department and will be delivered through a two-stage operational approach over a 30-year concession period.

    The bid submission deadline is 18 June.

    UK-headquartered Deloitte is acting as financial adviser, Aecom as technical adviser and CMS as legal adviser.

    Dubai Municipality said the project will also include additional land uses and community-focused amenities as part of broader sustainability and urban integration objectives.

    Phase one and two expansion

    In April, the deadline was extended for contractors to submit bids for an engineering, procurement and construction (EPC) contract covering the expansion of the Jebel Ali STP phases one and two.

    Located on a 670-hectare site in Jebel Ali, the original wastewater facility has a treatment capacity of about 675,000 cm/d following the completion of phase two in 2019, combining approximately 300,000 cm/d from phase one and 375,000 cm/d from phase two.

    The upgraded facility will be capable of treating an additional sewage flow of 100,000 cm/d, with the expansion estimated to cost $300m.

    The new bid submission deadline is 11 June.

    UK-headquartered KPMG and UAE-based Tribe Infrastructure are serving as financial advisers on the project.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16812872/main.jpg
    Mark Dowdall
  • Iraq LNG project delayed until next year

    13 May 2026

    Register for MEED’s 14-day trial access 

    Iraq’s first liquefied natural gas (LNG) import terminal, which has an estimated project value of $450m, is now expected to become operational in 2027 due to delays caused by the regional war and disruption to shipping through the Strait of Hormuz.

    Work on jetty reinforcement and fixed terminal infrastructure at the Port of Khor Al-Zubair has been delayed, according to a statement from US-based Excelerate Energy, which is contracted to develop the facility.

    In its statement, the company said: “We are revising our full-year guidance to reflect the delayed startup of our Iraq terminal due to the ongoing conflict in the Middle East.”

    It added: “The Iraq project fundamentals remain unchanged. Looking ahead, we continue to have confidence in our sequenced earnings growth through 2028.”

    In October 2025, Excelerate signed a definitive commercial agreement with a subsidiary of Iraq’s Ministry of Electricity for the development of the country’s first LNG import terminal.

    The integrated project includes a five-year agreement for regasification services and LNG supply, with extension options, and a minimum contracted offtake of 250 million standard cubic feet a day (cf/d).

    Excelerate said: “Jetty reinforcement and construction of the fixed terminal infrastructure have been delayed temporarily due to the conflict in the Middle East and the terminal is no longer expected to commence operations in the third quarter of 2026 as previously disclosed.

    “Project startup is now expected in 2027. The long-term fundamentals supporting the project remain unchanged, driven by chronic power shortages and limited domestic gas processing capacity in Iraq.

    “Current conditions further reinforce the country’s need for reliable and scalable LNG import infrastructure and construction will resume as conditions allow.”

    Earlier this year, Iraq’s Ministry of Electricity said that the terminal was on track to come online on 1 June, ahead of expected gas shortages during the summer months.

    Then, in late April, the ministry said the project had been delayed by several months and was expected to come online in August at the earliest.

    Although Iraq is Opec’s second-largest oil producer after Saudi Arabia, it is a net natural gas importer because its lack of infrastructure investment has meant that, until 2023, it flared roughly half of the estimated 3.12 billion cf/d of gas produced in association with crude oil.

    Iraq’s reliance on flaring associated gas instead of gathering and processing it has prevented the country from fully realising its potential as a gas producer and forced the Iraqi government to rely on costly gas and electricity imports from Iran.

    READ THE MAY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16803348/main.jpg
    Wil Crisp
  • Algeria turns the GCC oil crisis into an economic opportunity

    13 May 2026

    Commentary
    Wil Crisp
    Oil & gas reporter

    Algeria’s state-owned oil and gas company, Sonatrach, is taking advantage of concerns about global gas and crude supplies to sign deals and push ahead with major upstream projects.

    In recent weeks, the country has launched an oil and gas licensing round, taken steps to boost crude production in the short term and awarded a $1.1bn oil and gas field development project.

    This comes as shipping remains disrupted through the Strait of Hormuz, a key global oil and gas supply route. The disruption began after the US and Israel attacked Iran on 28 February 2026, triggering a regional war.

    Algeria’s ramp-up in activity puts it in a stronger position to benefit from higher global energy prices than neighbouring Libya, despite Libya holding Africa’s largest proven oil reserves.

    Libya challenges

    In Libya, officials have sought to advance oil and gas projects, but the business environment remains challenging due to recurring violence and deep political divisions.

    Last month, Libya’s rival legislative bodies approved a unified state budget for the first time in more than 13 years. The Central Bank of Libya confirmed on 11 April that both chambers had endorsed the budget, calling it a key step towards restoring financial stability after prolonged division.

    Contractors expected the agreement to accelerate project activity, but so far the deal has yet to translate into meaningful progress on the ground. Earlier this month, MEED reported that Libya’s state-owned National Oil Corporation (NOC) had not yet provided subsidiaries with details of their funding allocations under the new budget.

    Libya’s downstream sector was also disrupted this month by a fresh outbreak of violence. On 8 May, military clashes damaged buildings and vehicles, and forced the country’s largest operating refinery and a nearby oil port to shut for two days. On 10 May, Azzawiya Oil Refining Company, operator of the Zawiya facility, said it had lifted the state of emergency, allowing work to resume.

    Algeria momentum

    While Libya has struggled to capitalise on the current period of higher oil and gas prices, Algeria has significantly increased activity across its hydrocarbons sector.

    Last month, Algeria launched a new bid round offering seven exploration blocks to international companies. The round was launched by the National Agency for the Valorisation of Hydrocarbon Resources (Alnaft), which regulates the upstream sector. The blocks are located in Ouargla, Illizi, Touggourt and El-Bayadh.

    In parallel, Algeria is implementing short-term measures to raise output. On 3 May, the Ministry of Oil & Gas said the country plans to increase average production by 6,000 barrels a day in June.

    Algeria is also pursuing regional export opportunities. Earlier this month, officials signed a framework agreement to enable crude supplies from Algeria to Egypt.

    Turkiye has also announced plans to renew and expand its liquefied natural gas (LNG) agreement with Algeria. Turkiye’s Energy and Natural Resources Minister Alparslan Bayraktar said on 8 May that annual volumes could rise to 6.5 billion cubic metres, up from the current 4.4 billion cubic metres a year. The existing agreement is due to expire in September 2027.

    Another sign of momentum is the award of a $1.1bn contract for phase two of the Hassi Bir Rekaiz oil and gas field development. The contract was signed by Egypt’s Petrojet and Italian engineering and contracting company Arkad. Petrojet’s share is estimated at about $600m and Arkad’s at about $500m. The client is Groupement HBR, a joint venture of Sonatrach and Thailand’s PTTEP.

    Overall, while Libya continues to face obstacles to building sustained momentum in its oil and gas sector, Algeria is pursuing multiple initiatives that are likely to deliver economic benefits in the short, medium and long term.

    READ THE MAY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16803345/main4150.jpg
    Wil Crisp