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Sungrow’s high expectations for Spanish energy storage market

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Spain's Slow Adoption of Energy Storage

Spain's energy storage market lags behind due to insufficient regulations and the absence of a defined capacity market, hindering large-scale deployments. Experts highlight the need for clear regulations to attract investment and stimulate growth.

Government Initiatives and Future Outlook

Recent government tenders, including a 1.8GWh award for co-located renewable energy storage and an upcoming 2.4GWh standalone tender, are expected to boost the sector. However, these are unlikely to fully drive the country's 22GW energy storage target by 2030, as not all projects will be subsidized.

While these tenders will increase project size, the future of Spain's energy storage market will require a shift beyond subsidized initiatives.

Challenges and Opportunities

Regulatory hurdles: Lack of clear regulations at both EU and national levels.
Grid congestion: Existing grid limitations pose a significant challenge.
Skill shortage: A lack of specialists in energy storage technology.
Economic curtailment: A significant amount of renewable energy faces curtailment, which long-duration energy storage (LDES) could mitigate.

Conclusion

Despite challenges, the Spanish energy storage market holds considerable potential. Overcoming regulatory barriers, addressing grid congestion, and developing a skilled workforce are crucial for realizing its full capacity. Further growth is dependent on shifting beyond government-funded projects and attracting more private investment.

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Proof of this interest in the Spanish market is the company’s choice of location to host its PowerTitan 2.0 Experience Day in Madrid – which Energy-storage.news attended – earlier this month, showcasing its latest product in energy storage systems to the European scene, where it targets to deploy hundreds of MWh of storage with Power Titan 2.0 systems this year, mainly in the UK and Germany.

One of the reasons for Spain to be a late bloomer in the storage scene, is due to its lack of regulations which could draw some parallels with Italy, says Javier Izcue Elizalde, vice-president and responsible for Southern Europe at Sungrow.

“We need to have clear regulations because right now, the standard is under development. And needless to say, the capacity market is also not yet defined, but some of our customers have an appetite for these kinds of investments,” explains Izcue.

Last year alone Spain only added 5MW/10MWh of capacity, according to data from consultancy LCP Delta, with 2025 expected to be the year where BESS deployment will kickstart. A broader look at the Spanish market and other European countries’ grid-scale deployment in the coming years can be read in Energy-storage.news recent Energy Storage Report.

During a panel at Sungrow’s event, Alberto Quesada, head of engineering at renewables developer Fotowatio Renewable Ventures (FRV) explained the reason for the Spanish market to be behind in the energy storage scene is due to the lack of specific regulation and a lack of capacity market, adding: “You can only go to the wholesale market.”

The lack of regulation is not an issue unique to the Spanish market, but more broadly at the European level, as Margareta Roncevic, policy officer at the European Association for Storage of Energy (EASE), explains: “Energy storage, in general, is not recognised in many regulatory forms on the EU level and on the national level. That is a big barrier dragging in the market, even though technologies are commercially viable.”

Quesada also highlighted the issue of negative prices or close to zero in the Spanish market due to high amounts of PV during sunny days in the Summer, or wind during the winter.

Spain’s energy storage tenders

Izcue added that with Spain’s first tender for energy storage to be co-located with renewables – which awarded 1.8GWh of capacity – projects are expected to be much smaller, as is the case of Spanish utility Iberdrola which was awarded 300MW of BESS to be co-located with existing solar PV plants. It will deploy six 25MW/50MWh lithium-ion systems in the regions of Castilla y León, Extremadura, Castilla La Mancha and Andalusia.

However, with the results of an upcoming 2.4GWh Spanish standalone energy storage tender to be unveiled, in the coming months, Izcue expects the size of battery storage projects built to increase.

If these tenders could help kickstart interest in energy storage in the country, these will not necessarily be the main driver for Spain to reach 22GW of energy storage by 2030, explains Izcue.

Deployment of BESS in Spain is not expected to kickstart before 2025. Chart: Cameron Murray for Energy-storage.news.

“I don’t think that’s going to be the future of Spain, because these [auctions] are funded from Europe. We have been discussing recently with customers and some of them are not working in these plans.” Izcue added that “not everything is going to be subsidised”.

Grid issues and lack of professionals

If the lack of regulations for BESS to soar in the coming years is one of Spain’s main challenges, grid congestion and lack of personnel are also high on the list, which the solar PV industry has been facing too. With the higher complexities of storage technology, Izcue says: “It’s not easy to also find a specialist in storage.”

A report last year by Aurora Energy Research highlighted that 5% of Spain’s renewable energy generation could face economic curtailment between 2025 and 2030, which Quesada said was expected to increase in the coming year. However, long-duration energy storage (LDES) could reduce or eliminate these constraints with the deployment of 15GW LDES.

Updated on 22/03/24 to clarify the capacity of PowerTitan2.0 expected to be delivered in Europe this year.