The European Commission has approved a €9 billion Spanish scheme designed to ensure enough electricity capacity is available to meet demand over the next decade.
The measure is a “capacity mechanism”, meaning providers are paid to be available to generate electricity, store it or reduce consumption during periods when supply is tight.
The scheme will run for 10 years from May 2026, and is expected to cost around €900 million a year — about €9 billion in total — depending on the results of each auction.
Spain’s transmission system operator will pay for the capacity needed to meet a national “reliability standard”, defined as the maximum acceptable number of hours per year when demand cannot be met because of supply interruptions.
Projects eligible to take part include existing or new electricity generation, demand-side response — where users cut consumption when supply is reduced — and storage, subject to environmental eligibility criteria.
Providers will be chosen through “transparent and non-discriminatory” competitive bidding processes, with bids based on the amount of aid requested per megawatt of capacity available during a scarcity event.
Who can take part, and what happens next
The mechanism will be open to projects located in Spain, while Spain “endeavours” to allow participation from other interconnected EU member states “as soon as possible,” the Commission said.
The national reliability standard was set using Spain’s resource adequacy assessment and approved by the Agency for the Cooperation of Energy Regulators.
The Commission assessed the measure under EU State aid rules and approved it on the basis that it is necessary, proportionate, and includes safeguards to support competition.
“This new mechanism will help ensure Spain has enough power available during scarcity events,” EU Economy Commissioner Valdis Dombrovskis said.
