During 2024, natural gas continued to be a crucial factor in European energy markets. After a relatively stable first half of the year, the market experienced a strong price hike in the following quarters, mainly driven by geopolitical tensions, the risk of supply disruptions and high seasonal demand.
2024 has been a year of transition for gas in Europe. The drive to maintain high reserve levels and the commissioning of additional capacity were stabilising factors, but the market remains exposed to geopolitical and climate factors, as well as to the difficult balance between moving towards energy transition and ensuring security of supply. Tensions at the end of the year mean that 2025 must be viewed with caution, pending the entry into service of new LNG capacity that might relieve pressure on prices and reserves.
Although LNG imports remained stable —with a slight decrease compared to 2023— thanks to the strengthening of the Norwegian gas pipeline network and the commissioning of extended capacity with new terminals and projects under construction, which will come into effect between 2025 and 2026, uncertainty over the agreement on Russian gas transit through Ukraine, which expires at the end of 2024, has driven prices upwards.
Throughout this financial year, we have witnessed an upward trend in prices. The year started with a gas price of around €31/MWh and, in the second half of the year, prices soared to around €42/MWh, with high volatility. By the end of the year, futures prices reached almost €50/MWh, bringing the average for the last quarter to approximately €43/MWh. The price increase was marked by fears of potential interruptions to Russian supplies, particularly due to the expiry of the transit agreement, competition for LNG shipments with Asia, driven by a warm summer season in the northern hemisphere, and the combination of colder winters, lower renewable production and high demand for electricity generation.
In Spain, gas demand in 2024 stood at 311.9 TWh, representing a 4.2% drop compared to the previous year. The decline is mainly due to a significant reduction in the use of gas for electricity generation, which fell by 22%. In contrast, conventional demand (households, businesses and industries) remained strong, reaching 237 TWh. In particular, industrial consumption grew by 4.2% to 176.7 TWh.
Spain continues to pursue a strategy of broad diversification of supplies. In 2024, the country imported gas from fourteen different countries, positioning itself as one of the systems with the greatest variety of supply sources worldwide. It also played a prominent role in ensuring security of supply in Europe, exporting 34.5 TWh to other countries through interconnections and LNG refuelling. For the natural gas and green gases sector, the most important challenge lies in the legislation implementing European and Spanish climate policy.
In September this year, the Draghi Report on European competitiveness was presented, detailing the challenges that Europe faces in the context of a new world order. The Draghi Report proposes a set of technical and regulatory measures aimed at strengthening Europe’s energy competitiveness. In its strategic approach, it highlights that high energy prices —electricity and gas— are hampering European competitiveness and proposes a technologically neutral energy transition that includes renewables, nuclear, hydrogen, efficiency and carbon capture, while calling for a true Energy Union with harmonised regulation, security of supply and the deployment of cross-border infrastructure. In the gas sector, it proposes diversifying the supply sources, reducing dependence on spot markets through long-term contracts, and creating joint hedging mechanisms at European level. It also advocates the accelerated development of green gases, such as biomethane and hydrogen, with shared infrastructure and common regulatory frameworks.
In Spain, the natural gas sector as a whole will face new challenges in the near future related to the sector’s regulatory framework. The current remuneration model, which will be in force until 2026, is in its final stage of implementation and, therefore, a period of in-depth analysis of all aspects of the remuneration model for the next period must be initiated, with the aim of adapting it to the challenges and technical requirements.
In Spain, gas demand in 2024 stood at 311.9 TWh, representing a 4.2% drop compared to the previous year. The decline is mainly due to a significant reduction in the use of gas for electricity generation, which fell by 22%
It is essential to work closely with public administrations and regulators in order to find a common ground and a shared understanding and ensure that the new framework preserves the economic viability of the sector, which in recent years has suffered from high operating costs caused by an exceptional inflationary environment. In this regard, in October 2024, the New Deal for Spain report was presented, a proposal designed to speed up the energy transition and achieve net zero emissions by 2050, making use of all available technologies and minimising the investments required by both end users and the energy system as a whole. In quantitative terms, the proposal stands out for avoiding an additional 21 million tonnes of CO₂ by 2035 (98 million tonnes by 2050) and significantly reducing investment: €31 billion in end-user equipment and €21 billion in energy infrastructure by 2035 (€100 billion and €72 billion, respectively, by 2050). In addition, it advocates complete decarbonisation of the residential sector by 2040.
