An increasing number of PV park developers and owners in Spain combine their assets with battery storage and wind turbines. Besides providing this hybrid solution, batteries can provide grid balancing services in Spain much cheaper than gas- or coal-fired power plants, if there would be a free market for these services. This will give a boost to the recently increased government target of 22.5 GW of energy storage installed by 2030, experts state.
“We are not only going to achieve this goal, we are going to surpass it”, says Vicente Payá Alamar, managing partner of Circle Energy and one of the speakers at the Solarplaza Summit Energy Storage Spain in Madrid on the 24th of October. Low PV prices and an 80% capex drop for battery systems triggered investments in storage. “Some investors are waiting for a clear regulation, but there is a lot of appetite”, he says. “We are now arranging permits for smaller projects of 5 megawatts at the distribution level, but we are hoping to develop bigger projects connecting in high voltage when the regulation is in place, hopefully before the year has ended.”
Spain has increasing problems with grid connections. Asset owners of renewable energy can’t get access to the grid because of congestion or capacity problems. To be able to meet the requirements of capital deployment, incorporating new technology into their existing assets is a great option. Thus they can inject renewable electricity 24/7, in stead of from 9.00 to 18.00, expanding the time of delivery and making the project more profitable due to the increased capture price. “Due to low electricity prices in Spain, we need batteries to improve the existing assets and provide owners and investors with improved revenues of their plants”, Alamar says.
At this moment the local Spanish storage market is waiting for regulations to be in place, proposing bands for the electricity demand and supply of batteries during different peak periods of the day. This will help battery storage to be used when it’s needed, for the purpose it is needed, not cannibalizing the system. Alamar: “We need a stable regulatory framework to develop the battery storage market in Spain, which must be in place before the year ends, to help boost the development of battery storage projects.”
Spain is one of Europe’s largest producers of solar energy, with 37,551 gigawatt hours of PV generation so far in 2024. A new record, surpassing the entire 2023 production of 37,472 GWh. To prevent congestion and other grid problems, all this energy has to be stored for later use or for balancing the grid. Thus, battery storage becomes an essential part of the renewable ecosystem. Spain has set an ambitious goal of achieving 22.5 GW of large-scale energy storage capacity by 2030. The Spanish government has allocated €150 million to catalyze energy storage projects linked to renewable installations and launched the first tender for this combination this year.
Besides hybrid solutions, stand-alone batteries have significant potential in Spain as well. They can focus on grid balancing services like Frequency Containment Reserve (FCR) or automatic Frequency Restoration Reserve (aFRR), to keep the power grid stable at 50 Hertz. Spain doesn’t have a free market for these services, like other EU countries have.
In Spain most power plants are mandated to reserve flexibility for these services, meaning they can not run at a 100%. “In countries where battery storage is big, this is not mandated, but it’s a free market. Spain should also make this a free market. The benefit would be that battery systems can be built without subsidies and the costs for the end-consumer are reduced. They can provide these services much cheaper than gas or coal-fired power plants can”, says Oliver Schmidt, visiting researcher of the Imperial College London and CEO of the dvlp.energy platform.
At the summit, he will speak about optimizing economic returns on BESS projects.
In his opinion, hybrid solutions are only profitable if batteries can also provide balancing services and take energy from the grid. “Only providing the hybrid service is not sufficient”, Schmidt says. “The battery needs to stack multiple revenue streams to unleash its full potential and to become a profitable business case.”
