​Since the October 2025 Spanish Livestream, Spain has evolved significantly. In some cases, nothing has changed much: solar capture rates have continued to drop, and CCGTs and hydro are still key figures in the Spanish landscape. However, now more than 650 MW of BESS have entered the system, and new revenue streams are emerging, such as a capacity market.

In our Livestream “The investment Case for BESS in Spain”, Pablo Martínez and Paulo Brito guide through the new developments in Spain and how they might affect investment decisions.

Spain remains one of Europe’s cheapest wholesale markets

Spain's day-ahead price has averaged €65.4/MWh since Q3 2023. That is around 25% below Germany, and 40% below Poland and Italy. Modo's July 2026 Central forecast keeps that gap intact. Spain averages €62.3/MWh over the next three years, while prices in Germany, Great Britain and Poland also fall.

​Italy is the exception. Its forecast average rises from a realised €115/MWh to €119/MWh, widening the gap with Spain to almost €60/MWh. Spain's cheap power comes from one thing above all: solar oversupply during the day hours.

Frequent but shallow: Spain leads in negative hours in 2026, but deep negative prices are rare

Spain recorded almost 700 hours of negative day-ahead prices in the year to 22 July 2026. That is more than any other European market, and nearly double Germany's 348. At first glance, Spain looks like the most volatile market in Europe.

The depth tells a different story. Spain's lowest hourly price over the same period was -€9.8/MWh. Germany reached -€499/MWh, and Poland -€469/MWh.

Subsidies largely shield German solar from negative day-ahead prices, so assets can keep bidding far below zero. Spanish renewables sell mostly at merchant prices. Bidding negative means paying to generate, so they stop at zero, or just beneath it.

​The July model release improves solar modelling and lifts solar’s capture rate

Spain's realised solar capture price fell from €43/MWh in 2024 to €28/MWh so far in 2026. Solar buildout keeps outpacing load growth, and consecutive rainy springs have dragged second-quarter prices down further. Modo's April forecast expected just €18/MWh for 2026, well below what the year has actually delivered.

The July-26 release closes that gap. It now improves the bid methodology for Spanish solar as predominantly trackers, rather than fixed-tilt panels, lifting the 2026 forecast to €29.5/MWh, in line with realised data. Beyond that, capture prices dip to €22/MWh in 2028 and 2029, then stabilise in the mid-€20s from 2030 onward.

​New revenue streams in the near future: the capacity market is finally here

​On 29 May 2026, the European Commission approved the long-awaited Spanish capacity market. This new market, which should be fully operational by 2030-2031, depending on whether the first main auction launches in 2026 or 2027, will add an additional revenue stream for BESS operating in Spain.

​Final details are still pending. Even so, Modo Energy estimates that BESS de-rating factors in Spain will sit comfortably between Italy's and Belgium's. Investors can therefore expect capacity revenues in line with other European markets that already run these auctions.

​Long-term battery revenues remain stable in the latest model release, but short-term revenues are reduced

Modo Energy's July release trims Spain's near-term standalone BESS revenue forecasts. By 2028, total revenue falls to €152k/MW/year, down 31% from April's €219k/MW/year. Two drivers explain the cut: lower day-ahead revenues and lower automatic frequency restoration reserve (aFRR) capacity revenues.

On the day-ahead side, the new forecast expects tighter spreads than April did, which compresses arbitrage revenues. On the aFRR side, capacity prices fall as renewable portfolios and now batteries compete for the same service. We have watched this cannibalisation deepen throughout 2025 and 2026, and the updated methodology captures it better.

​You can access the livestream slides below: