Spain is entering the final stretch to launch one of the most anticipated mechanisms for the electricity sector.
After almost two years since the initial proposal was submitted for public comment and once the European Commission gave its approval, the capacity market is now awaiting the final regulatory steps before it can hold its first auctions.
AELEC believes there is still room for the mechanism to begin to materialize in 2027, although this will require accelerating the schedule in the coming weeks.
This is according to Marina Serrano , president of the Association of Electric Power Companies , in conversation with Energía Estratégica .
The directive focuses not only on the support that combined cycle power plants need to ensure security of supply, but also on the role that the new scheme can play in improving the profitability of storage.
Furthermore, it links its implementation to another of the major challenges of the Spanish system: ensuring that renewable growth is accompanied by new demand, prepared networks and technologies capable of providing flexibility.
AELEC has been calling for a technologically neutral capacity market open to generation, storage, and demand management for years. What design does Spain need, and how much time is left to approve it before the delay starts to affect investment decisions?
It's one of the things we're still waiting for. We even thought it might have been approved before the holidays so the first auction could take place as early as 2027.
It is necessary because it provides a signal to the market. First, it is essential to guarantee security of supply and maintain backup power plants that must be available when the system requires them.
It is also key for storage.
We agreed with the auction proposal that was included in the draft order we were aware of, which was also intended to facilitate new investments.
From what we know, after the European Commission's analysis, it doesn't seem like there will be too many changes.
The proposed model can be improved, like any regulation, but it seemed positive to us and in line with other European countries.
The important thing now is that it's approved and implemented. Afterwards, as the market evolves, adjustments or modifications can always be made.
But the most important thing is that it starts working as soon as possible.
Everything indicated that the capacity market would be approved before the end of summer, but that didn't happen. What's delaying the process, and what timeline are you working with for the coming months?
Until now, the European Commission's approval was still pending. That was the explanation we were given.
But that approval has already been granted and, as far as we know, the Commission has not proposed any major modifications to the Spanish proposal.
That's why we hope it will be approved as soon as possible.
And if that happens, how would we move forward?
If it is approved in September, then the resolution and the auction rules must be approved so that the first auction can be called for next year.
That's the timeline we're working with, and we believe we could be ready in September.
What role can this mechanism play in the face of the storage boom we are already seeing?
It is a very important element for the storage to have economic performance.
The auctions will allow available facilities to contribute to security of supply and will involve different types of technologies.
These primarily include combined cycle power plants, which act as backup, but also storage, renewables, and other agents related to demand management.
The capacity market can send a signal to storage, and that's important.
In addition, these facilities must be able to participate in other operating markets and be capable of providing services to the system.
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Shifting gears and focusing on the Official State Gazette (BOE)... A growing number of BESS projects are being processed, but there's a significant gap between them and the capacity that actually ends up being built. What does the market need today to move from planning to implementation?
Storage is a new element within the system, and indeed, there are many projects underway.
Many of them are planned in hybridization with photovoltaic installations, which is what is currently being processed.
The first thing to do is to get those projects established.
This requires a series of elements also related to permitting.
Previous royal decree-laws have already incorporated mechanisms to improve certain procedures and facilitate the implementation of those projects that meet certain characteristics, especially in relation to their location.
It's something that has been made progress on, but we need to keep pushing for the necessary procedures to be completed and for the facilities to finally be built.
Beyond storage, what other regulatory decisions should Spain make in the short term?
One of the most significant elements is facilitating access for those seeking it.
A system with a lot of renewable energy generation can only move forward if there is a balance between supply and demand.
Demand is knocking on the door of the networks: the industry that wants to decarbonize, data centers, charging points and the electrification of city air conditioning.
That is why measures are needed to encourage the establishment of this new demand.
We have sufficient supply and will need to continue incorporating renewables, but we cannot continue maintaining zero prices or allowing surpluses to be sold off . For that, electricity consumption needs to grow.
We need to focus on the growth of demand, facilitate access and connection, and strengthen networks as a backbone of the system.
In that scenario, how important is the recent regulation of flexible access permits?
It's a paradigm shift because flexible connectivity didn't exist until now.
Those who requested access did so to have full capacity available 24 hours a day, seven days a week.
Introducing this possibility represents a new way of working for both the agents requesting a connection and the network managers themselves.
It will allow us to offer an alternative to those who have requested access and cannot have all the capacity they need, providing them with a connection during certain hours or under certain conditions.
It is especially important for storage, because it fits very well with its operation: consuming when electricity is cheaper and contributing to the system when needed and has greater value.
However, this does not replace investments in networks .
It is an important element and will offer a lot of possibilities, but it must be complemented with new infrastructure.
Does Spain have the conditions to attract the investments that the system needs?
Spain has an unbeatable opportunity.
We have renewable energy sources and prices that are between 20% and 30% cheaper thanks to the efforts made by both the regulatory bodies and the sector itself to deploy them.
We need to ensure that this advantage allows us to attract industry, data centers, port electrification, heat pumps, electric mobility, and all new demand that can take advantage of this generation.
We can't miss that opportunity.
We need to overcome those obstacles that, often due to bureaucratization, the dispersion of responsibilities, or a lack of clarity regarding the objective, end up slowing down projects.
The goal is to ensure that Spain does not miss the opportunity it has now.