EU approves Spain’s €9 billion capacity market for generation, demand response and energy storage

LinkedIn
Twitter
Reddit
Facebook
Email

The European Commission has approved a €9 billion (US$10.5 billion) scheme to shore up its energy capacity, which will be open to new and existing projects including energy storage.

The mechanism is akin to a capacity market (CM) and will run for ten years from May 2026 at €900 million a year. It aims to ensure that there is sufficient capacity to produce, store or flexibly consume electricity and that electricity production meets the expected demand.

Under the mechanism, transmission system operator (‘TSO’) Red Eléctrica will remunerate the capacity needed to meet the maximum acceptable hours of lost load per year that the system must meet to ensure adequate security of supply (known as the reliability standard).

It will be open to new and existing projects located in Spain that can provide energy during periods of scarcity, including electricity generation, demand-rise response and energy storage. Winning projects will be selected through transparent and non-discriminatory bidding processes. It hopes to open it up to interconnected Member States at a later date.

This article requires Premium SubscriptionBasic (FREE) Subscription

Try Premium for just $1

  • Full premium access for the first month at only $1
  • Converts to an annual rate after 30 days unless cancelled
  • Cancel anytime during the trial period

Premium Benefits

  • Expert industry analysis and interviews
  • Digital access to PV Tech Power journal
  • Exclusive event discounts

Or get the full Premium subscription right away

Or continue reading this article for free

Non-profit coalition Beyond Fossil Fuels said that the auction should be geared to support battery energy storage systems (BESS) and demand side flexibility, and that awarding contracts to gas would be a costly step backwards.

Capacity markets are a common way to grid operators to ensure enough capacity for demand at predicted times of scarcity. BESS and demand side flexibility have been very successful in winning contracts in such auctions in the UK, Belgium, Poland and Italy in Europe, as well as Japan, Australia and the US. Germany is going to launch one soon too. See all our coverage of capacity markets here.

The capacity mechanism will also support the development of flexibility services to help Spain reach its national flexibility target, adopted under its National Energy and Climate (ENCP). We discussed European Union member states’ flexibility target progress with trade body Energy Storage Europe earlier this year in a video interview.

Spain’s large-scale energy storage market was initially kickstarted by its PERTE tender, which provided capex grants to co-located BESS. Some of those projects are already coming online, including four from Iberdrola. Unsubsidised projects meanwhile tend to use long-term tolls to secure bankability (recent ones from IPPs Grenergy and Zelestra are good examples).

The European Commission is the executive arm of the EU.

2 December 2026
Italy
Battery Asset Management Summit Europe is the annual meeting for owners, operators, investors, and optimisation specialists working with operational BESS assets across the continent. The Summit focuses on how to maximise performance and revenue, manage degradation, integrate advanced optimisation software, navigate evolving market and regulatory frameworks, and plan for repowering or end-of-life strategies. With insights from Europe’s most active storage markets, it equips attendees with practical guidance to run resilient, profitable battery portfolios as the sector scales.

Read Next

June 22, 2026
As of the second quarter of this year, installed energy storage capacity in Europe overtook nuclear, according to trade association Energy Storage Europe’s new report.
June 19, 2026
Long-duration energy storage (LDES) technologies are becoming increasingly viable options to add flexibility to the European electricity network, according to a new report.
Premium
June 18, 2026
We chat to Stephan Lehrke, head of Germany at Second Foundation, a Czech Republic-headquartered energy asset trading firm which is becoming an owner-operator of BESS.
June 17, 2026
Octopus Energy Generation has partnered with ZE Energy to invest in and build one of Italy’s biggest BESS projects, while Eco Stor has secured financing for one of Germany’s, which it is already building. Optimiser Entrix has also won two large contracts in Germany and the Netherlands.
June 15, 2026
Energy-Storage.news presents this sponsored webinar with Clean Horizon, on how Germany’s grid connection agreements can affect the business case for battery storage projects.