Beyond the Blame Game – How Storage Will Rewrite Spain’s Energy Story
by Ana Pirrone
A Wake-Up Call: The April 2025 Blackout
On April 28, 2025, Spain experienced one of the most severe blackouts in its modern history. Over 31 GW of load was disconnected, affecting millions across the Iberian Peninsula. The incident exposed vulnerabilities in grid inertia, voltage control, and coordination between transmission and distribution networks. It also highlighted the urgent need for flexible assets like Battery Energy Storage Systems (BESS) to stabilise the grid during periods of stress.
Regulatory Shifts: From RDL 7/2025 to MITECO’s New Framework
In response, the Spanish government published Royal Decree-Law 7/2025, which streamlined milestone extensions, recognised storage as a public utility, enabled demand-side access and support for industrial electrification, and accelerated permitting for hybridisation and repowering. However, its non-ratification by Congress created uncertainty for developers as it meant a return to strict permitting frameworks and delays in project timelines and potential PPA / financing complications.
To restore confidence, MITECO has approved the urgent processing of a Royal Decree to strengthen the electricity system, incorporating measures from Royal Decree-Law 7/2025. The new regulation will include measures that can be enacted without full legislative approval, such as limiting grid access permits to five years to prevent speculation, transposing EU rules on repowering, and setting mandatory response times for distributors. It also revives key elements of the rejected law, including the creation of new regulatory roles, incentives for electrification, and support for energy storage and self-consumption. The urgent procedure will halve administrative timelines to ensure rapid implementation ahead of the high-demand season.
Market Pressures: Negative Prices and Solar Curtailments
Spain’s electricity market is experiencing unprecedented volatility. According to APPA Renovables, the country has already accumulated over 500 hours of zero or negative prices in 2025, representing 12.5% of all trading hours. In June alone, 30 hours registered prices below zero, and July added another 131 hours in the €0–30/MWh range. These extreme price events are driven by the surge in renewable generation, particularly solar and wind. Despite a 2.1% increase in demand, the system has struggled to absorb the excess clean energy, leading to price collapses. Inevitably, curtailment and revenue instability has triggered a reduction in project valuations, with ready-to-build assets dropping from €150,000/MW to as low as €30,000/MW. In this volatile environment, hybridisation with BESS is no longer optional, it’s strategic. Projects with BESS are more resilient, bankable, and attractive to investors.
Institutional Support: €700M EU Aid Scheme
To accelerate deployment, the European Commission approved a €700 million aid package for energy storage in Spain. Managed by IDAE, the program offers up to 85% co-financing for a wide range of storage technologies, including standalone and hybrid BESS, pumped hydro, and independent thermal storage. While submissions are now closed, results are expected to be announced before the end of the year. Once awarded, projects must be completed within 36 months, paving the way for an exciting pipeline of new developments. This funding aligns with Spain’s broader decarbonisation goals under the PNIEC, which targets 22 GW of storage capacity by 2030.
What’s Next: Spain’s Capacity Market
In December 2024, Spain published a draft for its capacity market, expected to launch in 2026. Key features include technological neutrality, auctions with firm power demand curves, monthly payments for availability and energy delivered, and integration with day-ahead, intraday, and balancing markets. While not a silver bullet for profitability, the capacity market will provide additional revenue streams and reinforce the role of BESS in grid reliability.
Our Value Proposition: Embedded Expertise for BESS Success
At OWC, we don’t just advise, we embed ourselves in your project’s success. Our services include Owner’s Engineering, Technical Due Diligence (TDD), Lender’s Technical Advisory (LTA) and Developer support. We tailor our approach to each project’s needs, whether standalone BESS or hybrid with solar and/or wind.
Why Us? Experience from Mature Markets
Our team brings deep expertise from UK, Germany and Australia, where storage markets are more advanced. We’ve supported grid-forming battery projects in the UK’s frequency response market, hybrid solar and storage portfolios in Germany’s balancing and reserve markets, and cross-border due diligence for institutional investors. This experience allows us to anticipate regulatory shifts, optimise revenue stacking, and de-risk development in Spain’s evolving landscape.
Let’s Build the Future Together
Spain is at a crossroads. With the right partners, BESS can unlock grid flexibility, investment returns, and energy independence. If you’re developing, investing in, or evaluating a storage project, let’s talk. We’re ready to help you navigate complexity and deliver value.
Connect with The Expert
Ana Pirrone
Country Manager, Spain