he capacity market proposed by the Ministry for the Ecological Transition and Demographic Challenge (MITECO) represents a strategic move to ensure supply security in an increasingly decarbonized electrical system.

This tool aims to reward technologies capable of providing reliability in high renewable penetration scenarios, establishing new rules that particularly affect energy storage.

Andrés Pinilla Anton, Head of BESS Sales Iberia at Mars Renewable Iberia, points out that this market is designed exclusively for the Iberian Peninsula, excluding island systems. However, it incorporates tools such as a secondary market, which allows participants to transfer rights and obligations assigned in auctions, offering unprecedented flexibility.

The scheme also defines clear deadlines for the execution of awarded services:

• Five years for new installations.
• Nine years, exceptionally, for technologies like pumped storage.

Additionally, contracts are tied to the useful life of assets, limited to half of this useful life, with a maximum of 15 years. “This rule is key for batteries,” Pinilla explains.

The number of cycles that can be performed will determine the duration of the contracts, directly impacting their profitability. Technologies with useful lives between 13 and 22 years will benefit proportionally from this design.

Challenges and Necessary Adjustments

In conversation with Energía Estratégica España, the expert identifies several challenges and areas for improvement in the current market design:

• Definition of firmness coefficient: This indicator will be decisive for the income of batteries. Technologies with limited autonomy could be affected by correction factors.
• Emissions thresholds: The inclusion of emissions thresholds could favor batteries over technologies like combined cycles, but the actual impact will depend on the values set.
• Flexibility in main auctions: Pinilla questions the need to wait until 2029 for the first main auction, suggesting that advancing them could speed up the incorporation of firm capacity into the system.
• Competition with mature technologies: Batteries will compete with combined cycles and cogeneration, which present competitive costs because they are already amortized. However, falling battery costs could level the playing field.

Stress Hours and Firmness Coefficients

One of the most relevant points in the design is the definition of stress hours, which are the moments of highest demand or lowest generation in the system. These will not exceed 10% or fall below 5% of the annual hours and will be notified at the beginning of each year.

This element is crucial for batteries, as their competitiveness depends on their ability to respond during these critical periods. Pinilla highlights that batteries with higher autonomy could play an important role if they manage to meet these requirements.

The firmness coefficient also plays a central role. This indicator measures how much firm power a technology can provide in critical situations. According to the design, a correction factor will apply to technologies that cannot provide more than six consecutive hours of service. “This could significantly affect batteries,” warns Pinilla.

Auctions and Economic Guarantees

The market will be structured into three types of auctions:

• Main auction: Will award capacity contracts that will start operating in 2029.
• Transitory auctions (2025-2028): Designed to cover immediate needs.
• Adjustment auctions: Will correct annual imbalances.

To participate, winners will be required to deposit an economic guarantee in the General Deposit Box, ensuring their commitment to the service. Furthermore, a validation mechanism will be in place to verify the real capacity of the facilities. In the case of batteries, these tests will include a three-hour notice and a response of at least one hour.

Pinilla concludes that while the capacity market is an important step forward, its success will depend on how the details are defined. With the right adjustments, this mechanism could become a key tool for ensuring reliability and supporting the transition to a decarbonized electrical system.