In the last decade, Spain has made significant strides toward decarbonization, with electricity mainly coming from renewable energy in 2024, followed by natural gas, nuclear, and coal. Phaseout procedures for conventional energy sources are in motion for coal (by 2030) and nuclear (starting in 2027-2028). Despite high levels of renewable generation, Spain’s physical interconnection with other countries is limited, which often renders the injection of surplus energy impossible and results in zero prices during central hours. This, in combination with regulatory support schemes, makes the Spanish market a good fit for BESS (battery energy storage system) participation. So, what’s the status of battery capacity in Spain?
While Spain is a pioneer in renewable energy, its installed battery storage capacity is comparatively low, standing at only 60 MW as of 2025. This is set to change drastically by the end of the decade, thanks to several support schemes:
Grid connections and storage sites in Spain have been classified as being of overriding public interest, supporting the case for facilitating the acquisition of land and associated permits. Furthermore, grid rules now recognize storage as a source of flexibility to streamline grid access, dispatch priorities, and renewable integration.
Spain’s limited interconnection with other European markets and the lack of domestic battery storage capacity help explain why the Iberian Peninsula was hit so heavily by the watershed blackout of 28 April 2025. And now, a turning point of even greater significance is underway, according to EY’s Infrastructure Compass 2025 report, which reveals development plans for 14 GW of battery storage in Spain by 2030. Until 2050, the country aims to achieve 30 GW of battery storage across utility-scale and distributed units.
Spain’s electric transmission network consists of over 45,500 km of high-voltage lines and is operated by Red Eléctrica de España (REE), the national transmission system operator (TSO). The Spanish government has plans to invest heavily in grid expansion and modernization to support ambitious renewable energy targets. Beyond its own islands, Spain is interconnected with France, Andorra, Portugal, and Morocco. The cross-border capacity ratio between the Iberian Peninsula and the rest of the European continent is only 2% and remains below the EU objective of 10% by 2020. The interconnection capacity with France is 2.8 GW and was congested 68% of the time in 2024. With additional capacity under construction through the Gulf of Biscay, the interconnection is expected to nearly double to 5 GW by 2027. For comparison, the interconnection with Portugal is 2.3 GW (2.3% of installed capacity), but congestion occurred only 7% of the time in 2024.
What is the reason for this discrepancy? In France, Spain connects to a much larger, structurally different system, whereas the Portuguese network is much smaller and structurally similar. With comparable nominal interconnection volumes allocated to both countries, the French connection comes under pressure more quickly and easily.
Grid fees, known locally as “tolls” (paejas) or “charges” (cargos), cover the costs of transporting and distributing energy, as well as other system costs. As of 2026, grid fees are charged only for consumption (e.g., OPEX, cooling), but not for the provision of flexibility, exempting batteries. The exemption applies to both standalone and hybrid BESS front-of-the-meter (FTM) systems and incentivizes co-location with renewables.
REE compensates balancing service providers (BSP) for increasing or decreasing their energy output on request to balance fluctuations in grid frequency. Spain has aligned its balancing mechanism with EU frameworks and, in 2025, joined the PICASSO and MARI platforms, enabling participation in pan-European balancing services. Although exchanges are currently constrained by limited physical interconnection capacity, the market integration is in place and will scale as interconnections expand.
The Spanish power market offers two main revenue streams:
FCR doesn’t exist as a remunerated market in Spain but rather as an automated frequency response service that requires grid-connected generation units to reserve roughly 1.5% of their nominal capacity for balancing purposes.
| aFRR | mFRR | RT | |
| Activation speed | Full activation within 5 minutes, first reaction after 30 seconds | Full activation within 15 minutes | Intra-hour or day-ahead, depending on constraints |
| Activation | Automatic, according to REE setpoints | Manual, activated by REE | Manual, based on network and security constraints |
| Submarkets | Capacity + energy | Capacity + energy | Energy only (redispatch + curtailment) |
| Symmetry/direction | Asymmetrical | Upward only | Upward or downward |
| Divisible bids | Yes | Yes | Yes |
| Common internal market | PICASSO | MARI | National only |
| Suited for BESS | Yes | Yes | Yes |
The technical constraints market is employed by REE to resolve security and supply constraints that emerge immediately after the DA auction or in real time, such as network limitations or insufficient reserves. Participation is obligatory for storage and generation units. The process involves two phases:
TR bids can be updated up to 15 minutes before delivery. Energy reductions in phase 1 are not remunerated. In the dispatch priority order, curtailments affect non-renewables first, but Spain is working to adapt regulations in favor of renewables co-located with battery storage. TR presents a promising revenue stream for BESS in Spain, as assets can capture additional value from technical restriction activations.
