The lights went out at 12:33.
Phones stopped working. Buses stopped moving. Banks shuttered.
It was a plunge back to the dark ages for 60 million people. Ten hours of agony without modern conveniences. And the chain of catastrophes that triggered the shutdown happened in just 27 seconds.
Some of you may remember the 2025 Iberian Peninsula blackout. On April 28, 2025, mainland Spain and Portugal went dark when a series of events shut down the Spanish power grid.
The Iberian power grid provides electricity to Spain, Portugal, and parts of France and Morocco. About 59% of the grid’s supply comes from solar energy. Another 12% is from wind power, 11% from nuclear, and 5% from natural gas. Overall, it produces around 32 GW of power. (1 GW is enough to power about 750,000 homes.)
About 30 minutes before the blackout, the grid saw two anomalies. After the second, things seemed to calm down.
Then came a dramatic turn.
Voltage surged. Power transmission across the grid plunged.
The grid couldn’t handle it.
First, generators in southern Spain shut off. That resulted in a loss of 2.2 GW of power within seconds. Then transmission lines between Spain and France shut down. And soon after, the entire grid was toast.
Power grids themselves are very complex. You have to match supply and demand constantly. And moving power across the network has to stay within grid limits. When that supply and demand go out of balance, grids usually shut down.
Power Load
The way most grids work is by having three sources of power.
The first is baseload power. This is the power that’s very reliable and steady. It’s there to meet the guaranteed demand of the grid at any given time.
After baseload power is load-following power. This is power that can change gradually depending on the demand placed on the grid. For example, if it’s hot outside, more people turn on their air conditioners. Load-following power can adapt to that increased need.
Finally, peaking power is a flexible source of power that can quickly cycle up or down with unexpected demand. It’s the most unpredictable of the three.
While the Spanish government denies it, the problem its power grid saw that day may stem from its electricity generation mix.
Remember, about 71% of Spain’s electricity comes from renewables. The country relies on wind and sun to meet demand. Yet you can’t really control the wind and sun.
That means they're not ideal for meeting constant changes in power demand. It’s not as if you can turn off the sun or stop the wind if demand falls.
That’s also why most of the world relies on two energy sources for its power needs: coal and natural gas.
Natural gas, in particular, is a great source of baseload, load-following, and peaking power. It’s easy to scale it up or down. That’s also why it’s the most used source of power generation in the U.S. today.
Today, about a third of European electricity generation still comes from natural gas. Most grid operators don’t want to have an episode like the Iberian power grid.
But that’s also a major problem. Europe used to produce nearly half of its gas needs just 25 years ago.
Today, it imports almost 90% of its demand according to Eurostat. Much of it used to come by pipeline from Russia. But the country went from supplying about 50% of those imports to just 15% today.
In a world where energy independence means energy security, Europe lost the plot.
The Great Surge
When you rely on imports to supply your energy, you’re at the mercy of someone else.
That’s also true of the price of that supply. When demand starts moving higher while your supply is in question, prices naturally follow.
So it’s no surprise to see the price of natural gas in Europe look like this:
The chart above is of Dutch TTF natural gas. It’s the gas price at the Title Transfer Facility hub in the Netherlands. And it’s the benchmark for European natural gas.
At about $35 per MMBtu, it’s the highest level in years. And it could be well on its way to matching the all-time high it set back in 2022.
In fact, I wouldn’t be surprised to see it make a run at a new all-time high. That’s because, historically, going into winter, Europe has its natural gas tanks about 90% full.
Today, that figure stands at a record low 75%.
And Europe only has itself to blame.
For a long time, Europe – including Norway and the UK – was pretty self-sufficient when it came to its gas needs. Going back to 1973, the entire continent covered about 94% of its demand according to the IEA.
It was all downhill from there.
Today, all of Europe produces less than half of its needs. And if you strip out Norway and the UK, it’s even worse. Self-sufficiency drops to just 10%.
Compare that to the U.S., which has more natural gas than it knows what to do with. So much that it exports more than 20 Bcf/day and thinks nothing of it. (Production is roughly 113 Bcf/day while demand is about 90 Bcf/day according to the EIA.)
That’s why we see natural gas prices in the U.S. look like this:
Right now, natural gas in the U.S. sells for about $2.90 per MMbtu. That means in Europe, it’s selling for more than 10 times the U.S. price.
It’s a huge self-own by Europe. And it’s why we’re seeing industrial companies across Europe close shop and look for new, cheaper homes. Places where energy costs don’t force them to shut down.
There’s a Warrant for That
Now, I’m not here to suggest what Europe should or shouldn’t do. Where they go from here is up to them.
My job is to simply look for ways to play that massive gap in the price and production of things like natural gas.
That’s why, earlier this year, I recommended a small natural gas producer to readers of Strategic Trader that’s ramping up operations in Europe.
Make no mistake, there’s still an abundance of natural gas in the region. It’s just a matter of who’s willing to drill it out of the ground. Assuming they can get a permit.
The company I alerted my readers to just happens to be one of them. Better still, it’s flying under the radar of most investors. This despite it sitting on a mound of cash, having no debt, and growing its profit.
That’s the type of company I like to find. One that’s quietly producing tons of cash while no one’s looking. And when investors finally do see it, I’m betting shares will take off.
Except, I’m not looking to just ride along in the company’s shares. I want leverage to that play. Which is why I recommended this company’s warrants instead.
When the move finally happens – as I believe it will – I’m betting the warrants far outperform the stock. Much like our recent trade in warrants of Valaris, the offshore drilling company. That trade handed readers a 300% gain in a matter of weeks while the stock gained only 56%.
At some point, more and more of Europe will realize it needs its own supply of natural gas again. They’ll eventually turn to companies like our current recommendation. And when they do, my readers and I will already be in a position to take advantage.
Regards,
Editor, Strategic Trader
