​In Spain, asset size determines trading strategy. A 5 MW battery clears whatever volume without finding liquidity restrictions in most markets it enters. A 500 MW battery does not. Each market has a finite depth, and batteries are not the only technology bidding into it.

In August 2026, Modo Energy updated the Benchmark methodology to better price that constraint.

Key takeaways

• Revenue outside the day-ahead market falls from €196k/MW/year at 5 MW to €55k/MW/year at 500 MW, a 72% drop.
• The day-ahead market grows from 43% of gross earnings at 5 MW to 69% at 500 MW. For a large asset, wholesale is no longer one revenue stream among several.
• Modo Energy now applies a 30% participation ceiling by default to automatic frequency restoration reserve (aFRR) capacity and to technical restrictions phase 2.
• Batteries are not the only bidder in frequency response markets. The new calibration measures hydro, thermal plant and demand-side flexibility competing for the same volumes.

Liquidity constraints widen the gap between trading strategies.

In the Jul-26 release, Modo Energy anchored and calibrated a 50 MW asset. However, larger assets were not being penalised enough in certain markets where liquidity plays a bigger role.

As the battery size grows, its ability to capture market share is reduced. Some of this effect shows up in the Day-ahead market, when the optimisation step looks at the same time at the Day-ahead market and technical restrictions. It's a limited-liquidity market. With the current optimisation strategies from market players, there is some value in technical restrictions transferring to the Day-ahead market.

This effect is less pronounced as the battery size grows. Other markets like balancing services also see this cannibalisation effect because of battery size.

Why did the July 2026 methodology understate the size effect?

The July 2026 version captured the mechanism for some markets, not all of them. Its calibration also rested on a single static parameter: the battery fleet Modo Energy estimated would participate in each market.

That parameter had two problems. It had to be set ahead of a buildout that has barely started in Spain. It also treated batteries as though they competed only with each other.

However, batteries compete with hydro, with thermal plants, and renewables for the same volumes Red Eléctrica de España (REE) procures. That holds in aFRR capacity, technical restrictions, and energy balancing markets like aFRR and mFRR.

Explore how size affects revenues by creating a virtual asset.

How does the new size formula work?

Modo Energy now measures the depth of each market, in each direction, from the volume competitors actually offer into it. The battery is then sized against that depth.

Below the threshold, a battery is a price-taker. It takes its full pro-rata share of whatever the system activates.

Above it, Modo Energy applies a logarithmic cannibalisation formula. The capture rate is not itself logarithmic. Effective power is, and the rate falls out of dividing it by nameplate. A battery twice the size clears well short of twice the volume, because it has to bid deeper into the merit order and earn increasingly average prices.