| aFRR capacity | aFRR energy | |
| Block duration | 15 minutes | 15 minutes |
| Minimum bid size | 1 MW | 1 MW |
| Maximum bid size | Unlimited | 9,999 MW |
| Volume granularity | 1 MW | 1 MW |
| Price granularity | 0.01 €/MWh | 0.01 €/MWh |
| Gate closure | 16:00 CET | 20:00 CET on D-1 up until 25 minutes before delivery |
| Remuneration | Pay-as-bid | Pay-as-cleared (merit order) |
Day-ahead market (DA)
Intraday markets 1-3 (ID)
Intraday continuous market (IDC)
The Iberian electricity market (MIBEL) is clustered into two main wholesale segments:
Spot market (managed by REE and the Iberian spot exchange OMIE)
Futures/forward market (operated by futures/forwards exchange OMIP)
| DA | IDA 1 | IDA 2 | IDA 3 | IDC | |
| Market type | Daily auction | Daily auction | Daily auction | Daily auction | Continuous trading |
| Remuneration | Pay-as-cleared | Pay-as-cleared | Pay-as-cleared | Pay-as-cleared | Pay-as-bid |
| Session overture | 10:00 CET | 14:00 CET | 21:00 CET | 09:00 CET | After IDA 3 clears (~ 22:00 CET, D-1) |
| Clearing time | 12:00 CET | 15:00 CET | 22:00 CET | 10:00 CET | 5 minutes before delivery |
| Product type | Hourly and quarter-hourly blocks | Hourly, half-hourly & quarter-hourly blocks | Hourly, half-hourly & quarter-hourly blocks | Hourly, half-hourly & quarter-hourly blocks | Hourly, half-hourly & quarter-hourly blocks |
The imbalance market isn’t a distinct revenue stream in Spain because market participants don’t receive a reward for being imbalanced in the right direction (consuming less or injecting more when the system is short / consuming more or injecting less when the system is congested). Instead, the imbalance is settled based on day-ahead prices, meaning there is no gainable upside and no difference to being in balance.
An imbalance in the wrong direction (consuming more or injecting less when the system is short / consuming less or injecting more when the system is congested) exposes market participants to the full downside risk, as deviations are settled at the imbalance price and therefore often punitive. Imbalances are typically managed in the IDC market.
Spain is in the process of implementing a centralized capacity remuneration mechanism (CRM) to ensure long-term security of supply and support investment in flexible, low-carbon technologies, such as battery storage. The CRM is designed to replace legacy capacity payments and align with EU Regulation 2019/943, establishing a competitive, technology-neutral framework.
BESS projects are eligible for participation and expected to benefit from long-term revenue certainty that compensates earnings from energy and ancillary services. Awarded projects will be required to commit to availability during predefined stress periods (estimated to span no more than 10% of annual hours) and receive fixed monthly payments per MW of firm capacity. Non-compliance may trigger penalties or loss of remuneration.
As of early 2026, Spain’s capacity mechanism is still under development following a public consultation in 2024-2025. The government has submitted a draft and is awaiting State Aid clearance from the European Commission. Expected to become operational in 2026, the mechanism is seen as a key enabler of large-scale battery deployment and addressing the growing flexibility needs of the Spanish power system.
Spain offers favorable conditions for BESS, including a dedicated storage strategy, an exemption from grid fees, and a future capacity mechanism. While revenue stacking opportunities are currently underdeveloped due to a lack of market maturity, EU-approved funding schemes and grants for standalone projects help mitigate operational costs and provide a solid foundation for business cases.
Clean Horizon’s storage index for Spain shows solid revenue potential for BESS in 2025 and strong revenue in July 2025, which was a notoriously difficult month for battery assets in Germany. Spain has taken strategic steps to support BESS development and built a concrete project pipeline, putting the country well on its way to becoming a future market leader.
Disclaimer: The header visual was generated using AI.
Sources:
Red Eléctrica de España
Red Eléctrica de España: Renewables
IEA
Modo Energy: Spain's battery energy storage buildout
Modo Energy: Why are there no batteries in Spain?
La Moncloa
ENTSOE
Red Eléctrica de España: Interconnections
Energy Storage News
BBVA Research
Clean Horizon
LCP Delta