Spain is, literally, in a decisive decade for its energy transitionThe country already stands out for its installed renewable energy capacity, but if it wants to take full advantage of it, it needs to rapidly deploy storage technologies: pumped hydropower, large-scale battery deploymentConcentrated solar power with molten salts, thermal solutions, and even hydrogen and new battery chemistries. And that's where forecasts, official targets, and investment opportunities come into play.
The global context: dominant renewables and expansion of storage
On the international stage, projections agree that Renewable energies will be the backbone of electricity generation in the coming decades. Various scenarios from the International Energy Agency indicate that, by 2050, renewable sources could represent around 62% of the global electricity mix, driven by photovoltaics and wind power.
This profound change implies that electrical systems will have to take into account much greater flexibility and regulatory capacityTraditional thermal power plants will gradually lose ground, and this adjustment function will be increasingly taken over by batteries, pumped storage, solar thermal with salts, and other technologies such as hydrogen or compressed air.
According to the World Energy Outlook, batteries are expected to grow strongly as providers of flexibility between 2030 and 2050, with a average annual growth rate close to 15% globally. It's a huge leap compared to current installed capacity, and it puts storage at the heart of energy planning.
Meanwhile, reports such as those from BloombergNEF predict that global storage capacity will increase sharply in the short term: in 2025 alone, [number of] would be added. tens of gigawatts of new power and hundreds of gigawatt-hours in terms of capacity, with China and the United States as clear leaders, followed by European markets such as Germany, the United Kingdom, Italy, and Spain.
This global context is also driving an industrial race for batteries, in which The European Union wants to gain strategic autonomy in the face of the major Asian powers, strengthening the entire value chain: from the refining of raw materials to the recycling and second life of batteries.
Spain: renewable leadership and an urgent need for flexibility
Spain recently closed a fiscal year with a renewable generation close to 150.000 GWhThis represents slightly more than half of the annual electricity mix. This figure confirms the country's renewable energy leadership, especially in solar photovoltaics and wind power, but it also makes it clear that the grid will need significantly more capacity to absorb and manage this production.
The Integrated National Energy and Climate Plan (PNIEC) sets the bar very high: by 2030 it sets a target of 22,5 GW of installed storage capacityAdding up all technologies. This figure includes pumped hydro, concentrated solar power with storage, battery installations, and other thermal or emerging solutions.
Currently, the Spanish system has approximately 7 GW of storageThe vast majority of this is pumped hydro storage, in addition to the molten salt systems integrated into concentrated solar power plants. If we look only at pumped storage, Red Eléctrica de España (REE) estimates approximately 3,3 GW of turbine capacity reversible, which act as a gigantic “water battery”.
The power plants solar thermal power plants with storage in Spain they total about 6.675 MWh of thermal storage capacity and 870 MW of power of associated generation. Many of these plants can operate for up to 7,5 hours without direct solar radiation, and one of them reaches 15 hours, allowing them to provide very stable nighttime renewable electricity.
In contrast, large-scale battery storage is still in its infancy: only around 25 MW of grid-connected batteriesAlthough the project portfolio far exceeds that figure, with gigawatts of power in the pipeline or with access and connection permits already granted. project portfolio The ongoing process demonstrates investor interest and the demand for additional capacity.
Official targets: the “magic number” of 22,5 GW
The number that is repeated most often when talking about storage forecasts in Spain is 22,5 GWThat is the storage capacity target that the PNIEC updates for 2030, with the idea of being able to manage the high penetration of renewables, minimize dependence on fossil fuel plants and ensure supply even in situations of system stress.
Within that overall objective are included various technological areas. On the one hand, there is the hydroelectric pumpingThis already represents approximately 3,3 GW, and a significant expansion is planned through new reversible projects and expansions of existing facilities. Just four projects recently supported with €100 million in public funds could add an additional 2 GW of turbine capacity.
Concentrated solar power with storage also plays a key role. Spain already has 18 power plants with molten salt tanksMost of these plants have a capacity of 50 MW and 7,5 hours of storage. The PNIEC (National Integrated Energy and Climate Plan) includes a contribution of approximately 3,6 GW of concentrated solar power within the overall package, consolidating this technology as a "nighttime renewable energy" source with a competitive cost compared to photovoltaic and battery combinations and pumped storage.
The remainder of the target up to 22,5 GW will have to be provided mainly by the large-scale batteries and other electrochemical or thermal systemsIn practice, this means deploying several gigawatts of BESS (Battery Energy Storage System) systems, both hybridized with renewables and in standalone mode, with durations ranging from one to several hours.
