Policy Momentum, Market Demand: Spain’s Energy Storage Hits the Fast Lane

In April, a major blackout exposed Spain’s fragile grid and brought energy storage to centre stage. Globally, storage is fast becoming the engine of the energy transition.

Different countries take different paths: Germany focuses on homes, the UK on markets, while Spain is rising fast on the twin engines of policy and demand.

As a major solar nation, Spain now faces a structural challenge: too much electricity by day, not enough at night. Storage isn’t optional anymore — it’s essential.

Policy Push: Storage Becomes Core Infrastructure

Spain has placed storage at the centre of its energy strategy. Under its National Energy and Climate Plan (NECP/PNIEC 2023–2030), it raised its 2030 electricity storage target to 22.5 GW, with 40% from batteries.

However, as of 2024, battery storage is only about 1.7 GWh, indicating that Spain remains one of the most active markets in Europe in terms of energy storage policy.

Key policy measures include:

• Financial support: grants, tax incentives, and dedicated R&D funding, especially for storage paired with renewables.

• Regulatory reforms: clearer market roles for storage, simplified permitting, and access to wholesale and ancillary markets.

• Supporting measures: reforms to capacity mechanisms, grid flexibility markets, and incentives for distributed storage.

Storage in Spain is now recognised as part of the core energy infrastructure — not an add-on.

Market Heating Up: Demand Is Real

Policy sets the course; the market drives growth. Rapid renewable expansion and rising grid stress have made storage essential.

Why Is energy storage Essential for Spain?

• Too much power, not enough grid: By the end of 2024, Spain’s wind and solar hit about 64 GW, with curtailments and negative prices becoming routine.

• Grid bottlenecks: Over 120 GW of renewables await connection.

• Blackout risk: The Iberian Peninsula blackout in April 2025 showed the danger.

• Weak interconnection: At 1.9%, Spain’s links to Europe are far below the 15% EU target. Local storage is the only answer.

Why is energy storage such a good fit for Spain?

It’s not just essential — it’s profitable. Spain’s storage market offers both strong demand and clear revenue potential.

• High volatility in electricity prices: the daily peak spread in April 2025 amounted to €28.4/MWh.

• Strong supply and demand for renewable energy: In 2024, Spain generated more than 100 TWh of electricity from wind and solar, about 40% of total electricity generation.

• Project pipeline growing fast: In March 2025, Renewco and Atlantica announced 2.2 GW of storage in Spain, with co-located wind and solar sites on the rise. Returns in wholesale and balancing markets continue to improve.

Big gap, clear opportunity

Currently, battery storage is only 60 MW, far behind the UK and Italy.

Target: 22.5 GW by 2030, which means more than 15 gigawatts of new construction, especially long-term projects.

Spain is shifting from generation shortages to oversupply and weak flexibility. Storage isn’t optional — it’s critical infrastructure.

Global Spotlight: Spain Sets the Pace

• Recognised by international bodies: The IEA highlights Spain as an example to follow. BloombergNEF sees it as a reference for southern Europe, the Middle East, and North Africa.

• Global investor interest: Energy majors like Enel, TotalEnergies, Iberdrola, and investors including BlackRock and Brookfield are expanding in Spain to access wider southern markets.

• Global leader: Spain now hosts the world’s second-largest pipeline of advanced storage projects, accounting for 19% of global late-stage projects (~10.5 GW), behind only the US.

Challenges Remain

Despite progress, challenges persist:

• Revenue volatility from fluctuating power prices.

• Slow permitting and grid connection processes.

• Delays in launching capacity markets (now expected 2025), currently more focused on fossil fuel retirements.

• Loss of priority dispatch for solar-plus-storage projects, reducing incentives.

• Grid bottlenecks requiring competitive auctions for connection rights.

• Potential restrictions on operating hours could undermine flexibility and earnings.

Even so, with policy and market drivers aligned, Spain’s storage market is set for rapid growth.

Storage: More Than Batteries — A Force for System Redesign

Spain’s storage sector is at a pivotal moment where policy backing meets market take-off.

• Funding and incentives from government;

• Massive renewable potential driving real demand;

• Business models sharpening fast.

If Germany is Europe’s showcase for home storage, Spain is shaping up as the next big frontier for grid-scale deployment.

Storage isn’t just about batteries anymore. It’s about rebuilding the system from the ground up. And Spain is a key part of that global shift.

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