From Morningstar: 2025-04-29 10:58:00

On April 28, a sudden 60% drop in power supply combined with a disruption in connection with France caused a grid shutdown in Spain and Portugal. The reason is still unknown, but power was fully restored the next day. The blackout highlights years of underinvestment in the Spanish grid and the need for regulatory improvements.

Discussions are ongoing for the 2026-31 regulatory period for electricity networks in Spain. The blackout underscores the necessity for higher investments. The opposition leader criticized the government’s plan to phase out nuclear power by 2027. This incident could lead to increased investments and improved returns in the sector.

Morningstar Equity Research suggests an increase in investments in the electricity grid for companies like Redeia, Endesa, and Iberdrola. The fair value estimates for these companies are EUR 18.5, EUR 23.5, and EUR 14.4, respectively. SSE and E.On are recommended for investments in the electricity grid sector, with fair value estimates of GBX 2,250 and EUR 17.

The blackout in Spain could impact the useful lives of nuclear plants, requiring significant investments, especially for Endesa. The regulatory regimes in Germany and the UK will be influenced by the need for higher investments and returns in the electricity grid sector. Redeia is expected to fully recover costs related to the blackout.

The blackout incident in Spain highlights the importance of addressing underinvestment in the electricity grid sector and improving regulatory frameworks. This could lead to increased investments and returns, benefiting companies like SSE and E.On. Morningstar does not own shares in any mentioned securities.



Read more at Morningstar: Blackout in Spain and Portugal Strengthens Case for…