This week brought the official announcement that the sector had been waiting for for years. Order TED/966/2026, of September 15 , which creates a capacity market in the Spanish peninsular electricity system , established the architecture with which generation, storage, and demand will compete for remuneration associated with firm capacity.
The next level of detail could arrive soon. Javier Revuelta, Senior Vice President of Wood Mackenzie in Spain, estimates a timeframe of one to three months to learn some of the remaining parameters, although the Order does not establish a timeline. These include firmness coefficients, price limits, and the specific conditions for the first calls for bids.
For Revuelta, this definition will be crucial for projects that still need to secure financing. “The capacity market will improve bankability because it can provide additional guaranteed income, and the bank will be able to count on that income,” he explains to Energía Estratégica .
If a BESS needs, for example, an additional 17,000 euros per MW per year to achieve the profitability required by its investment committee, that figure can become its offer to the capacity market.
If the project falls within the cutoff and the system needs that power, the payment covers part of the missing funds . “It will be the figure that closes the loop,” Revuelta summarizes. The unknown is that the developer still doesn't know how many MW this price can be applied to, because the mechanism will compensate for firm capacity and the coefficients for each technology are still pending.
Aurora Energy Research 's analysis concurs. "The published framework establishes the architecture, not the parameters," summarizes Alejandro Zerain, Head of Advisory Iberia . The consultancy focuses on the variables that still separate the regulatory design from a closed financial account: firmness coefficients, contracted power curve, price limits, unit investment values, and the threshold applicable to hybridizations.
Sources within the energy storage sector consulted by Energía Estratégica share this caution. “We are better off than yesterday, but we still have a couple of very important final steps to take,” they point out. The operating procedure must define, among other aspects, the methodology for calculating firmness, while the call for bids will establish the power curve, prices, service periods, and hybridization threshold.
The proposed call for tenders must also undergo public consultation and receive a report from the CNMC (National Markets and Competition Commission). While these steps are underway, the Strategic Energy monitoring system tracks more than 1,429.5 MW of BESS (Basic Energy Storage and Storage) projects currently being processed in the BOE (Official State Gazette) , without yet knowing what portion of that capacity will be recognized as firm.
Revolt: the payment also seeks to prevent the closure of combined cycles
Batteries won't enter that market on their own. Revuelta identifies a key function of the mechanism: maintaining the availability of some of the thermal generation that remains necessary to ensure coverage while renewable energy takes over. " If you don't provide payments to many combined cycle power plants, they will literally shut down , " he argues.
The scale is concerning when measured in gigawatts (GW). “ If just three, five, or seven GW of combined capacity are shut down, out of the twenty-odd we have, then we really have a problem , ” he warns. The market will therefore have to find a balance between maintaining existing assets and attracting new flexibility without overcompensating for capacity that is already fully amortized.
The Order itself acknowledges the economic origin of this tension. The increase in arbitrage and the opening of new markets still do not generate enough revenue to mobilize all the necessary firm and flexible capacity, a shortfall that the text expressly refers to as "missing money ." The new mechanism aims to cover this difference through availability payments, not payments based on actual generation.
100 MW installed may end up being less than the remunerated MW
The Official State Gazette (BOE) defines firm capacity as the installed capacity multiplied by a coefficient between zero and one. A 100 MW battery with a hypothetical coefficient of 0.5 would compete with 50 MW of firm capacity . In hybrid projects, the calculation will be done module by module, and the sum cannot exceed the granted access capacity.
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The specific coefficient for BESS has not yet been set. The methodology will be developed in the operating procedure, and the values per technology will be established in the call for bids. Until then, developers can define how much they want to charge per MW firm, but not how many MW they will actually be able to bring to the auction.
This figure will directly impact revenue. The monthly remuneration will be one-twelfth of the result of multiplying the firm capacity awarded by the price obtained in €/MW firm per year.
Furthermore, it's crucial to focus on the Operating Authorization, which will be the determining factor . Facilities that already have it before the call for proposals will be considered existing and will have access to twelve-month contracts. Those that don't yet have it can enter as new investments, with periods defined according to the useful life of each technology and a maximum of 15 years.
To participate, bidders must also have access and connection permits and reach at least 1 MW of firm capacity if bidding individually. In the main auction, new investments will be limited to renewables, storage, and demand.
Up to five years may elapse between the awarding of the main auction and the start of service provision. Certain new investments may exceptionally have access to a quota of up to nine years .
Pay-as-bid and fixed price throughout the contract
The auction will be a sealed-bid, pay-as-bid process : each successful bidder will receive the price they offered in €/MW firm per year. In the main auction, this amount will remain fixed throughout the entire service period.
Article 15.12 further stipulates that neither the price nor the awarded firm capacity will be updated subsequently . A BESS with a long-term contract will have to incorporate its O&M, financing, inflation, and degradation forecasts from the initial bid. Bidding too high could exclude them; bidding too low could result in insufficient income for years.
Furthermore, hybrid installations that combine an existing module with a new one will generally be subject to the lower reservation price applied to existing assets. This limitation will be lifted if the new investment exceeds the hybridization threshold established in the call for proposals.
Aurora Energy Research adds another change for existing plants: they will be able to submit bids in blocks of at least 1 MW firm capacity and distribute their capacity across different prices. The rules may also establish a maximum number of blocks per participant.
The call for bids may limit concentration and reduce awards
The Ministry for Ecological Transition and the Demographic Challenge (MITECO) may require a minimum ratio between the volume offered and the power the company intends to contract. If this ratio is not met, MITECO may reduce the awarded capacity until it is fulfilled. It may also set a maximum percentage of firm MW for a single company or group of companies.
Both tools will be optional and their values will be defined in each call for proposals.
Aurora also focuses on the reliability standard. The Order adopts a LOLE of 1.5 hours , compared to the 0.94 hours considered in a previous design phase. National analyses published in the BOE (Official State Gazette) estimate 4.08 hours for 2028 and 2.41 hours for 2030 .
According to the consultancy, the new standard reduces the theoretical need for coverage compared to the previous scheme and can translate into a lower volume of MW to be contracted.