The Institute for Energy Diversification and Saving (IDAE) and the Ministry for Ecological Transition and the Demographic Challenge (MITECO) have launched aid programs worth hundreds of millions of euros To accelerate this deployment, the €840 million allocated to storage projects in the first wave are complemented by new calls for proposals, some co-financed with ERDF 2021-2027 funds, which add another €700 million aimed at both stand-alone and hybrid solutions.
Market dynamics and regulators' vision
Storage forecasts are not only determined by national plans, they also depend on how the electrical system is modeled and what assumptions are usedThe European Agency for Cooperation of Energy Regulators (ACER) has analyzed the National Resource Adequacy Assessment (NRAA) prepared by Red Eléctrica and has detected two problematic points.
Firstly, ACER believes that Spain has been too conservative in estimating storage deployment for 2030The national study only includes projects already secured through public support, which leaves the forecast at around 8,6 GW, well below the 16,6 GW projected by the European Adaptation Assessment (ERAA 2024) and the path implicit in the PNIEC itself.
Secondly, the European regulator questions whether it has been applied a fixed maintenance profile for combined cycle gas turbines using 2026 as a reference point for all years analyzed. In their view, this simplification does not fit with the actual evolution of the system, where the peak risks will shift towards winter and the demand structure will be different.
Despite these objections, ACER concludes that the impact of these assumptions on the final fit-out result is limited, partly because the lower battery penetration and restrictions on the gas fleet are offset in the model by a lower volume of combined cycle plant closures during the economic assessment. Even so, it encourages Spain to correct these assumptions in future studies, especially considering the growing importance of storage and flexibility in the new design of the European electricity market.
These assessments are not merely an academic exercise: their conclusions will directly influence the design of future capacity marketswhich will be one of the pillars to guarantee stable income to storage facilities and encourage investors to take the step towards large-scale projects.
The great take-off of the battery market and BESS systems
The “EY Infrastructure Compass 2025” report and various sector analyses agree that the battery segment in Spain has experienced a remarkable leap: it has gone from a market value close to $ 417 billion in 2019 with projections exceeding 2.100 billion by 2029. On a global scale, the expectation is for annual growth of close to 15% between 2030 and 2050.
In the residential and commercial sectors, the projected growth rates are even more striking, with increases of close to 30% annually until 2030This translates into thousands of self-consumption installations with associated batteries, allowing households and SMEs to reduce their dependence on the grid, cut their electricity bills, and improve peak demand management. Many of these solutions are explained in practical guides on home storage.
One of the major catalysts for this expansion is the drastic drop in the cost of lithium-ion batteriesIt is estimated that from 2010 to 2024 its average price has been reduced by around 90%, settling at around $115 per kWh, with forecasts that it will continue to fall as the industry gains scale and new chemistries consolidate.
Companies like Solaria are taking advantage of this trend to develop BESS projects hybridized with large photovoltaic plantsThe company has approximately 1 GWh of projects under construction and more than 5 GWh under development in Spain, Italy, Portugal, and Germany. These systems are integrated into solar parks or near their substations, streamlining environmental permitting and reducing evacuation costs. The growth of battery segment This trend is reinforced by integration with renewables.
Furthermore, specific investment vehicles are being developed, such as joint ventures dedicated exclusively to the standalone BESS business, with portfolios of several gigawatt-hours and committed equity capital. All of this reinforces Spain's role as relevant energy storage platform in Europe, both in terms of available renewable resources and investor appeal.
Market design, “revenue stream” and economic viability
It's one thing for the technology to exist and be competitive, and quite another for it to the projects manage to secure fundingThis is where the concept of a "revenue stack" comes into play, that is, the combination of different sources of remuneration that allow batteries and other storage systems to recover the investment with a reasonable return.
Among the most common sources of income are the energy arbitration (loading when the price is low and unloading when it is high), the provision of balancing and frequency regulation services, participation in adjustment markets and, increasingly, payments associated with capacity markets or capacity mechanisms.
In Northern Europe, the price differentials between off-peak and peak hours are wide enough that energy arbitrage alone can sustain a significant portion of the investment in BESS. In the Iberian Peninsula, however, those differentials are narrowerThis means that storage projects cannot be sustained solely by buying cheap energy and selling expensive energy.
That is why deploying a solid and predictable capacity market In Spain, which is expected to be defined around 2025. This mechanism should complement the income obtained in the day-ahead and services markets, and offer a clear long-term signal to encourage banks and infrastructure funds to finance assets with useful lives of 15 to 25 years.
Analysts also highlight the key role of the Power purchase agreements (PPAs) and flexibility services These tools can provide revenue stability to hybrid generation and storage projects. Advanced modeling tools, supported by machine learning, are already being used to estimate multi-year price and revenue scenarios, which is essential for making informed investment decisions.
