Occasion Spanish government opens consultation on planned RE capacity market in 2025

published on March 19, 2025

The Ministry of Ecological Transition (MITEC) has launched public consultations on the planned capacity market in the electricity system of the Iberian Peninsula in order to improve security of supply. The planned indefinite establishment of the Spanish capacity market will take into account the EU regulations on state aid and the internal electricity market.

The aim is to create economic incentives for the integration of renewable energies by promoting technologies for storage and demand management. The regulation is set to come into force as early as 2025.

Most important planned innovations:

Subsidy recipients: The planned capacity market enables the participation of generation and storage facilities as well as demand-side resources such as consumers and the (planned) so-called independent aggregators (“agregador independiente”). These participants receive remuneration for providing stability to the electricity system by either feeding electricity into the grid or reducing consumption. The participating generation plants may not emit more than 550 grams of CO2 per kilowatt hour (kWh) (emission limit), meaning that plants from the photovoltaic, wind, hydropower, geothermal and battery storage system (BESS combined or “stand-alone”) sectors in particular can apply for future funding.
Subsidies and payments: Under the mechanism, payments are awarded via auctions for fixed electricity volumes and prices.
Requirements for new investments: Only renewable technologies that allow storage or demand-side management are eligible.

Tender types: Different types of tenders are planned, including a main tender, an annual adjustment tender and a transitional tender.

Main tender: This auction is open to both existing installations and new projects, with terms of up to 15 years for new investments to further promote the development of new renewable energy installations.
Annual adjustment tender: This tender serves to solve short-term problems (“situaciones coyunturales”) and is held in parallel to the main tenders. It is limited to installations already in operation.
Transitional tenders: This tender is intended to ensure the stability of the electricity grid until the main tender goes live. Existing plants and new investments can participate for a period of one year.

Planned secondary market: A secondary market will be created to give the capacity mechanism more liquidity through rights trading (assignment of rights and obligations).