Gran Canaria Pushes for Tailored Energy Market Rules to Unlock Renewable Potential

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. The proposal argues 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 in an Isolated System

The Canary Islands operate as six isolated electricity systems, lacking interconnection between islands and with no link to the mainland. Despite this unique situation, the archipelago remains subject to a market design largely aligned with the Iberian Peninsula, leading to growing inefficiencies and paradoxical outcomes. A key issue is the increasing curtailment of renewable energy, even as latest wind and solar capacity is installed.

According to the Cabildo, the problem isn’t a lack of renewable resources or demand, but a system architecture that prioritises inflexible thermal generation, offers insufficient price signals, and fails to properly integrate energy storage, demand management and system flexibility. 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 leverages the legal recognition of the Canary Islands as an outermost region under Article 349 of the Treaty on the Functioning of the European Union. This article explicitly allows for differentiated regulatory approaches to address permanent structural disadvantages such as insularity, remoteness and market fragmentation. Similar frameworks are already in place in other EU outermost island regions, such as the Azores, and Madeira.

Developed with technical support from 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 decarbonisation, reduce structural system costs, increase renewable penetration, and integrate storage as a central pillar of system operation.

Key Elements of the Proposed Reform

• Improving system operation and transparency
• Adapting price signals to local system conditions
• Creating specific remuneration categories for storage and hybrid systems
• Establishing long-term mechanisms, such as contracts for difference, to provide investment certainty for renewable generation

In the medium term, the proposal envisions the gradual development of local electricity markets adapted to island systems, although 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 projects such as pumped hydro storage, offshore wind and geothermal energy. The Consejo Insular de la Energía de Gran Canaria is playing a key role in this transition, as highlighted by its creation to foster a more alternative energy model. The Cabildo de Gran Canaria’s development of a solar plant over the Plaza de Yaiza parking area in San Bartolo, with a budget of 379,114 euros (85% funded by the Plan de Recuperación), exemplifies this commitment.

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, to initiate a structured dialogue on adapting Spain’s electricity regulation to its outermost regions.

The Cabildo of Gran Canaria views adapting the rules to the territory as essential: every megawatt of renewable energy curtailed represents lost climate ambition, lost economic opportunity and lost energy sovereignty for the Canary Islands. The Sede Electrónica de Energía de Gran Canaria recently published Resolution 2026-0037, outlining a 2nd call for subsidies to promote solar photovoltaic installations in homes in 2025.