The Ministry for Ecological Transition (MITECO) has initiated a public consultation with the aim of establishing a new capacity market in the Spanish peninsular electricity system. This initiative seeks to ensure security in the electrical supply and promote investments in key technologies, such as energy storage and demand management. The capacity market is seen as a fundamental tool to attract investments that will drive the integration of battery systems into the electrical system, essential elements in the transition towards a more renewable and flexible energy model.
This new market will allow the participation of various generation, storage, and consumer installations, including demand aggregators. Participants will receive economic compensation for their availability to supply electricity or reduce their consumption during critical times. According to MITECO’s proposal, three types of auctions are being considered: the main auction, focused on existing and new projects lasting between one and fifteen years; the annual adjustment auction, aimed at operating facilities with a twelve-month validity period; and the transitional auction, which will provide stability to the system while the services awarded in the main auctions are implemented.
A key aspect of these auctions is that participating generation facilities cannot emit more than 550 grams of CO2 per kWh and must meet firmness and flexibility requirements established by the Ministry. New investments will be limited to renewable and storage technologies, highlighting the country’s commitment to sustainability and reducing carbon emissions.
The implementation of the capacity market is crucial for the development and expansion of energy storage systems, especially batteries, which play a vital role in managing the variability of renewable sources like solar and wind. Despite the benefits they can offer, these projects have faced significant challenges related to revenue uncertainty, affecting their financial viability.
The new capacity market could provide the financial stability that battery projects need, becoming a fundamental pillar for their sustainability. This structure will offer more predictable income, facilitating access to financing and promoting both independent projects and those combined with renewable energies.
This strategy aligns with the trend observed in other European countries, where capacity mechanisms have proven effective in stabilizing the electrical supply in systems reliant on intermittent renewable energies. France, the UK, and Italy have already adopted similar models that incentivize investment in technologies that provide flexibility and support to the electrical grid, ensuring future sustainability.
With the implementation of this market, Spain is poised to overcome the barriers that have limited the deployment of storage technologies, attracting essential investments that will not only be profitable but also crucial in meeting the decarbonization goals established within the framework of the energy transition.
Source: MiMub in Spanish