BESS and LDES in Spain: opportunities and challenges

Battery Energy Storage Systems (BESS) play a pivotal role in supporting the wider adoption and integration of renewable energies (RE) around the world. As a result, the battery technology market is booming with c.$35B+ invested in 2023 – with 70% growth year on year.

In Spain, the Energy Storage Strategy aims for 22 GW of energy storage by 2030. The country is generating (and committed to steady growth in the coming years) a significant portion of energy from renewables, makes the BESS role increasingly important in addressing generation intermittency and variability, grid stability, and technical regulation features.

In 2020, the target of 39 GW produced from renewables grew to 2023’s objective of 76 GW of solar photovoltaic (PV) alone. The other major expanding contributor is wind, with targets of 62 GW, while hydropower currently provides just 17 GW with potential to grow.

Economic impact

The in-country electricity market is structured in a day-ahead trading demand and supply interaction. Combine this with the referred objectives and the RE substantive weight, and there are increasing risks of oversupply in the windows where RE operate, hence wholesale prices drop to almost €0/kWh during certain periods. The two potential outcomes of this equation are interrelated: additional RE capacity being economically curtailed delivering a significant profitability drop; and, upcoming projects facing higher risk profiles for power purchase agreements (PPA).

BESS and Long Duration Energy Systems (LDES) can play an instrumental role in reducing or eliminating the need for RE economic curtailment, as, when combined, the technologies deliver further advantages alongside the technical benefits. Supply stability, reliability, peak shaving and frequency and voltage regulation can all be achieved efficiently.

A coherent and reliable energy transition plan with targets must therefore be supported and enabled by the implementation of large-scale energy systems.

Regulatory pressure to achieve 2030 goals

In Spain, significant growth has been seen in the BESS field over the last few years in the context of the National Integrated Energy and Climate Plan (PNIEC). However, there are still opportunities within the associated policies and regulations to unlock the necessary government support for these initiatives. The 2030 objectives and targets will not be achieved without decisive and determined actions by key stakeholders – more notably central and regional governments and incumbent policymakers. Key changes might include:

1. Policy and regulation direction are needed, as there are significant barriers with grid connection constraints, adaptation plans for RE integration, recurring lengthy permitting and planning processes (such as projects classification, or eligibility for “Strategic Importance Declaration”), excessive bureaucracy and restricted land access.
2. Capital investment requirements are high with low margins creating project uncertainty and risks must be reduced and/or returns improved through:
   • clarity on eligibility criteria to encourage the development of storage assets
   • transparent processes to access subsidies or fiscal incentives
   • support with risk-management for innovative and less proven technology applications 
   • capacity building plans and resources must be made available to stakeholders, specifically municipalities.
3. Greater clarity and analysis to support deployment plans of LDES to assess how productive these technologies are versus shorter duration Li-ion batteries, as the current market benchmark.
4. Case studies must be obtained to prove the benefits of LDES and the enhancement of RE capacity against the anticipated challenges of high upfront investment costs, technology maturity, environmental impact, and the ratio of energy discharged to energy stored.

Solutions for your business

Ricardo has undertaken several assignments in this space, supporting developers, independent power producers and regulators in the decision-making process, through:

• Due diligence assessments, including technical and environmental and commercial components
• Technical advisory services, from pre-feasibility, feasibility, technology assessment
• Financial analysis and modelling
• Energy modelling to support project sizing, project development, policy, market analysis
• Implementation and construction management, such as Owner’s Engineer and Project Management Consultant services.

Backed by these relevant credentials in the space, alongside an enhanced permanent entity in Spain with consulting, advisory and engineering capabilities, Ricardo is very well positioned to support developers, financiers, IPPs, policymakers and contractors in their BESS projects and objectives: from early-stage feasibility throughout implementation.

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