In the rating agency’s view, more solar capacity on its own will only deepen the problem. To stay bankable, new projects require flexibility, both in terms of storage and grid expansion, and the contracts that protect them when prices turn negative.
Solar capture prices halved
The average solar capture price, namely the revenue actually earned per MWh of solar power, fell in Spain from around €73 per MWh in the first half of 2023 to around €24 per MWh in the first half of 2026. Over the same period, the capture rate, which is the ratio of the achieved solar price to the baseload market price, dropped from around 82 percent to 48 percent. Negative prices are also becoming a fixture. By the end of June 2026, the number of hours with negative electricity prices had already exceeded the total for the whole of 2025.
Spain – solar's success becomes its economic challenge
The main reason for this slump is that so much solar power is generated in the midday hours, while grid and balancing capacity is limited. When supply far exceeds demand, prices are pushed towards zero or below. Morningstar DBRS sees this as a lasting feature of any market with a high share of solar.
Older PPAs often fail to provide adequate protection
Many older Spanish solar plants signed their contracts before negative prices became a regular problem. According to Morningstar DBRS, their power purchase agreements (PPAs) often do not protect them well enough, so when day-ahead prices turn negative, payments can be cut or suspended. Compensation arrangements for curtailment, meaning the reduction in feed-in ordered by grid operator Red Eléctrica de España, also vary widely, and in some cases leave producers without revenue even though they have a PPA in place.
Spanish home storage expands on lower costs and rising demand
To protect producers, the analysis suggests contractual tools such as price floors at €0 per MWh, caps on the number of negative-price hours that count towards settlement, contracts for difference (CfDs) and curtailment compensation clauses. On the operational side, operators can switch off their plants during negative-price periods, or add battery storage so they can shift some of their output to later in the day.
Capacity market and storage support as the policy response
Spain is also taking action at the national level. On 29 May 2026, the European Commission approved the Spanish capacity market, worth around €9 billion over ten years. Red Eléctrica will auction capacity that can be relied on when needed and pay winning bidders for being available, whether or not they actually feed power into the grid.
Battery energy storage systems (BESS) could do well under this scheme, as the capacity payment gives them a guaranteed minimum income, whatever happens to price spreads on the market. But it is not yet clear how large the auctions will be, what prices they will clear at, or how much of each battery’s capacity will count towards the scheme, known as the de-rating factor. The European Commission has also approved a Spanish aid programme of €700 million for large-scale storage, to help bring down investment costs.
Battery storage growing, but slowly
Installed battery capacity in Spain has risen more than tenfold since the nationwide blackout in April 2025, from around 28 MW to about 300 MW by September 2026. But that is still a long way short of the target in the National Integrated Energy and Climate Plan (Plan Nacional Integrado de Energía y Clima, PNIEC) for 2023–2030, which envisages a total of 22.5 GW of storage capacity by 2030, from batteries, pumped hydro and thermal storage. For solar overall, Spain is targeting 76 GW of installed capacity by 2030, made up of 57 GW of centralised capacity and 19 GW of self-consumption installations.
UNEF calls for more flexible rules on data centres
Morningstar DBRS sees Spain as a potentially large BESS market, but one that still lags more mature European markets such as Italy and Germany. For lenders, the main question will be whether a project can show stable revenues. To judge this, the analysis recommends looking at capture prices, contract details and how well a project can respond to low-price periods, as well as generation volumes. As long as negative prices and curtailment continue to rise, lenders are likely to favour projects with secure income and limited exposure to market price risk. (nhp)
