EU Approves Spain's €9 Billion Capacity Market for 10 Years of Power Backup
Updated
Updated · Energy-Storage.news · Jun 2
EU Approves Spain's €9 Billion Capacity Market for 10 Years of Power Backup
3 articles · Updated · Energy-Storage.news · Jun 2
€9 billion in state aid won European Commission approval for Spain to launch a 10-year capacity mechanism from May 2026, paying providers that can deliver electricity or cut demand during scarcity.
€900 million a year will be allocated through competitive, non-discriminatory auctions run by transmission operator Red Eléctrica to meet Spain's reliability standard and security-of-supply needs.
The scheme is open to new and existing projects in Spain, including generation, energy storage and demand-side response, with the Commission saying it could later expand to interconnected EU member states.
Battery and flexibility advocates welcomed the opening for storage and demand response but warned that awarding contracts to gas plants would be a costly setback for Spain's energy transition.
The approval adds to Spain's broader push to build grid flexibility, following storage support through PERTE grants and a growing market for unsubsidized battery projects backed by long-term tolling deals.
Will Spain's €9 billion energy auction fast-track clean tech or become a lifeline for gas?
With nuclear plants closing, can Spain's new capacity scheme prevent a looming energy crisis?
Spain’s €9 Billion Capacity Market: Securing Electricity Supply After the 2025 Blackout
Overview
Spain has launched a new capacity market, approved by the European Commission and valued at 9 billion euros, to secure reliable electricity supply from 2026 to 2036. This mechanism is designed to ensure power is available during high demand or scarcity, using a competitive bidding process to select providers. The European Commission highlights the importance of such mechanisms for safeguarding electricity supply across Europe, as long as they are structured to avoid market distortions. Spain’s approach aims to balance competition, reliability, and market stability, reflecting a strategic response to recent challenges in its energy system.