Since the last IEA review in 2009, Spain’s dependence on energy imports has decreased markedly, in part thanks to a rapid increase in renewable energy supply. Spain’s security of supply has further been improved with diversified import sources and enhanced storage capacity for both oil and gas. In the electricity sector, Spain has built a large, diverse and reliable power generation fleet. After several years of efforts, the government has now also managed to solve the massive imbalance between the electricity system’s regulated costs and revenues. The broad and deep electricity market reform has fundamentally changed the remuneration scheme for renewable energy. Spain must now maintain its strong and long-term commitment to a financially sustainable electricity system. To improve investor confidence, it should also closely follow the principles of transparency, predictability and certainty when revising policies and regulations. New momentum for establishing additional cross-border connections in electricity and gas will eventually enable Spain to use its large power and liquefied natural gas capacity to increase flexibility, diversity and security in the European Union internal market. The government should now focus on longer-term issues including energy demand and greenhouse gas emissions. A critical question is how to encourage the transition to a low-carbon energy system. This review analyses the energy policy challenges Spain faces and provides sectoral recommendations for further policy improvements. It is intended to help guide the country towards a more secure and sustainable energy future.