Spain’s €699 million scheme to support 2.5-3.5GW of storage following EU approval

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The European Commission has approved a €699 million (US$760 million) state aid scheme in Spain to support the deployment of up to 3.5GW of energy storage.

The scheme was approved this week (17 March) under the EU’s Temporary Crisis and Transition Framework (TCTF), its programme to help economies in light of Russia’s invasion of Ukraine in 2022, and will contribute to the bloc’s decarbonisation goals during 2024-2029. It will be part-financed by the European Regional Development Fund (ERDF).

It will take the form of direct grants covering no more than 85% of a project’s capital expenditure, and is open to all technologies and standalone, renewables-hybridised and thermal energy storage projects in Spain.

The European Commission said it will support the construction of 1,800MWh of new ‘electricity storage projects’ while Spain’s Ministry for the Ecological Transition and the Demographic Challenge (MITECO) said it would support a total of 2.5-3.5GW of new capacity, in a separate announcement.

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The disparity in the figures could be for a few reasons, but one explanation could be that the Commission’s figure refers to the amount that the funding will cover in full, with MITECO’s figure including capacity funded by project owners themselves.

MITECO said between 80 and 120 projects will be funded, and they must be completed by the end of 2029. It will be administered by the Institute for Energy Diversification and Savings (IDAE), part of MITECO.

The projects will make the energy system in Spain more flexible, robust, and resilient, MITECO said, helping to integrate more renewable energy.

The funding scheme is separate to Spain’s PERTE programme, which is only funding storage co-located with renewables. IPP Ibedrola is one of the first to make firm announcements for projects as part of PERTE, deploying 300MWh across six projects.

Spain has been tipped as an attractive market for energy storage but final investment decisions (FID) have by-and-large not yet been taken, with developers and operators waiting for the business case to firm up and for grid capacity to become available in upcoming auctions. Last week saw developer Renewco and IPP Atlantica partner on a 2.2GW BESS pipeline in the country.

Just last week, a similar scheme under TCTF was approved in the Czech Republic, and the past few years have seen schemes approved in HungaryPoland and Slovenia too, while the EU’s separate Recovery and Resilience fund (related to the Covid pandemic) has supported storage in Bulgaria, Romania, Finland and Greece.

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