Gran Canaria calls for a differentiated electricity market model for the Canary Islands to unlock renewables and storage

At the beginning of February 2026, the Cabildo of Gran Canaria, the island's governing authority, and the Consejo Insular de la Energía, acting as a Covenant Coordinator, formally presented a proposal to adapt the electricity market framework in the Canary Islands to their condition as an EU outermost and isolated region, arguing that the current regulatory model, designed for interconnected continental systems, has become a structural barrier to decarbonisation, renewable integration and energy security.

Barriers to renewable integration

The Canary Islands operate as six isolated electricity systems, with no interconnection between islands and no link to the mainland. Despite this singularity, the archipelago remains subject to a market design largely aligned with the Iberian Peninsula, generating growing inefficiencies and paradoxical outcomes. One of the most evident is the increasing curtailment of renewable energy, even as new wind and solar capacity is installed.

According to the Cabildo, the problem does not lie in a lack of renewable resources or demand, but in a system architecture that prioritises inflexible thermal generation, offers insufficient price signals, and fails to properly integrate energy storage, demand management and system flexibility. As a result, fossil fuel-based generation continues to operate even when renewable production is available, reinforcing dependency on imported fuels and increasing system costs.

Adapting regulation to Island realities

The proposal builds on the legal recognition of the Canary Islands as an outermost region under Article 349 of the Treaty on the Functioning of the European Union, which explicitly allows for differentiated regulatory approaches to address permanent structural disadvantages such as insularity, remoteness and market fragmentation. Similar differentiated electricity frameworks are already applied in other EU outermost island regions, such as the Azores and Madeira.

Developed with technical support from specialised energy policy consultants and through dialogue with the Government of the Canary Islands, business organisations, renewable energy stakeholders and experts, the proposal outlines a phased reform of the current framework. Its objectives are to accelerate real decarbonisation, reduce structural system costs, increase renewable penetration, and integrate storage as a central pillar of system operation.

Key elements include improving system operation and transparency, adapting price signals to local system conditions, creating specific remuneration categories for storage and hybrid systems, and establishing long-term mechanisms, such as contracts for difference, to provide investment certainty for renewable generation. In the medium term, the proposal envisages the gradual development of local electricity markets adapted to island systems, while ensuring consumer protection through compensatory mechanisms at national level.

Towards energy sovereignty and climate neutrality

Gran Canaria positions this initiative as part of a broader strategy towards energy sovereignty, resilience and climate neutrality, alongside flagship projects such as pumped hydro storage, offshore wind and geothermal energy. Once consolidated with the regional government, the proposal will be presented to national authorities, including the Institute for Energy Diversification and Saving (IDAE) and the Spanish Ministry for Ecological Transition, with the aim of opening a structured dialogue on adapting Spain’s electricity regulation to its outermost regions.

For the Cabildo of Gran Canaria, adapting the rules to the territory is no longer optional but essential: every megawatt of renewable energy curtailed represents lost climate ambition, lost economic opportunity and lost energy sovereignty for the Canary Islands.