Where Capital Is Flowing in Spanish Renewables - nTeaser

I'm your host, Ed Porter. Welcome back to transmission. Three years ago, a solar project in Spain sold for €200,000 a megawatt. Today, the best price you can get is €50,000. Batteries went the other way from basically nothing to €100,000 per MW and climbing. Same country, same investors, opposite directions. What flipped the market was solar cannibalization. Too much sun, not enough storage and capture prices falling through the floor. Now there's a 30 gigawatt battery pipeline in Spain. Carmen Izquierdo is founder of nTeaser, the marketplace where many of those deals show up. This episode is about what the prices are actually telling us. And if you want to find out more about Spanish power markets, Co, Modo Energy's AI analysts can guide your questions on asset specific forecasts. Now back to the episode. Let's jump in. Hello, Carmen, welcome to transmission. Hello. Thank you very much for for hosting me today. Oh our pleasure. We're delighted you're here. And as always, let's jump straight in. So you see more, uh, Spanish renewable deals than almost anyone else. What is the one thing that people get wrong about deals in Spain's energy market? Yeah, I would say that the the wrong perception is that Spain is frozen. Many people tend to think that now deals are not happening. And that's not true. We have batteries where we see dozens of deals every month, I would say. And we also have solar where deals are still happening. Of course, investors are much more selective and prices are different compared to some years ago, but they are happening okay. And when you say prices are different, uh, obviously like the solar build out in Spain has been really rapid. So you've got 40 ish gigawatts today. And by the time you add on some domestic, maybe that's more like 50GW. So it feels like a huge amount of solar has been built. When you say prices are different for solar, do you mean that they have come down in terms of like the cost of acquiring those projects? Exactly. I mean, 2 or 3 years ago, we were seeing ready to build prices for solar PV of around 2002. I mean, €200,000 per megawatt right now, the best price you can get for a standalone solar PV project. It's 50. Okay. 5000 thousand, of course. So yeah, the market has changed a lot. Yeah. So a huge change. And then on the battery side, has that kind of gone the other way. Because these these things they seem to like move to together. It's exactly the opposite. Okay. In Spain, in Spain I mean 2 or 3 years ago we didn't have any batteries. I mean, barely anybody was developing batteries. But right now we've seen the need of of this kind of asset in the market right now. I mean, we are seeing prices of around €100,000 per megawatt, something around that for the most advanced projects. So it's quite different. And the trend is going upwards. Yeah. And that's what we'd expect to see. Right. So as you build way more solar, this kind of gives you that oversupply in the middle of the day. And you're starting to see sort of 0 pound pricing or even negative pricing coming through in Spain. Bad news for solar. Great news for batteries. And so that means that you're starting to see that coming through in the in the sort of deal, uh, the deal prices that you're seeing now, people will be wondering, well, how come you've got this kind of access to and how come you have this insight into the prices that these projects are transacting at? So would you like to do a little intro in terms of nTeaser, in terms of what you do, but also how it, uh, how it was conceived as a, as a company? Yeah. And this is a renewable energy marketplace. So what we do is we digitalize M&A transactions. So through a one stop shop platform we put in contact all the developers, all the projects that are being transacted in the market, not only in Spain, in in different regions, in Europe, with thousands of of investors such as utilities, IPPs. So we believe that through technology we could bring efficiency to to this market. And that's what we are doing. Okay. And maybe just give me give us an insight sort of behind the scenes like on a on a month to month basis. Like how many deals are you seeing coming through right now? We have around 200 products on the platform. I would say 70 or 80 are are in Spain. The others are in Poland, in Italy, in Germany, UK and uh, per month, um, around 20, I would say maybe something like that. Okay. 20 to 30. I mean, we also see deals that are not closing through the platform. Yeah, there's a lot. So there's a lot happening right in Spain. And we've just been talking about how Spain has so much more solar installed than other parts of Europe, but barely any batteries does. Do you think that that feels like a market that's on the edge of all of a sudden ramping up the battery installation quite quickly? Yeah, definitely. I mean, the reason why we have so many solar in Spain is because two to four years ago, I mean, with the Ukraine war in 2022, prices, I mean, electricity prices were super high in Spain. Of course, it's a very sunny place and solar was capturing exceptionally high prices. So it was super interesting