The Spanish energy market is entering a critical phase for the large-scale deployment of energy storage systems. As grid constraints, price volatility and regulatory adjustments converge, battery storage is no longer seen as an emerging technology, but as a decisive asset class.
That was the central message delivered by Optimize Energy during FES Iberia 2025, a key industry forum held to explore solutions for energy security and flexibility in southern Europe.
Participating in the panel on storage and asset management, Rodrigo García Ruiz, Partner & COO of the company, outlined why early movers in the storage space will be best positioned to capture value, and how Spain’s current market conditions offer a rare opportunity for high returns — provided projects are well structured and strategically operated.
Who benefits and why: first movers will dominate returns
“We’ve moved on from questioning whether storage is needed to asking when it will come online,” García Ruiz stated, reflecting the sector’s consensus that storage is now essential for managing renewables and stabilising the grid.
In today’s market, early deployment is key. According to the executive, projects commissioned first will be able to access the most attractive income streams, particularly in balancing services and arbitrage, before these become saturated or less profitable due to market cannibalisation. “Those who enter first will take the largest share of the pie,” he emphasised.
What makes storage viable: spread, balancing, and hybridisation
The revenue model García Ruiz presented is grounded in current market data. “We’re seeing spreads of €90 to €100 per megawatt hour,” he explained — figures that allow storage operators to estimate base revenues of up to €36,000 per megawatt, purely from day-ahead arbitrage.
However, he stressed that balancing services represent the real engine of income, with some technologies, like pumped hydro, generating up to 70% of their revenue from these ancillary markets.
García Ruiz warned that these services will not remain untapped for long. “Balancing services will become cannibalised — when exactly, we’ll see,” he noted. As more battery systems come online, competition for these mechanisms will intensify, reducing their individual profitability.
To enter the market efficiently, hybridisation with existing solar PV assets offers a clear path. It allows developers to create flexibility, maximise returns, and diversify revenue sources, despite some trade-offs.
“You might lose priority dispatch, but that will likely fade away anyway,” he observed. Still, operational challenges remain: “Sometimes you’ve already charged your battery before the grid applies curtailment, so it becomes a vicious cycle,” he added.
How to succeed: control, modelling, and operational sophistication
Unlike traditional renewables, storage is a dynamic and operationally intensive asset. “It’s like moving from the ACB to the NBA,” García Ruiz said, highlighting the increased complexity and sophistication needed to manage storage profitably.
This reality is driving many developers to bring battery operation in-house, instead of relying on third parties. “Why hand over battery operations to a third party if I don’t know whether they’ll maximise performance?”, he asked.
Internal management not only improves responsiveness but also gives developers direct control over revenue stacking across markets.
However, García Ruiz also acknowledged the lack of reference cases in Spain, with only isolated battery installations — such as the one in Abadiño — currently in operation.
To compensate for this gap, Optimize Energy has developed OctiBase, a proprietary modelling tool to simulate revenue scenarios. “We aim to provide visibility, stability and value for what can be captured in the coming years,” he explained.
When and where: regulatory shifts and market evolution
The timing of project execution will be crucial. García Ruiz pointed out that the Spanish market is transitioning to 15-minute settlement periods, increasing operational complexity and demanding higher precision. “We’ll need data, algorithms, intelligence,” he asserted.
In this new environment, contract structures and service models will need to evolve. “Before, market representatives would charge a fee for negative imbalance mitigation and split it 50/50. Now, they’ll need entirely new value strategies,” he concluded.
Battery storage is no longer a complementary technology. It is becoming a strategic cornerstone for renewables integration and energy market participation.
As García Ruiz made clear at FES Iberia 2025, those who act first — with the right technical, commercial and operational frameworks — will be the ones to lead the transition.
0 Comments