On April 28, 2025, millions of residents across Spain and Portugal experienced an abrupt and massive power outage that paralyzed transportation, communication, and essential services for hours [1]. From Madrid to Lisbon, daily life ground to a halt: metro systems stopped mid-route, airports faced severe delays, hospitals switched to emergency power, and traffic lights blinked out across major cities [2].

This widespread blackout, which began around midday, raised immediate questions about the vulnerability of the Iberian Peninsula's electricity infrastructure. Early investigations pointed to a likely failure within the interconnected European grid, possibly linked to a fire affecting high-voltage transmission lines in southern France [3].

Amid the scramble to diagnose the root cause, one underlying vulnerability has become clear: Spain and Portugal's heavy reliance on imported energy and intermittent renewable sources has left their grids more exposed to sudden disruptions.

In contrast, traditional baseload power sources such as coal fired plants offer the kind of grid stability that intermittent renewables often cannot provide on their own.

The Iberian Shift Away from Coal

Both Spain and Portugal have been at the forefront of Europe's efforts to decarbonize their electricity sectors. Portugal proudly announced the closure of its last coal-fired power plant in 2021, becoming one of the first European countries to eliminate coal entirely from its energy mix [4]. Spain, too, has aggressively moved to decommission its coal plants, with utilities like EDP even exploring ways to repurpose shuttered coal sites into data centers [5].

While these efforts align with ambitious climate targets, the blackout of April 2025 serves as a cautionary tale: removing stable, dispatchable power sources without ensuring adequate backup solutions can lead to serious systemic risks.

Unlike solar and wind energy, which depend heavily on weather conditions, coal-fired plants provide consistent, around-the-clock electricity. This "baseload" capability is critical to maintaining grid stability, particularly during unexpected system shocks. In the absence of coal, Spain and Portugal have grown increasingly dependent on imported electricity from neighboring countries, such as France. Thus, when a disruption occurs beyond their borders, their vulnerability is immediately magnified.

Reassessing Energy Security

The Iberian blackout highlights an important lesson for policymakers worldwide: energy transitions must balance environmental goals with pragmatic considerations around reliability and security.

Rather than viewing coal strictly as an environmental liability, countries could adopt a more nuanced approach that acknowledges its role in maintaining grid stability, especially during transitional phases. Cleaner coal technologies, carbon capture initiatives, or limited strategic reserves of coal-fired generation capacity could serve as "shock absorbers" against future grid disturbances.

It is worth noting that Spain and Portugal’s laudable investments in renewables have placed them ahead of many nations in sustainability rankings. However, as recent events have shown, overreliance on variable renewables and cross-border imports, without maintaining stable domestic generation capacity, can come at a steep cost.

A Path to Resilient and Sustainable Energy Systems

Ultimately, achieving a carbon-neutral future does not mean abandoning common sense. Coal may not be the final destination in a clean energy journey, but completely removing it without adequate replacement strategies undermines energy security. A diversified portfolio, combining renewables, cleaner fossil fuel technologies, and strategic reserve capacity, offers a more stable pathway.

Spain and Portugal’s blackout should serve as a wake-up call for governments worldwide. Energy security and sustainability must go hand-in-hand, and sometimes, ensuring the lights stay on may require keeping a few coal plants operational a little longer.

How May Investors Gain Exposure to Companies in the Coal Industry?

The Range Global Coal Index ETF (COAL) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Range Global Coal Index. The Index aims to track the performance of a portfolio of stocks that are involved in the met and thermal coal industry.

[1] Reuters, "Large Parts of Spain and Portugal Hit by Power Outage" (April 28, 2025)
[2] Euronews, "Spain, Portugal, and Parts of France Hit by Massive Power Outage" (April 28, 2025)
[3] Huffington Post Spain, "Portugal Points to Fire Outside Spain as Possible Cause of Massive Blackout" (April 28, 2025)
[4] Karuna News, "Portugal Ends Coal Burning Two Years Ahead of Schedule" (2021)
[5] Bloomberg, "EDP Eyes Repurposing Spanish Coal Plant Sites for Data Centers" (January 24, 2025)

Risk Disclosures:

Carefully consider the Fund's investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund's full or summary prospectus, which may be obtained by visiting www.rangeetfs.com/coal. Read it carefully before investing or sending money.

Investing involves risk, including possible loss of principal. There is no guarantee the Funds will achieve their stated investment objectives.

Investments in the energy industry are subject to significant volatility due to changes in commodity prices. Additional risks include changes in exchange rates, government regulation, world events, economic and political conditions in the countries where energy companies are located or do business, and risks for environmental damage claims.

The Fund is non-diversified. Its concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors.

International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Investments in smaller companies typically exhibit higher volatility.

The Fund may invest in securities denominated in foreign currencies. Because the Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if currencies of the underlying securities depreciate against the U.S. dollar or if there are delays or limits on repatriation of such currencies. Currency exchange rates can be very volatile and can change quickly and unpredictably.

Because the Fund is new, investors in the Fund bear the risk that the Fund may not be successful in implementing its investment strategy, may not employ a successful investment strategy, or may fail to attract sufficient assets under management to realize economies of scale, any of which could result in the Fund being liquidated at any time without shareholder approval and at a time that may not be favorable for all shareholders. Such liquidation could have negative tax consequences for shareholders and will cause shareholders to incur expenses of liquidation.

The Fund is a recently organized investment company with no operating history. As a result, prospective investors have no track record or history on which to base their investment decision. Moreover, investors will not be able to evaluate the Fund against one or more comparable funds on the basis of relative performance until the Funds has established a track record.

COAL ETF is distributed by SEI Investments Distribution Co.