Storage technologies: pumped storage, concentrated solar power, batteries and innovation
The technological landscape for energy storage in Spain and Europe is becoming increasingly diverse. It's not a race with a single winner, but rather a combine complementary technologies that cover different time scales: from seconds or hours to weeks or even months.
El hydroelectric pumping It is, to this day, the main "backbone" of large-scale energy storage in Spain. These facilities pump water to an upper reservoir when there is surplus energy and release it through turbines when electricity is more expensive or the grid needs it. Their main advantages are their long lifespan, low degradation, and ability to provide seasonal stability to the system.
The power plants molten salt solar thermal power plants They have demonstrated for over a decade their ability to reliably provide renewable nighttime electricity. Spain stands out globally in this technology thanks to R&D centers like the Plataforma Solar de Almería and national companies that have spearheaded its development and export.
The electrochemical batteriesBatteries, with lithium-ion batteries leading the way, have become the preferred option for short- and medium-term energy storage due to their fast response time and flexibility for integration into power plants, industrial facilities, or even at the neighborhood level. Vanadium flow batteries are also beginning to appear in pilot or demonstration projects, capable of offering several hours of runtime with a good degradation profile.
In the longer term, technologies such as green hydrogen, compressed air storage, or sodium-ion batteries They promise to further expand the range of solutions. The European Commission has focused on long-duration (more than 10 hours) and seasonal storage, essential to cover prolonged periods of low renewable energy production. compressed air storage It is one of the options explored for these durations.
Europe: strategic autonomy in batteries and market reforms
At the European level, the Energy Storage Association (EASE) estimates that in 2023 alone, over 10 GW of new storage capacitymore than double the previous year. Germany leads the residential rollout with hundreds of thousands of domestic systems, many linked to photovoltaic self-consumption, while other countries, such as Spain, are progressing at a somewhat more moderate pace.
One of the European Union's priorities is to reduce dependence on critical raw materials such as lithium, cobalt, and nickel, most of which it currently imports. Demand for some of these materials is expected to increase tenfold by 2040, making it urgent to diversify suppliers, improve recycling, and invest in alternative technologies.
The Horizon Europe program and other R&D initiatives will channel significant funds towards projects that seek More sustainable batteries, less intensive refining processes, and advanced recycling solutionsResearch is also being supported on sodium-ion batteries, solid-state batteries, and other emerging chemistries that could reduce the pressure on critical materials.
In parallel, the RePowerEU plan sets the ambition to achieve around 200 GW of installed storage capacity by 2030combining all types of technologies. Achieving that figure requires, in addition to technology, eliminating regulatory barriers and creating specific markets for storage services, something that is already beginning to be seen in countries like France or Germany through auctions dedicated to batteries.
The reform of the European electricity market planned for this decade will force member states to define national system flexibility planswith specific objectives for solutions such as energy storage, demand management and active consumer response.
Impact on households, SMEs and the industrial fabric
The deployment of storage systems is not just a matter of large grids and power plants: it also has a direct impact on households, small businesses and industriesSelf-consumption photovoltaic systems with associated batteries allow many users to store surplus energy from midday and use it at night, reducing their exposure to market prices. This model of individual energy autonomy It's gaining traction.
In the case of autonomous communities such as Andalusia or Catalonia, the calls for storage aid They are promoting large-scale projects, both stand-alone and hybrid with renewables. Some initiatives exceed 200 MW of storage capacity and receive tens of millions of euros in subsidies, which strengthens local job creation and boosts the associated industry.
For SMEs and energy-intensive companies, integrating energy storage can represent a significant competitive advantage. The possibility of shift consumption to cheaper hours, reduce contracted power and improve the quality of supply This transforms these solutions into a risk management tool, especially in volatile markets.
Furthermore, the manufacturing and deployment of batteries, power electronics systems, and digital energy management platforms shape a new industrial ecosystem linked to storage. Spain aims to position itself as a hub for the production and assembly of batteries and components, supported by public-private investment programs and its strong renewable energy base.
The combination of renewables, storage, and electrification of demand (for example, with aerothermal energy or electric vehicles) opens the door to virtually emission-free homes, where a large part of the energy consumed comes from clean sources generated and intelligently managed locally.
What emerges from all these forecasts is a scenario in which energy storage ceases to be a complement and becomes a true pillar of the electricity system: Spain has set ambitious targets of 22,5 GW, Europe is accelerating its commitment to sustainable batteries and long-life storage, and the market is beginning to develop the mechanisms—subsidies, capacity markets, new business models—that will make the projects viable; if this combination of technology, regulation, and investment takes hold, storage will allow us to get the most out of the renewable potentialstabilize prices and build a much more robust energy system and decarbonized.