The proposal brings certainty to the process by not relying on a single technology, offering flexibility to end users and avoiding bottlenecks in renewable generation, electricity grids and household equipment. It also limits the need for large-scale coordinated decisions by millions of consumers and reduces the risk of closure or relocation in the industrial sector by avoiding high investments in electrification. Furthermore, it provides an answer to the technical constraints of the current electricity model, such as the lack of space or resources for heat pumps and the seasonality of energy demand, guaranteeing supply through better integration of renewables and highlighting the key role of cogeneration as a backup for the electricity system. In short, the New Deal study is a more pragmatic and efficient alternative for the decarbonisation of Spain, a new approach to energy transition that demonstrates that the balanced development of different technologies makes it possible to achieve decarbonisation targets in the most efficient way and reduce the effort required from citizens and businesses.
The existing natural gas networks in Spain constitute a strategic infrastructure that adds value to the energy system as a whole and enables the energy demand of households, industries and businesses to be met efficiently
In Spain, the latest revision of the PNIEC (National Integrated Energy and Climate Plan) until 2030 was approved in September 2024. This 2023-2030 revision confirms the recognition of the role of green gases, in particular green hydrogen and biomethane, as key elements in reducing dependence on fossil gas and strengthening energy resilience. Even so, the targets set are insufficient, given that by 2030 targets of around 20 TWh of biomethane have been established, which is less than 2% of the gas mix, compared to our country’s huge potential for green gases, estimated at up to 163 TWh of biomethane. In addition, the PNIEC maintains the installed capacity of combined cycle plants at 26.6 GW by 2030, acknowledging their role as a backup system for the ambitious deployment of renewables; however, it stresses the need to ensure that a capacity market exists that guarantees their operation and economic feasibility.
The existing natural gas networks in Spain constitute a strategic infrastructure that adds value to the energy system as a whole and enables the energy demand of households, industries and businesses to be met efficiently, providing a safe, mature alternative that is capable of adapting to the current challenges of the energy transition. One of the main benefits of this infrastructure is its ability to supplement electrification, as the current networks are ready to deploy new sustainable energy solutions, such as green gases (biomethane and green hydrogen). Their use will allow to accelerate decarbonisation without the need for massive investment in completely new infrastructure, optimising resources and reducing the implementation times for these technologies. In short, preserving and enhancing the existing gas infrastructure will strengthen the robustness of the Spanish energy system. In an environment where renewable sources have variable production, having a developed, flexible and operational transport and distribution network is key to ensuring supply at all times, especially during peak demand moments or situations of volatility in the energy markets.
Madrileña Red de Gas continues to make progress in sustainability, thanks to a clear and ambitious strategy to improve every year, based on a thorough assessment of our impact and with targets that are committed to and shared by everyone in the company. We have a clear strategy and a Sustainability Master Plan for 2023-2026 that sets out the path forward. Our commitment has been recognised by the Global Real Estate Sustainability Benchmark (GRESB) index, in which we have achieved first place in Spain, Europe and worldwide, once again obtaining the maximum score of 100 points out of 100. Similarly, Madrileña Red de Gas has been awarded the Sustainability Award by Corporate magazine, highlighting our leadership in the implementation of sustainable practices.
At Madrileña Red de Gas, we focus our strategy on integrating sustainability into our operations, products and services. In this context, we have grown in terms of supply points at higher rates than the rest of the sector, reaching 909,915 users, with a network length of 6.054 km, and we are present in 61 municipalities in the Community of Madrid. Likewise, the economic results are solid and secure the future development of the company.
As part of our growth strategy, we are working to expand the gas distribution network to new municipalities in the province of Madrid, which until now only had access to more polluting energies, such as liquefied petroleum gas. In line with this, during 2024 we have started distributing natural gas in two new towns —Casarrubuelos and Miraflores de la Sierra— and we have made significant progress in the process for new municipalities, such as Los Molinos, Moralzarzal, and Soto del Real.
I would like to end my first letter as chairwoman of Madrileña Red de Gas by expressing my gratitude to the company’s shareholders for placing their trust in me this year to take on the role of chairwoman. For my part, I am committed to continuing to move forward in order to grow the project and develop a strategy that will pave the way for success in the coming years.
Companies and their successes are nothing more than the people who work for them and do so with commitment. I would like to thank and acknowledge the work of my predecessor as chairman of the company, Pedro Mielgo, for his good work over the last fifteen years. Similarly, I would like to acknowledge the team at Madrileña Red de Gas for their dedication, professionalism and commitment during this financial year, as well as for enthusiastically sharing our vision for the future. I would also like to extend my thanks to our customers, suppliers and partners, whose trust and support have been essential in enabling us to continue advancing towards our goals.
To all of them, thank you for making the consolidation and growth of Madrileña Red de Gas possible.
Carmen Gómez de Barreda
Chairwoman