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The 2025 Iberian Peninsula blackout: lessons for modern power systems and policy implications

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  • Hugo Morão

Abstract

On April 28, 2025, the Iberian Peninsula experienced a complete electrical blackout affecting 47 million people across Spain and Portugal. Drawing from the ENTSO-E investigation, this paper examines the policy implications of this event for power system management during rapid decarbonization. The investigation identified an unprecedented cascade of generation disconnections triggered by overvoltage conditions, tracing the root cause to institutional rather than technical failures: regulatory barriers prevented the utilization of renewable capacity with certified voltage control capability, market design incentives misaligned operational decisions with real-time stability requirements, and governance fragmentation impeded coordinated crisis response. These findings offer lessons for policymakers navigating the tension between market efficiency and system security in renewable-dominated grids.

Suggested Citation

  • Hugo Morão, 2026. "The 2025 Iberian Peninsula blackout: lessons for modern power systems and policy implications," Working Papers REM 2026/0413, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    • Handle: RePEc:ise:remwps:wp04132026
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    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F15 - International Economics - - Trade - - - Economic Integration
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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