The renewable sector is facing a series of difficulties such as curtailments, resulting from grid saturation and the large penetration of photovoltaic energy, leading to price cannibalization. Experts point to energy storage as the key to transforming the electrical system, but they agree that some measures are needed to promote the technology.

Alberto Rocha, Growth Strategy Advisor at AR Industrial Partners, analyzes the Spanish energy market and asserts that if there is no public information about prices and nodal congestion in real time, any measures taken will “just be patches.”

“When you know the areas where there is saturation, the prices, and what you can earn, you invest in a battery. Batteries cannot be installed in the north of the country when most of the renewable generation is in the south. It’s not a small country where energy can be transferred easily. It only unbalances and makes the investment meaningless. Many of these developments will not have a future because logically, in places where there is even saturation by capacity, they will pay you less because it’s not as needed,” explains Rocha.

“In my view, the only solution to have a truly free market in which the market regulates itself is to provide public information about nodal congestion and nodal prices,” he emphasizes in an interview with Energía Estratégica España.

He also points out that having access to updated and dynamic information about grid saturation would ensure greater competitiveness for the final price and for investors, as they can install where there is market demand, in addition to generating a flexible, efficient grid adapted to renewable energy.

“If you install a battery in a place where there is no congestion, you will buy energy at the low price in Spain because it’s a system with a single global price. It doesn’t make much sense when we already have a 4.0 grid, and we need nodal information that shows where we need the grid or a battery, which ultimately absorbs energy when there is congestion or excess,” adds the AR Industrial Partners executive.

The Spanish government is advancing in the regulation of some measures to promote storage, such as the capacity mechanism, which is expected to be launched by the end of the year.

In this regard, the expert points out that the administration is taking the right steps and assures that the Comisión Nacional de los Mercados y la Competencia (CNMC) is expected to release an informational document this week on how demand requests should be submitted, obligating distributors to provide information about the demand capacity at these nodes.

CNMC Methodology

It is worth recalling that last August, the CNMC published the proposed Resolution RDC/DE/005/24, which aims to establish operating patterns for storage installations. While Rocha notes that this step is heading in the right direction, he expresses that controlling storage without knowing the real situation of the grids is somewhat limited.

“Today, real-time monitoring and control are required for storage installations, but information about the grid remains static. How can we optimize the use of storage without knowing the congestion or prices at each node in real time?” he points out.

He adds, “It’s not ambitious; they set operating patterns and locations for installations, more capacity will come out, but then you can’t enforce those patterns because they change between summer and winter, so it becomes limiting.”

Market Analysis

Analyzing the current market situation, Rocha points out that the photovoltaic sector is experiencing saturation and price cannibalization, which could lead to a halt in projects.

“Given the current energy prices, the inherent cannibalization in photovoltaics, there is no clear viability for investments. I would define photovoltaics as saturated in development, it’s a good time to build projects, get them into operation, and reach the goals, but in my view, photovoltaic development is nearly done,” he details, adding that project prices are expected to decrease.

As for wind energy, he warns that many projects are expected to fail due to social resistance. “In terms of saturation, I think there are projects that will fall through, and we’re not mega-saturated, we’re not that close to the goal with projects currently underway or permitted according to Red Eléctrica’s information, which leads me to say there is still space in wind,” he explains.

Regarding storage, Rocha notes that it is already saturated, as, according to Red Eléctrica data, there are many ongoing and permitted projects in both distribution and transport.

“In my view, these projects may not be well-oriented. There are projects that will fall through because I’ve seen projects that are not symmetrical, meaning the injection capacity into the grid does not match the demand capacity, which will make some projects unattractive and they’ll be replaced by better ones,” he explains.

“Additionally, I see that especially in storage, given the degree of saturation in developments, it could lead, particularly in transport rather than distribution, to specific capacity auctions for storage technologies, so that the best projects make it to operation,” he adds.