Table of contents

• Market leadership by the numbers
• REER auctions: Investment stability through competitive bidding
• Just Transition tenders: Linking renewables to regional development
• Coming soon: Capacity markets
• Battery storage is key to Spain’s ambitions

Spain’s solar market is experiencing significant growth, creating a wave of project and investment opportunities worth watching. With a combination of natural resources, policy stability, and innovative market mechanisms, Spain’s tilt toward the sun appears to be a winning strategy.

The Spanish government recently greenlit nearly 300 renewable energy projects representing a €17 billion investment and 28 gigawatts of new capacity. The pipeline looks equally promising, with upcoming tenders expected to allocate 10 GW of solar photovoltaic capacity by the end of this year and projected growth to approximately 43,8 GW by 2028.

The country’s National Energy and Climate Plan, with its ambitious target of 76 GW of solar capacity by 2030, creates a foundation for long-term market visibility and is supported by concrete policy improvements. These include the elimination of previous barriers like the controversial ‘sun tax’ (taxing self-generated solar power even if not grid fed), and the implementation of the REER auction scheme, which provides revenue stability through long-term contracts. Innovative mechanisms like Just Transition Institute tenders that link grid access for renewables to socioeconomic development in regions affected by coal plant closures, further suggest Spain is serious about solar power leadership well into the future.

Market leadership by the numbers

Spain’s natural advantage is enviable – the country receives about 50% more sunlight than Germany, for example, but the momentum goes beyond geography:

• In January 2025, Spain’s solar PV capacity reached 32,043 MW, surpassing wind power (32,007 MW) to become the technology with the highest installed capacity in the country.
• Photovoltaic capacity is expanding nearly twice as fast as the European average, with solar now accounting for 21% of Spain’s electricity generation – nearly double the EU average of 11%.
• Since 2001, Spain’s solar capacity has seen a remarkable year-on-year increase of 27.9%.
• The PNIEC (National Integrated Energy and Climate Plan, or Plan Nacional Integrado de Energía y Clima) aims to increase renewables to 48% of final energy consumption and 81% of electricity generation by 2030.
• Specific PNIEC targets include installing 76 GW of solar PV, 62 GW of wind power, and 22.5 GW of storage capacity.

REER auctions: Investment stability through competitive bidding

Overseen by the Ministry for the Ecological Transition and the Demographic Challenge (MITECO), Spain’s renewable energy auctions operate under the ‘Régimen Económico de Energías Renovables’ (REER) framework. Auctions are held annually to allocate renewable energy capacity across various technologies, with solar and wind being prioritised. REER offers project developers a stable investment environment through a pay-as-bid system and includes sliding feed-in premiums (Contracts for Difference or CfD). These adjust payments based on market prices to incentivise participation in the wholesale electricity market. Notably, these auctions permit hybridisation between technologies and compatibility with energy storage solutions.

MITECO published an indicative auction schedule for 2020-2025 where solar PV had a quota of approximately 1.8 GW per year and wind energy around 1.5 GW annually through 2025. The auction process is straightforward: developers submit sealed bids, winners receive their offered prices, and projects proceed with regulatory certainty. Participation requires economic guarantees of 60 €/kW for intended capacity, with auctions following pre-qualification, qualification, and bidding stages. None are confirmed yet for 2026, but with PNIEC targeting 81% renewable electricity by 2030, potential extensions are suggested.

Just Transition tenders: Linking renewables to regional development

Spain’s Just Transition Institute (ITJ) created a tender system that addresses coal plant closures while expanding renewable energy. They offer grid access to projects that commit to local job creation and community investment in affected regions, with 55% of evaluation criteria focused on development plans. Endesa’s subsidiary won the first tender in November 2022, committing €1.5 billion for renewables in Andorra, Aragón, plus €60 million for social initiatives, creating 380 direct and 6,000 indirect jobs. ITJ is now preparing four new tenders, including one allocating 409 MW of grid access capacity, with dates not yet announced.

Coming soon: Capacity markets

Spain plans its first capacity market auctions by September 2025, with the system expected to be operational in 2026. These auctions, managed by grid operator Red Eléctrica de España, will contract firm power capacity through three types of auctions.

• The main auction will focus on existing facilities and new projects starting service within five years of award (service duration of one to 15 years, depending on technology).
• The annual adjustment auction targets operational facilities with 12-month service periods to address temporary system needs.
• The transitional auction will ensure system firmness until main auction services become operational, with an annual duration.

Following a pay-as-bid model, the market is technologically neutral, allowing generation, storage systems and demand-side resources to compete equally.

Battery storage is key to Spain’s ambitions

Spain’s renewable growth story is becoming a storage story too. The National Energy and Climate Plan sets a target of 22.5 GW of storage capacity by 2030, with approximately 10 GW expected to come from standalone battery projects. For developers and investors, battery economics are improving rapidly. Declining costs coincide with expanding revenue opportunities through ancillary services and market trading. Large-scale projects exceeding 300 MW are gaining momentum due to economies of scale and increasing demand for grid stability solutions.

The upcoming capacity market auctions in 2025 will provide additional revenue streams for battery storage developers by compensating for firm power availability. It will reduce investment risks while complementing income from wholesale electricity markets, making battery storage projects increasingly attractive as Spain pushes forward with its renewable energy transformation.

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