to develop these kind of, these kind of assets. And the need of batteries wasn't there. Everybody started developing solar PV. And through the years 2023, 2024, when cannibalization of solar PV started capture, prices were going down. Developers realized that they needed batteries and then they started developing batteries. What happens? A development takes 3 to 5 years, more or less in Spain. So all these assets that started being developed in 2023, they are reaching ready-to-build now in this year, next year. So we expect to have like a very big amount of batteries coming to the operation in the coming two years. In fact, the the actual pipeline of, of batteries in Spain is around 30GW. It's it's incredible. Right. So, um, just to think about where some of this stuff is, is coming from, and you mentioned sort of the, the Ukraine war, right. So drove huge increases in gas prices off the back of those huge gas prices. You see people go, actually, you know what? Let's bring more solar through. Let's bring more wind online. Let's get away from gas. That takes time to come through as as those projects start to deliver in 2023, 2024, all of a sudden you're seeing power prices come down because you've got a lot of solar then on the system, and then people go, ah, right, battery prices are coming down. We see the spreads emerging in the market. We need to build battery projects. And then you wait. I think you said through 3 to 8 years did you say for. No, no, three, 2 or 5. I mean, there's some assets that take eight years or even more, but 3 to 6 is like reasonable. Okay. So then we're going from say 2026, 2027 out to 2030. And it's just fascinating to me to link all of that back to the Ukraine war. And at some point, um, you know, Russia's decision, Russia, a gas major at some, at some point has triggered this process of shrinking gas, um, from European power markets. I just it's so fascinating to sort of see that come through. Uh, maybe a huge strategic, um, pivot has been happening, but these things happen so slowly. One thing I would say about Spain is when we hear about it, it sometimes feels like it has been quite slow to move. So you mentioned 30GW of batteries in the pipeline. We see around, I think, 3.5GW of batteries deployed and operating in Spain by 2030. What do you think about that number? Is that a number that you think is you think it's conservative, or do you think for a new sector building batteries for the first time, do you think that actually it will. Will we'll find some speed bumps in the road. I would say it's it's a bit conservative. I mean, of course not. All this pipeline of projects being developed is going to retreat. Will one or many of them will have no permits at some point. That also happens with solar, with wind, with other technologies, but at 10% of them is it's very conservative I think. Okay. So so let's just think through like what makes the project happen, right. So you need as you say, you need permits. You need. And those permits can be sort of electrical connection permits. You also need planning as well. You need the cash to exist. And then you also need like the electrically qualified people you know, you need the the people who will go on the ground and make sure all of this is connected. If you had to guess and kind of in that supply chain, like where do you think the weak link is? Well, that's a difficult one. I mean, the on the development side, I think we are we are covered because we have dozens, hundreds of developers in Spain and they are used to solar PV and batteries is not so different in Spain. Regarding permitting, regarding, um, construction financing, maybe here it's going to be a bit more difficult because banks are not financing batteries yet in Spain. I mean, we will see what happens in the future. But for the moment, we're not seeing banks financing anything because there's not there's anything to finance. I mean, there's no way to build projects. And uh, maybe the, the, the labor force to, to build these projects could be a bottleneck. I think it's already it has been in solar PV and probably in battery. It's going to be the same. Yeah, I definitely feel like the financial side is warming up. Like we're definitely seeing the start of that. And so I guess it might be in the sort of technical engineering side that might be the slowest part to ramp. But yeah, as we start to see those projects coming through, there may be also some skilled labor that shifts from the solar side over to the battery side. Do you think that will happen? Probably yes. I mean definitely yes. I mean, we I mean, we've seen that most of the capital is going to batteries right now. I mean, banks are not financing lots of solar. They are not financing merchant structures. And I think they are a bit wait and see what happens with batteries. But probably in the coming years we will see most of the capital flow into batteries. Okay. Batteries or co-located assets with batteries? Yes. Okay. And then obviously with your platform, you're seeing the people who are buying and selling are these projects. So could you talk a little bit about who are the sort of typical buyers and sellers of projects? Yes. Well, it depends on the type of asset, of course, but for we have right now around 3000 companies registered on the platform. So I would say for batteries, almost everybody is looking for batteries in Spain. Like the global IPPs. I mean, large IPPs, global IPPs in France. There's a local power producers. Independent power producers. Sorry. Yeah. Infrastructure funds, family offices, all sort of European utilities. We're also seeing some local players from Nordic countries or other countries where they are more used to batteries, for example, the UK coming to Spain. That's for batteries. But for solar PV, what we are seeing and the shift has been clear, we are seeing long term investors that see the value of solar PV in the long term, because right now, the capture price you're going to get with your solar PV is not the best one. And they are also thinking of strategies of allocating these assets with with the battery and seeing in the long term like stable revenues. And as you said, you're saying the the price for those transacted battery projects. That has been increasing increasing. So those early movers that have gone got into battery projects in Spain, they are being rewarded. Yes, definitely. Those early movers that on the peak of solar thought that this was going to come and they started developing batteries. Now they are they are seeing a good compensation. I mean prices reaching ready to build right now. They are they're like treated like like gold in Spain. I love it. And um, maybe this maybe this just it doesn't happen at all. But I would love the concept of, like, this kind of, uh, family office. So this incredibly wealthy family, like, find out that they've bought a battery in Spain, and they go and see it. I'd love to. I'd love to see a very wealthy family sort of pull up and take a look at the battery project and go, oh, you know what? That that's not as interesting as I thought it was going to be. I mean, for a family offices, I would say maybe they are looking more for solar co-located with, uh, with batteries. Okay. Because it's like an easier asset. But family offices are saying entering into the battery market is because they have experience in solar or other kind of renewable energy technologies or energy technologies, which is not an easy asset to to have as an investment. You know, it's not like investing in on the S&P. You need to manage this asset and it's not easy. Yeah, exactly. So not everyone can get into this space. And as you kind of rightly say, it will often be the people who've got that solar exposure solar understanding who'll kind of shift across. Well, let's let's take a moment to then compare, say, Spain to Italy, another market where you're very active. It feels like with the the blackout that happened in Spain of April of last year. That's April 2025, depending on when you're listening to this. Um, there's sort of a bit of a watershed moment where Spain starts to move very quickly towards batteries. How would you see Spain comparing to Italy? Yes. As I said, Spain now is it's booming. I mean, the appetite is increasing, the prices are increasing. There's a lot of interest for these kind of assets. Everybody's expecting the capacity market to to come to Spain. I mean to to happen in Spain and in Italy it was similar. I mean, it was a batteries were an interesting Asset class. However, that much happened and that that changed everything. MACSE, I mean, all the capacity. Aware that most of the capacity awarded was awarded to Enel, which is like a super big player and it's not competitive with a small players. Also, the price awarded was kind of low compared to what was expected. And that that point that became like a change in the in the market. So investor appetite slowed down, prices were decreasing. And I would say right now in Italy for batteries, it's in a moment of wait and see. Developers, investors are waiting. What's going to happen in the future? What's happening with the second MACSE auction, what's going to happen with the capacity market? And they are hoping that this is going to change. And I hope so. Yeah. Okay. So we're seeing so. So the let's just a quick recap on MACSE, the sort of the centralized procurement process for batteries in Italy where so you're almost seeing, um, if you had one battery investor and they had a choice between going to sort of Italy or Spain, you would say, right now they're going towards Spain. Yeah. Okay. And what I think is really interesting. So the two countries are very different, um, obviously for lots of reasons, but from a, from a solar perspective, in Spain you're seeing incredibly low capture rates. Um, for, for solar projects. And you're seeing people trying to shift out of solar very quickly. If you look at solar in Italy, similar latitude should be seeing quite sort of severe solar cannibalization. But when we've been tracking sort of solar capture rates, it's actually not as bad. And in part because it's been very slow to deliver as much solar as has come through in Spain. So do you see sort of still continued enthusiasm for, say, solar in Italy? Um, what's your take? I think for what you said was completely right. I mean, for for Italy, we haven't seen, uh, this decrease in capture rates. I mean, price capture are quite interesting. There's mechanisms to recruit solar that are also interesting. The deployment of batteries has been at the same time as solar. So it has it has been quite balanced. Uh, of course, in the future, the more solar you deploy, maybe capture rates are going to be I mean, are going to decrease. This is a market. We also have demand that is expected to increase. There's data centers in Italy. There's also data centers in Spain. We don't know what's going to happen in the short and mid-term with data centers, but could be a good opportunity to to increase the demand of both countries. So I think we have to balance this, this to the deployment of solar with the deployment of data centers and the increase of demand. Okay. Well, let's let's come back to Spain. Right. So, um, people will be familiar with the phrase low, low prices cure low prices. And what we're seeing in Spain is low prices. Um, and so is that, uh, you know, you're talking to people in the market all the time. You're starting to see interest for data centers coming through in Spain. Yes, definitely. I mean, we've seen interest for data centers everywhere in Europe. Of course, Spain is super attractive market. It's a super attractive market because of the prices. But yeah, definitely right now many developers are starting to develop data centers looking for players to invest with them because these assets are also very, very different, much more different than batteries and very, very difficult to to develop and to build. So it's a very different, different asset class again. But we see a lot of appetite for, for it in Spain. And this is an interest to develop it. Yeah. Yeah for sure. And this is maybe going away from your sort of standard day to day. But do you, do you see those data centers coming through as sort of just standard demand on the system. So they're kind of connecting to and seeing the wholesale price? Or do you see people thinking, hey, look, I've got, you know, a gigawatt of solar solar plant here. I could co-locate these two together. So data centers and PV all in one location. Are you starting to see that sort of behind the meter play? Yeah, exactly. We see both. But behind the meter, it makes a lot of sense. I mean, of course you need to have a base load for for the data center. You kind of have data center during the day and not during the night. So you cannot connect it only to to a solar plant. But but yeah, it makes sense. It's a it's a good way to have some more a investment to get more profits from your solar plant and right now or wind plant. Okay. We're seeing that. Okay. That makes sense. And it's a it's a trend we're seeing everywhere. So it's not a huge surprise to see it coming through in Spain. You mentioned something earlier about financiers not yet sort of backing projects in Spain, in part because and I should be clear, battery projects in Spain, in part because those battery projects haven't yet come through and gone live. What, in your view, is the the point at which battery projects become bankable? Uh, in Spain? Well, as you said, know many batteries are being financed because there are no reliable batteries. But if you look to the to the banks and what they are looking to finance, when they, when they look to solar or to when they look to stable revenues. So probably for batteries they're going to look to the same. It's the same thing. They're going to look to stable revenue. So probably with tolling agreements you can have that with the capacity market. You can you can also have that also the fundamentals. You need to have the project proper and real ready to build. You don't you shouldn't be missing any licenses or anything and expect to be very similar to, to that kind of financing. Um, also, in fact, Spanish banks, I know that they have finance batteries outside Spain, so they're used to it and they they know how to do it. It's just a matter of time to have them financing also batteries here in Spain. They're in. Spain. They're in Spain? Yes. Yeah, yeah. Maybe sunny outside, but this is this is definitely central London. Um, and so you mentioned the capacity market, I think twice. It's kind of been coming for some time. What's the what's the view on the ground in terms of that capacity market. Is there sort of a lot of confidence that it will go live there? I think everybody thinks is going to come live. I've heard so many dates. Some people were thinking it was going to happen last year. It didn't. Some other people think it's going to happen this summer. I have no insider information. I'm going to be very honest with that. But I think it has to happen because we need it. And it's it's it's just one more revenue stream and it's a way to, to bring stability to the market. Okay. It will happen. It's a matter of time. Okay. And let's talk about that revenue side. Right. So when people come to the market often in in these markets that are starting to grow, and I think we saw this a little bit in Germany, actually, people kind of came in and said, ah, my revenue assumption is it's way up here. It's a really high number. Um, and there's often a sort of a split between sort of the expectation, their expectation of where revenues might be and then what sort of banks are willing to finance. So are you seeing that? Are you seeing there is that sort of spread of revenue expectations, or do you see sort of buyers have got a reasonably good handle on the the reality of what the market might deliver in terms of revenues. I would say it depends on who's the who's the buyer, the investor or the owner of the battery. Of course, we have, uh, international players that are already owning batteries in other countries. I think they already know how to manage these kind of assets. But in Spain, for those who don't have experience with batteries, we see there's a lot of expectations on arbitrage, which of course is super interesting. But the problem of arbitrage is that it's going to it's going to be cannibalized soon. I mean, the more batteries enter in the market, the spread is going to is going to be smaller. But yeah, I would say it it depends on on who's the player. But you have other. Yeah. So yeah, these players who are coming to the market, they've seen it before in different markets. They understand sort of how that market is going to mature. They know about ancillary services. They know about tolling agreements. They know of course arbitrage. They know about the capacity markets in probably other countries. Yeah. And I was going to say so. So we've talked very much about Spain and Italy. You also cover a few other markets as well. So maybe you'd be worth just covering those for a few, a few, a few moments. Yeah. I mean we in Spain, you already know what we're doing. Italy is a very interesting market for all kinds of assets we have right now. We're also very active in Poland, where it's a market that we see. It's growing very, very fast. Lots of developments, lots of coal. So lots of more renewables we need to to, to develop there. And actually actually a really interesting sorry to interrupt, but we'll come back to your your region that you're covering. But in Poland. Like a really good spread as well. Like between the peak price and the sort of minimum price that you see. Yes. So it's not just, you know, often people think about Poland as being a capacity market only story, or it was a few years ago, just capacity market, any story actually, the fundamentals are pretty good. Mm. Exactly. Yeah, yeah. So maybe for for solar in Poland we are not very I mean, most of the developers, they are already knowing that they have to co-locate their assets with other with batteries probably to capture better prices. But but yeah, we see it as a very promising market for the next 5 or 6 years at least. And you mentioned just as we were chatting to start off with that, you might be looking at places like Romania as well. Is it do you see sort of nTeaser moving to like lots of markets quite quickly? That's what it feels like. One of the strengths of a of a platform approach. Yes, definitely. We are now opening the UK, we are opening in Germany. We are seeing a lot of appetite for these two countries. We are about to open Romania, where we see also a lot of investor appetite and a lot of developments. Yeah, they're happening and we expect to open in the whole Europe in the coming two years. Yeah. So it's a fascinating time. Um, we've seen sort of battery space for a long time and in some sort of core markets, it's grown. It's grown a little bit slower in others, and now it feels like the tipping point has been hit, and it's just happening in so many markets all at the same time. Yes. Great to see. Um, come on. One final question. Um, what is a contrarian view you hold about energy markets in Europe? Well, yeah. My view is that good, good M&A processes should be available to everybody in the energy market. The contrarian view is no. I mean, deals are done like in the traditional way. They are opaque. They are bilateral. There's not a lot of transparency. They are slow. They are full of intermediaries. And that's why we built nTeaser to bring the transparency to to this industry and to and to bring deals to, reality. I mean, to bring projects to to reality as soon as possible. Mhm. But that that pace. Right. Does that come with the downside. So like obviously moving faster is good. But like surely the legacy providers would say hey look you know all of this stuff takes time. You have to do all these checks. You have to make sure you're buying the right thing. It's a combination of both. I mean, we work with the legacy ones, but they have to adapt to the to the new technologies. I mean, to to the new era, to the efficiency that technology brings, the transparency we bring. Yeah. It's it's a combination. Oh it's fascinating. We're an AI company. We think about terminals and platforms all the time. So like, I'm, I'm trying to wear my hat to, to challenge you on it. But I have to say I agree with you. So, um, come on. Thank you very much for coming on transmission. You've been a wonderful guest. So much is happening right now. Uh, go and check out nTeaser loads of projects happening today. Thank you very much, Ed.