Energy storage is emerging as the key to reducing price volatility in the Spanish electricity market . However, its expansion could become a challenge: as more batteries are installed, they tend to cannibalize revenue , raising new questions about their future profitability.

To address this scenario, Our New Energy (ONE) developed a report led by María Santana, Quantitative Analyst and Artificial Intelligence, and Laura Sust , Company Consultant.

In dialogue with Strategic Energy Europe Managing Director Miguel Marroquín explains: “This study came about because we noticed that battery cannibalization, i.e. how their growth will reduce their own revenue margins in the long term, was not being properly assessed.”

Batteries as a tool to reduce volatility

Currently, Spain has 84 GW of installed renewable power , of which 32 GW correspond to photovoltaic solar energy .

The accelerated penetration of renewable energy has led to an increase in price volatility , with periods where electricity is sold at prices close to zero and others where it exceeds €100/MWh in a single day.

In this context, batteries play a fundamental role. Marroquín argues that they allow energy to be stored when prices are low and released during times of high demand, thereby reducing price spikes and stabilizing the market .

According to the report, if Spain did not incorporate storage, there could be fluctuations of up to €100/MWh in a single day by 2030 , while with 20 GW of batteries installed , that difference would be reduced by almost half.

“The batteries can absorb excess solar energy during off-peak hours and use it when the grid needs it, preventing Spain from having to export electricity at zero prices,” the executive explains.

The storage paradox: the risk of cannibalization

Despite its positive impact on market stability, the growth of storage brings with it an internal challenge: the reduction in revenue from the battery installations themselves .

“At first, batteries will take advantage of market volatility, buying energy at a low price and selling it at a high price,” Marroquín explains. However, he warns that as more storage is connected to the grid, they themselves will begin to narrow the price gap between peak and off-peak hours, thus limiting arbitrage opportunities .

The report models two scenarios for 2030 :

• Without batteries: extremely volatile prices, with peaks above €120/MWh and lows close to €20/MWh .
• With 20 GW of batteries: reducing the difference between maximum and minimum prices by half, with values ranging from €40/MWh to €100/MWh .

“When there are many batteries competing to store energy during solar hours and sell it at night, price valleys rise and peaks fall, limiting profitability,” he points out.

Spain, a key market for storage

The report highlights that Spain has exceptional potential for storage development due to its high solar capacity and limited interconnection with other markets.

Marroquín emphasizes that, unlike countries with greater integration into the European grid, Spain must manage its solar surpluses internally, making storage a key tool to avoid energy exports at zero prices.

However, the advancement of storage faces challenges such as a lack of specific incentives and the need for sustainable business models.

According to the expert, “the electrification of demand is not progressing at the expected pace, which is creating uncertainty for some projects.”

While acknowledging that electric mobility and data centers can boost consumption, he maintains that “there is no significant growth in industrial electrification due to a lack of incentives and strategic vision in Europe.”

As the market evolves, it will be key to find mechanisms that balance storage deployment without compromising profitability . Spain has the opportunity to consolidate its position as a leader in batteries, but to do so, it must anticipate the effects of its own expansion.