Blackout vs Backup

The power system has had its Covid moment. These are my thoughts from ground zero in Madrid during the blackout.

This week, I and my team at Otovo in Madrid experienced the Iberian Peninsula blackout firsthand. At around 12:30, the lights shut off out and WiFi ground to a halt. Mobile connectivity quickly deteriorated. Suddenly, 50 million people across Portugal, Spain, and parts of southern France were without power.

The disruption was immediate and profound. Thirty-five thousand people were stranded and evacuated from trains. Traffic lights failed, causing gridlock across cities. ATMs and payment terminals powered down, forcing businesses to revert to pen-and-paper ledgers-if they could stay open at all. Hospitals scrambled to switch to emergency backup systems. Office workers got sent home. Impromptu street parties emerged - this being Spain after all.

By late evening, Spanish system operators and power providers had re-established essential energy supply. By the next morning, 99% of the country was back to normal. The worst had been avoided. Now comes the time for lessons to be drawn.

While the root cause of the outage is still under investigation - and the Spanish government has wisely stated that “no hypothesis will be disregarded” - we should not expect this to deter energy professionals and lobbyists from shaping the crisis to fit their preferred narratives. After the Texas Freeze in 2021, the blame game began immediately: excessive wind power, mismanaged grids, inoperable gas plants-who was at fault?

Proponents of traditional power sources and incumbents will point to renewable energy as a destabilizing force. Fossil fuel advocates will argue that relying on electricity is too risky. Grid operators will claim they need higher and more unavoidable consumer fees to provide stable service. They’re all mostly wrong. And we would be ill-advised to follow their prescriptions for how to build an energy system for the future.

At the end of the day though, the reasons for the blackout matter less than the response. Whether it is due to interconnectors shutting down, inverters powering cascading out due to grid frequency imbalance, syber attacks or a dysfunction in a single plant, it's more important to step back and ask two fundamental questions:

How should we power our economy?

And how should we operate the power system?

The answers will determine which of four scenarios we build toward.

Scenario 1: Old Power Supply, Old Power System

This is the legacy model-centralized, fossil-fuel-based, and heavily dependent on energy imports, with a handful of large power plants as single points of failure.

• Pros: In the short term, this system can appear more stable, requiring no disruptive transition. It is familiar and, for some, comforting.
• Cons: In the long run, it is obsolete-expensive, polluting, and vulnerable to global fuel price swings and geopolitical shocks. It locks us into high emissions and undermines energy independence.

We have already set sail away from this scenario. Thanks to remarkable advances in solar, wind, storage, and electric vehicles, there is no turning back.

Scenario 2: New Power Supply, Old System

This is where much of Europe - and in particular Spain during this blackout - finds itself today. We are rapidly adding renewables to a grid designed for centralized, dispatchable generation.

• Pros: This transition is happening organically. Renewables are now too competitive to stop. Solar and wind are being deployed at record rates, driving down costs and emissions.
• Cons: The grid is under pressure. It was not built for the variability and intermittency of renewables. Operators must rely on grid-scale backup plants, often fossil-fueled, to maintain stability. This creates operational headaches, increases costs, and exposes us to new risks.

This is an inherently transitional scenario. The inadequacies of legacy infrastructure are laid bare in a world of distributed, variable energy supply. We cannot stay here for long.

Scenario 3: Strong System, Old Supply

Some propose reinforcing the grid while sticking with legacy generation-overbuilding infrastructure, doubling down on transformers, substations, and transmission lines, but continuing to rely on centralized fossil or nuclear plants.

• Pros: This approach promises stability and continuity, minimizing disruptive change and reassuring those wary of rapid transition.
• Cons: It is massively expensive. Overbuilding the grid to accommodate worst-case scenarios locks in legacy structures, delays the benefits of cheaper, cleaner energy, and burdens consumers and businesses with higher costs. It risks entrenching the status quo at great expense, without future-proofing the system.

This is where we might be headed if we don’t show resolve and keep committed to the new/new scenario implicit in the past two decades of European energy transition.

Scenario 4: New Power Supply, New System

This is the scenario we must strive for: a digitally enhanced, distributed, and resilient energy system powered by renewables.

• Pros: This model is energy efficient, low cost, and low emissions. By distributing generation-rooftop solar, community batteries, electric vehicles as grid assets-we create multiple points of resilience and redundancy. Digitalization enables real-time balancing, demand response, and local optimization. The system is future-ready, adaptable, and aligned with climate and economic goals.
• Cons: The transition is not trivial. It requires investment in digital infrastructure, modernization of the grid, and widespread deployment of renewables and storage. Policymakers must support innovation, update regulations, and empower consumers to participate as “prosumers.”

To me, it is clear that out of these four scenarios, only one is truly desirable. Scenario 1 is already in the rearview mirror, thanks to the unstoppable momentum of new energy technologies. Scenario 2, where the Spanish system found itself during the blackout, starkly exposes the inadequacies of a grid built for centrally produced thermal generation in an age of wild supply. We cannot remain in this limbo. Scenario 3 asks us to pause the electrification and renewables revolution while the grid stiffens up-a costly detour that would delay the benefits of new energy technology and threaten European competitiveness, without guaranteeing a solution.

The Path Forward

Only in a society that is full-on electrified and has cleaned up its electricity generation can we simultaneously benefit from low emissions, low prices and low energy imports. Only if grids are digitally enhanced, bolstered with local endpoint storage and built on the premise that we will accommodate intermittent energy sources will the energy system be as stable as we need it to be to keep the traffic lights on, the trains running, the ATMs online and well, those street parties reserved for Champions League wins…

We must not let this blackout become an excuse for retreat or delay. Instead, let it be the catalyst for sufficient action. The energy transition is like jumping over a small stream: You need to make sure not to stop midway or you'll regret it. The technology is here. The economics are compelling. The need for resilience and sustainability has never been clearer. Let’s seize this moment and build the energy system our future demands.