AleaSoft Energy Forecasting, May 28, 2025. Energy storage development is now the cornerstone of renewable energy development. After the blackout of April 28 in the Iberian Peninsula, it has become clear that the stability and reliability of the electricity grid in the future depend to a large extent on the deployment of batteries. If batteries are managed optimally, they can generate good profitability over their lifetime. In this five‑year period, which began in January, photovoltaic energy will be installed hybridised with batteries to achieve better IRR and obtain financing.
The 55th edition of AleaSoft Energy Forecasting’s monthly webinar series took place on May 22. On this occasion, in addition to the usual analysis of the evolution of energy markets in Europe in recent weeks and the prospects for the coming months, Javier Adiego, CEO and co‑founder of 7C Energy, participated as a speaker to explain aspects related to batteries, such as the different types of income depending on the type of operation.
Luis Atienza Serna, former Minister of the Spanish Government and former President of Red Eléctrica, and Kiko Maza, Managing Director at WeMake Consultores, participated in the analysis table of the webinar in Spanish to analyse issues related to the importance of energy storage for renewable energy development and grid security.
The way batteries are operated can make a difference to their profitability
During the webinar, Javier Adiego shared some key insights on the efficient operation of storage systems.
Adiego stressed the importance of short‑term demand forecasting to optimise battery use and pointed out that secondary and tertiary regulation markets represent particularly attractive opportunities in the current environment, with prices remaining very favourable. However, he recalled that everyone assumes that there will be cannibalisation in these markets, so it is essential to anticipate.
Using a base case combining fixed price spreads with tertiary market participation and various operating strategies, Adiego illustrated how different operational decisions can affect the profitability of projects. For example, increasing the intensity of battery use from two to three cycles per day can shorten the lifetime of the battery by three years. However, the impact on the net present value (NPV) of the project would be relatively limited, with a reduction of only 3.5%, despite a 12% drop in captured spreads. According to Adiego, this example shows that the time effect of investments is more relevant than usually thought.
Results for the analysis of a battery of 25 MW / 4 hours.Source: 7C Energy.
Storage, the cornerstone of the energy transition
In a system where variable renewable energy generation is predominant, storage allows the natural mismatch between production and consumption to be resolved. Batteries store energy when there is a surplus (for example, during the central hours of the day in solar plants) and release it when there is a deficit (such as at dusk), thus contributing to stability and a more efficient use of renewable resources.
In addition, batteries help to avoid curtailments and reduce the need to activate more expensive or polluting technologies at times of high demand.
The April 28 blackout: a warning about the fragility of the system
The electricity outage of April 28, 2025, affected several parts of Spain and showed that the system’s lack of flexibility in the face of unforeseen generation failures or grid problems can have immediate consequences. In a context of increasing electrification and decentralised generation, the system needs more resources capable of acting in seconds. Batteries, with their ultra‑fast response capacity, are the most effective technical solution to prevent events of this type.
Profitability and revenue models: beyond arbitrage
A well‑managed battery can generate revenue through multiple channels, such as price arbitrage in the day‑ahead and intraday markets, participation in ancillary services such as frequency regulation, and capacity payments, which are increasingly recognised in the design of the European electricity market. In addition, in the case of industrial consumers or self‑consumers, it enables savings in electricity charges and the use of deferred self‑consumption. To achieve this profitability, it is essential to have updated and robust forecasting models that optimise battery operation and evaluate future scenarios.
Regulation and subsidies: an evolving framework
The regulatory framework for energy storage is under development. Public support, such as PERTE, NextGen funds or regional calls for proposals, has driven many pilot projects, but stable regulation that recognises the systemic value of batteries is still necessary.
In parallel, the design of an effective capacity market, which adequately rewards technologies that deliver robustness and availability, is essential. It is also necessary to allow full participation of batteries in all ancillary markets, including balancing services and demand response mechanisms.
Hybridisations: the winning combination with solar and wind energy
Hybridisation with batteries is already a reality for photovoltaic energy, but it is also starting to be applied in wind energy projects. The combination of technologies makes it possible to smooth production, increase the capacity factor of the connection point and improve management in the event of low prices or curtailments.
In hybrid installations, the battery acts as a regulator of energy flow, storing when there is excess and delivering when the energy can best be sold. This improves overall profitability and provides access to more diversified revenues.
Electricity grids: necessary condition for storage
Mass deployment of energy storage also requires an electricity grid ready to integrate it. Batteries, especially large‑scale batteries, must be connected to both transmission and distribution grids, and provide services to both. This requires ensuring access and connection capacity for storage projects, facilitating active demand management and flexibility in distribution grids, and ensuring that these grids allow the bi‑directional flow of energy in an efficient manner. In addition, batteries should be enabled to participate in aggregation schemes and control centres that optimise their operation in the electricity system as a whole.
Prospects for European energy markets in the second half of 2025. Renewable energy, PPA and batteries
The next webinar in the series of monthly webinars organised by AleaSoft Energy Forecasting, which in this case will be number 56, will take place on June 12. For the seventh consecutive year, guest speakers from Engie Spain will participate in this webinar. The topics to be analysed will be the evolution and prospects of European energy markets for the second half of 2025, growth opportunities in the renewable sector, the current affairs of the PPA market in Spain and the prospects for energy storage in batteries.
Source: AleaSoft Energy Forecasting
