The methodology disclosure at the end is what sets this apart. Granger causality with war dummies and lag tests is more rigor than most paid research bothers with.
One pushback on the interpretation, though. The wholesale decoupling story holds. Spain’s €18/MWh week is real, and the merit-order mechanism is well-documented. But if you look at retail household prices across the same period, the Iberian gap compresses dramatically. Eurostat H1 2025 puts Spain at €26.1/100 kWh against an EU average of €28.72, roughly 9% below, despite a wholesale gap the chart shows as 7x against Italy. Most of the decoupling effect disappears somewhere between the spot market and the household invoice.
The straightforward reading is that network and system charges are absorbing the wholesale saving upstream of retail. Constraint costs, must-run thermal dispatch for inertia and voltage support, capacity payments, ancillary services, transmission build-out. None of these shrink as renewable penetration rises, and several grow. The wholesale saving is real, but it is captured before it reaches the consumer’s bill.
Which leaves a distributional picture worth naming directly. Consumers see very little of the benefit in their monthly bills. Merchant generators absorb most of the cost through lower capture prices and compressed margins, and that compression is structural. It deepens as penetration rises rather than stabilizing. Ancillary and balancing markets are often pointed to as the recovery channel, but margins there are thin and the addressable market is small relative to the energy revenue being eroded. It’s not a plausible compensation mechanism for what’s being lost on the energy side.
The usual counter is the ETS angle, that carbon pricing either rewards low-emission generation or returns value through auction revenue. Both are real, but neither changes the picture in the way the counter implies. Auction revenue accrues to governments, not to consumers or merchant generators. And the emissions cost avoided by displacing gas is fundamentally a cost-suppression effect. It prevents the carbon component of electricity from escalating as allowance prices climb, but it doesn’t generate new value. It caps downside. A mechanism that caps downside is not the same as one that creates upside, and conflating the two is how the “everyone wins” framing survives scrutiny it probably shouldn’t.
Stack these together and the decoupling narrative reads less like “wholesale and retail both fall” and more like “wholesale value is redistributed away from generators without meaningfully reaching consumers, while system costs rise in parallel.” That’s a harder story to tell, but I think it’s closer to what the data is showing.
And yes, we are planning a retail price report soon to explore these topics, it just requires a deep dive into national tariffs because we don't fully trust the Eurostat/ACER data. For households, there's ACER data up to Feb 2026, but I'm not seeing a huge difference in network charges between e.g. Italy and Spain. And the total price is still quite a lot lower in Spain than Italy - say ~25 to ~35 (you can't export this data...).
However, there's indeed a detachment between Spain wholesale prices and "energy component" - which means e.g. other markets (not day-ahead) are contributing a lot. So that's something to unpack.
Thanks, the Modo piece is exactly the operational decomposition I had been looking for. Their finding that 78% of CCGT generation re-enters via TTRR, with that component reaching 75% of the final price in low day-ahead weeks, is the cleanest empirical anchor I’ve seen for the wholesale-retail divergence.
On the network charges puzzle in ACER, one thing worth checking is whether TTRR costs are classified under “energy component” rather than “network charges”. The taxonomy is inconsistent across countries and often hides exactly this kind of system cost migration. That said, my background is as a power sector practitioner in Korea, with European market design coming mostly from earlier regulatory and policy work where I had to compare regulatory regimes rather than operate within them. Please take this as a question rather than a confident claim. Someone closer to the European data may well catch nuance I’m missing.
How do solar developers receive revenue? Are they solely reliant on the wholesale prices and therefore their revenue is the solar capture price of the wholesale price? Or do they receive fixed tariffs. If the latter where does that show up in the electricity bill?
The methodology disclosure at the end is what sets this apart. Granger causality with war dummies and lag tests is more rigor than most paid research bothers with.
One pushback on the interpretation, though. The wholesale decoupling story holds. Spain’s €18/MWh week is real, and the merit-order mechanism is well-documented. But if you look at retail household prices across the same period, the Iberian gap compresses dramatically. Eurostat H1 2025 puts Spain at €26.1/100 kWh against an EU average of €28.72, roughly 9% below, despite a wholesale gap the chart shows as 7x against Italy. Most of the decoupling effect disappears somewhere between the spot market and the household invoice.
The straightforward reading is that network and system charges are absorbing the wholesale saving upstream of retail. Constraint costs, must-run thermal dispatch for inertia and voltage support, capacity payments, ancillary services, transmission build-out. None of these shrink as renewable penetration rises, and several grow. The wholesale saving is real, but it is captured before it reaches the consumer’s bill.
Which leaves a distributional picture worth naming directly. Consumers see very little of the benefit in their monthly bills. Merchant generators absorb most of the cost through lower capture prices and compressed margins, and that compression is structural. It deepens as penetration rises rather than stabilizing. Ancillary and balancing markets are often pointed to as the recovery channel, but margins there are thin and the addressable market is small relative to the energy revenue being eroded. It’s not a plausible compensation mechanism for what’s being lost on the energy side.
The usual counter is the ETS angle, that carbon pricing either rewards low-emission generation or returns value through auction revenue. Both are real, but neither changes the picture in the way the counter implies. Auction revenue accrues to governments, not to consumers or merchant generators. And the emissions cost avoided by displacing gas is fundamentally a cost-suppression effect. It prevents the carbon component of electricity from escalating as allowance prices climb, but it doesn’t generate new value. It caps downside. A mechanism that caps downside is not the same as one that creates upside, and conflating the two is how the “everyone wins” framing survives scrutiny it probably shouldn’t.
Stack these together and the decoupling narrative reads less like “wholesale and retail both fall” and more like “wholesale value is redistributed away from generators without meaningfully reaching consumers, while system costs rise in parallel.” That’s a harder story to tell, but I think it’s closer to what the data is showing.
These are great points, thanks!
And yes, we are planning a retail price report soon to explore these topics, it just requires a deep dive into national tariffs because we don't fully trust the Eurostat/ACER data. For households, there's ACER data up to Feb 2026, but I'm not seeing a huge difference in network charges between e.g. Italy and Spain. And the total price is still quite a lot lower in Spain than Italy - say ~25 to ~35 (you can't export this data...).
However, there's indeed a detachment between Spain wholesale prices and "energy component" - which means e.g. other markets (not day-ahead) are contributing a lot. So that's something to unpack.
https://www.acer.europa.eu/data/dashboards/retail-electricity-and-gas-markets-prices
Btw there's also an interesting Modo Energy piece that looks into the technical restrictions market: https://modoenergy.com/research/en/has-spains-power-system-decoupled-from-natural-gas
Thanks, the Modo piece is exactly the operational decomposition I had been looking for. Their finding that 78% of CCGT generation re-enters via TTRR, with that component reaching 75% of the final price in low day-ahead weeks, is the cleanest empirical anchor I’ve seen for the wholesale-retail divergence.
On the network charges puzzle in ACER, one thing worth checking is whether TTRR costs are classified under “energy component” rather than “network charges”. The taxonomy is inconsistent across countries and often hides exactly this kind of system cost migration. That said, my background is as a power sector practitioner in Korea, with European market design coming mostly from earlier regulatory and policy work where I had to compare regulatory regimes rather than operate within them. Please take this as a question rather than a confident claim. Someone closer to the European data may well catch nuance I’m missing.
Looking forward to the retail report.
How do solar developers receive revenue? Are they solely reliant on the wholesale prices and therefore their revenue is the solar capture price of the wholesale price? Or do they receive fixed tariffs. If the latter where does that show up in the electricity bill?