Endesa’s Strategic Gamble: Betting on Nuclear and Grids to Secure Spain’s Energy Future

The April 2025 blackout that plunged Spain and Portugal into darkness underscored the fragility of Europe’s energy systems—and Endesa, Spain’s largest electricity utility, has seized the moment to push for sweeping reforms. In a bold strategic shift, the company is calling for tax relief for nuclear energy and a major overhaul of grid investment frameworks to modernize infrastructure. With a record €9.6 billion investment plan and soaring profits, Endesa is positioning itself as both a beneficiary and a catalyst of Spain’s energy transition. But its success hinges on whether policymakers will heed its warnings.

The Nuclear Question: Taxation, Viability, and Phase-Out Dilemmas

Endesa’s CEO, José Bogas, has framed nuclear energy as a linchpin of Spain’s energy security, even as the country plans to phase out reactors by 2035. Current tax policies, he argues, are pricing nuclear power out of the market. The company’s Q1 2025 net profit surged to €583 million—double that of the prior year—thanks in part to the removal of a 1.2% “extraordinary tax” on electricity generation. Yet Bogas warns that without broader reforms, Spain risks losing nuclear’s baseload capacity just as renewables face intermittency challenges.

The stakes are high. Nuclear currently supplies 20% of Spain’s electricity, but its viability depends on fair remuneration and regulatory clarity. Endesa’s strategic plan allocates €1 billion to maintain existing nuclear plants, but the company has ruled out new builds. Instead, it is advocating for tax parity with renewables and a prolonged role for nuclear in the grid mix.

Grid Modernization: The €4 Billion Lifeline

While nuclear gets the headlines, Endesa’s real focus is on the €4 billion grid investment—42% of its three-year plan—to address bottlenecks threatening Spain’s energy transition. The grid’s capacity to handle rising demand from renewables, data centers, and industries is nearing its limits.

Endesa is demanding a 7.5% return on grid investments, up from 5.6%, to attract private capital. Currently, Spain lags behind Germany and Italy, where grid projects earn returns closer to 8%. Without these reforms, the company warns, connection rejections for solar and wind projects will rise, stifling renewable growth.

The plan includes digitizing grids with smart meters and remote monitoring, while expanding capacity to serve data centers—a sector Endesa sees as a growth driver. However, bureaucratic delays and speculative connection requests remain risks.

Renewables and the Financial Backing to Sustain Them

Endesa’s renewables pivot is equally aggressive. €3.7 billion will fund hydroelectric (37%) and wind projects, including the acquisition of 626 MW of hydro capacity in Aragon. This bolsters its renewable portfolio to 13.1 GW by 2027, covering 100% of sales under its 2040 net-zero target.

Financially, Endesa is in a strong position to execute its plan. The Q1 profit surge and a €1.2 per share dividend (up 10%) signal confidence. A €2 billion share buyback—€500 million already executed—further underscores its financial health.

Regulatory Crossroads: Can Spain Keep Pace?

Endesa’s proposals face two critical hurdles: tax reforms and grid regulation. The Spanish government’s 2035 nuclear phase-out remains contentious, and Endesa’s plea for tax relief will test political will. Meanwhile, grid reforms must balance investor returns with consumer costs—a delicate tightrope, as electricity pool prices hit €85/MWh in 2025, up 90% from 2024.

The company’s advocacy for streamlined permitting and capacity payment mechanisms aims to accelerate project approvals. Without these, Spain’s National Energy and Climate Plan (NECP) 2030 targets—74% lower emissions than 2017 levels—will remain out of reach.

Conclusion: A High-Stakes Bet on Energy Security

Endesa’s strategy is a masterclass in leveraging financial strength to drive policy change. Its €9.6 billion plan, backed by record profits and a dividend growth roadmap to €1.5 per share by 2027, positions it as a key player in Spain’s energy future. Yet its success depends on whether regulators can reconcile grid modernization with affordability and extend nuclear’s role beyond 2035.

The numbers tell the story: a 7.5% grid return could unlock €308 billion in Spain’s NECP 2030 investments, while nuclear’s survival hinges on tax parity. For investors, Endesa’s gamble is compelling—but only if the grid reforms and policy shifts it demands materialize. In an era of energy volatility, this utility’s fate is as much about politics as it is about power lines.

As Bogas put it: “The grid is the backbone of the energy transition.” For Endesa, building that backbone is now a race against time—and uncertainty.