Spanish Government Launches Consultation on Planned Renewable Energy Capacity Market in 2025

The target is to create economic incentives for integrating renewable energy by promoting storage technologies and demand response. The scheme is intended to enter into force as early as 2025.

Key Planned Changes:

• Eligible Participants: The planned capacity market enables participation by generation and storage facilities as well as demand-side resources such as consumers and the (planned) so-called Independent Aggregators (“agregador independiente”). These participants will receive remuneration for providing stability to the electricity system by either feeding electricity into the grid or reducing consumption. Participating generation facilities must not emit more than 550 grams of CO2 per kilowatt-hour (kWh) (emissions limit), meaning that, in particular, facilities in the photovoltaic, wind, hydropower and geothermal sectors, as well as battery energy storage systems (BESS, combined or “stand-alone”), may apply for future support.
• Subsidies and Payments: Under the mechanism, payments will be awarded via auctions for fixed electricity volumes and prices.
• Requirements for New Investments: Only renewable technologies that allow for storage or demand response are eligible for support.
• Tender Types: Various types of tenders are planned, including a main tender, an annual adjustment tender, and a transitional tender.

1. Main Tender: This auction is open to both existing facilities and new projects, with terms of up to 15 years for new investments, in order to further promote the development of new renewable energy facilities.
2. Annual Adjustment Tender: This tender is intended to address short-term issues (“situaciones coyunturales”) and will be conducted in parallel with the main tenders. It is limited to facilities already in operation.
3. Transitional Tenders: This tender is intended to ensure the stability of the power grid until the main tender becomes operational. Existing facilities and new investments may participate with a term of one year.

• Planned Secondary Market: A secondary market will be created to provide greater liquidity to the capacity mechanism through trading of rights (assignment of rights and obligations).

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From the Newsletter “E|News: Renewable Energy”