Spain has the potential to abolish financial constraints on renewables through 15GW of enduring energy storage

Around 5% of Spain’s renewable energy production may experience financial constraints from 2025 to 2030, but extensive energy storage (EES) could lessen or completely eradicate that necessity. This is a significant finding from an investigation into Spain’s energy sector by Aurora Energy Research, revealed in a fresh study commissioned by Breakthrough Energy. Financial constraints arise when the operational expenses of generators surpass the wholesale electricity market prices received for their sold power, prompting operators to cut down power output to avoid financial losses.

Spain’s aspiration is for renewables to constitute 81% of the total electricity production by 2030, nearly double the already substantial proportion of 42% reported in 2022. This implies a growth of 173% in installed renewables capability between 2022 and 2030. The new ambition is established in Spain’s National Energy and Climate Plan (NECP). This includes 76GW of solar PV capacity by the end of the decade, up from a previously established 39GW target from 2020, as reported by related site PV Tech in late June. Out of that amount, 19GW are expected to be self-consumption solar PV systems, leaving a substantial volume of solar to be incorporated into the grid.

As Aurora emphasized in its comprehensive 89-page investigation, the anticipated target for energy storage has also risen from 9GW in the 2020 NECP to 18GW, coupled with 10GW of electrolysers (up from 4GW) and 61GW of wind, an increase from a former 49GW target. Higher electrification and decarbonisation objectives mean transferring renewable energy from the time of production to the time it is required, as well as a larger demand for grid services and precautions to guarantee electricity supply security.

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Lithium-ion batteries, currently the most commonly adopted energy storage technology in recent implementations, can efficiently provide short to medium duration storage to offer ancillary services and level out the inconsistency of renewables for several hours. Extensive storage, on the other hand, is defined as technologies with a storage and discharge period ranging from eight hours to four days. According to Aurora, this type of storage might be a “essential” option to speed up the transition to net zero while lowering power system costs and curtailment.

Extended energy storage (EES) technologies would be a cost-effective method to diminish reliance on gas to balance the growth of renewable energy capacity on the grid to 85GW, Aurora proposed. It could abolish financial curtailment by 2035, while 15GW of EES could offer roughly a €1 billion “benefit” in system costs from 2025 to 2050, according to the group’s modelling. Due to decreased usage of natural gas, EES could also propel Spain’s power sector to net zero five years quicker than in other scenarios, and play a substantial role in decarbonising the industrial sector, responsible for 40% of the energy used in industrial heat processes, which are traditionally hard to reduce emissions from.

However, EES, which covers a wide array of technologies, does not yet have a route to market in Spain. This is a frequent problem in many areas of the world, but notably in Spain, Aurora pointed out that the nation’s 2030 aim of 18GW for energy storage does not presently take into consideration extensive length demands. One criticism leveled about EES is that several of the technologies are still more expensive, particularly in terms of Capex, than shorter-duration lithium-ion batteries. Cost reductions for EES will be achieved, but they will need scaling up production and deployment, according to Aurora Energy Research.

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The costs of EES will decline over time, as has been observed with solar PV and battery storage, but that accelerating cost reductions will need immediate action to ensure that potential developers have the required policy support and opportunities to monetise the value that these assets contribute to the national power system in the long term. Aurora’s head of energy research for Iberia and Latin America, Ana Barillas, said that given the clear argument in favour of EES, Spain now requires a thorough policy and regulatory framework that facilitates its deployment.

Without EES and increasing industrial electrification, the NECP’s lofty renewable energy objectives are “plainly impracticable,” according to Barillas. When such a large component of the generating mix is intermittent, as is the situation in Spain, EES can not only help prevent the curtailment of renewable output but also provide essential grid services that are required. Further, thermal storage can effectively utilise renewable energy to decarbonise industry at comparatively low costs versus other low-carbon providers of high-temperature heat.” Similar studies have reached conclusions in favour of market and regulatory structures to support EES in the UK and other regions, while the EES Council, a trade group formed to represent and promote the technologies globally, has published a series of international reports with McKinsey.