Spain took a significant step toward activating its capacity market after the European Commission approved, at the end of May, a €9 billion mechanism to guarantee the security of electricity supply. However, the storage sector is still awaiting national definitions and the timetable for the first auctions.
For Raúl García Posada , director of ASEALEN , this wait already represents a risk for projects that need to make investment decisions and secure financing.
“The risk of it being late is real. Spain has taken too long to implement it, and many investment decisions are being made now,” the executive warned in an interview with Energía Estratégica .
According to García Posada, each new delay leaves mature projects without sufficient visibility on their future income, hinders their bankability, and threatens the fulfillment of Spanish storage targets.
The mechanism is designed to compensate for the availability of capacity during periods of peak system stress. For batteries, pumped storage, and other manageable technologies, it could provide a predictable revenue stream in addition to energy arbitrage and ancillary services.
“The capacity market must be a central piece to ensure coverage and provide a predictable revenue base that facilitates the financing of new low-carbon investments,” said the director of ASEALEN.
However, García Posada clarified that the instrument should not be considered a one-stop solution or replace income from energy, balancing and flexibility markets.
Today, much of the discussion surrounding the new tool is shifting to the design of the auctions.
“Too low firmness coefficients, short-term contracts, or an inadequate definition of stress hours could considerably reduce their attractiveness for batteries,” García Posada added.
ASEALEN advocates a technologically neutral mechanism, but one capable of adequately recognizing the availability, duration, and value that each solution brings to the system.
The association also calls for avoiding a design that relies solely on batteries with a limited lifespan . Spain will need a combination of BESS, pumped hydro, demand response, and technologies capable of storing energy for longer periods.
Belgium, a benchmark for combining income
In this scenario, García Posada points to Belgium as a reference of interest for Spain, although he avoids automatically transferring its model to the Iberian market.
The country combines operational balancing markets with a capacity mechanism open to storage . Furthermore, it has adapted its calls for bids to the actual development timelines of batteries and incorporated an auction held two years in advance.
“The main reference point for Spain would be the ability to adjust the regulatory design to each technology and facilitate the combination of different sources of income,” explains the director of ASEALEN.
The Spanish scheme, he adds, should also provide opportunities for projects requiring longer construction periods. Some facilities, especially large-scale, long-term solutions, may need five or six years to become operational.
Belgium also exhibits more pronounced volatility and price extremes, particularly in balance sheet markets. This economic signal, combined with capacity payments and greater regulatory predictability, allows investments to draw on multiple sources of value.
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Beyond the capacity market, ASEALEN considers it a priority to develop specific support mechanisms for non-fossil flexibility.
Arbitrage and adjustment services are fundamental sources of income, but their volatility and the growing competition between assets make it difficult for them to sustain the volume of investments that the country needs on their own.
Based on an analysis of the system's needs, Spain should establish specific flexibility targets and convene competitive instruments that remunerate the ability to shift energy between hours, integrate renewable surpluses, and respond to daily, weekly, or seasonal needs.
The association also demands competitive products for technical services that the system needs, but which still do not have specific and transparent remuneration.
These include inertia, voltage control, short-circuit current, oscillation damping, fast frequency response, and autonomous starting.
“Storage can provide many of these services, but it needs markets that recognize its value and allow its cost to be compared with that of technical constraints or material investments in the network,” the executive explains.
In addition, there is a need to develop local markets for flexibility and congestion management, coordinated between Red Eléctrica and the distribution network operators . These mechanisms would allow the use of batteries and flexible demand as an efficient alternative to certain infrastructure reinforcements.
Access, connection and permissions
Access and connectivity remain among the biggest bottlenecks , and a clear example of this is the Strategic Energy survey on the July BOE .
A total of 55 energy projects were identified: 23 incorporate storage, representing approximately 42% of the total. Seventeen are photovoltaic hybrid systems, compared to four independent BESS projects and two combinations with various renewable energy sources.
Among the largest developments are La Atalaya, with 83.71 MW of battery storage; Ignis's Azor Solar 1 and 2 BESS plants, with 68.51 MW; PB Babor 7, with 66 MW; and Solaben ST1 and ST6, with 50 MW each. In Alcalá de Guadaíra, six plants—Artemisa, Elvisa, SES, Jade, Esmeralda, and Heracles—obtained preliminary and construction permits for 278.4 MW of solar power and 237.6 MW of storage.
The volume confirms investor appetite, but does not guarantee projects: July also saw seven withdrawals for more than 405 MW.
ASEALEN attributes the impasse to separate generation and demand permits, limited access, and uncertainty surrounding flexible access. The association calls for protecting firm permits, simplifying stand-alone projects, and unifying the energy, water, and environmental permitting processes for pumped storage.
In the case of pumped storage, García Posada proposes a unified procedure that coordinates energy, water, and environmental permitting with access and connection authorizations. The current fragmentation multiplies the timelines and uncertainty surrounding strategic facilities for storing energy over extended periods.
Spain could end 2026 with nearly 650 MW of installed battery capacity, compared to the approximately 290 MW currently recorded, according to estimates from One Hub Energy provided to Energía Estratégica. However, a large part of the project pipeline is still undergoing permitting and has not yet reached the construction phase.
Regulatory delays don't just affect developers. Without sufficient storage capacity, a growing proportion of renewable energy generation could go to waste during peak production hours, while the system continues to rely on fossil fuels to meet demand at other times.
ASEALEN also anticipates increased spills, more hours with zero or negative prices, and an increase in technical restrictions and the need to reinforce the networks.
“Spain would lose an opportunity for a competitive advantage over other European systems. If we don't accelerate investment, the value chain and new industrial consumption will shift towards markets capable of offering that combination sooner,” concludes García Posada.