Flexibility as an asset

The Iberian Peninsula is emerging as a key test case for hybrid PV and battery storage, driven less by inherent project attractiveness and more by mounting pressure on standalone solar. As merchant exposure, price cannibalization and curtailment risks intensify, co-located battery energy storage systems (BESS) are becoming a tool to stabilize revenues rather than unlock upside. In this context, aggregator contracts are evolving toward more flexible, merchant-driven structures. Everoze Partner Ana Bamonde explores this shift and what it means for the structuring, financing and operation of hybrid assets in Iberia.

Across Europe, PV-plus-battery storage projects are moving rapidly from concept to execution, and Iberia is no exception. Accelerated solar deployment, combined with increasing power price volatility, a sharp rise in negative price hours in Spain and Portugal, and limited interconnection capacity have created a strong case for co-located storage.

The standalone PV market has reached an impasse, with many ready-to-build projects struggling to secure financing, and earlier-stage developments facing limited prospects as merchant risk increases. These pressures have accelerated interest in co-locating and retrofitting BESS to optimize asset revenues and reduce lost energy.

Regulatory frameworks for BESS are gradually being adapted. In Spain, recent decrees have sought to streamline hybridization permitting, although access to demand-side grid permits remains a key bottleneck. This is expected to ease once Spain’s energy regulator, the CNMC, publishes its framework for flexible demand access. In Portugal, hybridization rules have been established and recently streamlined through regulatory updates. While co-located BESS is permitted and grid charging is allowed subject to network approvals, certain support schemes (such as storage auctions) have imposed constraints on charging, for example requiring a majority of charging energy to originate from renewable sources, which may limit operational flexibility.

In the absence of capacity markets or other stable, contracted revenue streams, hybrid projects in Iberia are, by necessity, anchored primarily on merchant revenues. Value creation is therefore centered on wholesale price arbitrage, intraday optimization, imbalance management and ancillary services, requiring assets to respond continuously to market signals.

For the first co-located BESS assets that are now reaching financial close, this means optimizer and aggregator agreements reflect a clear shift away from rigid, downside protected frameworks toward lighter, merchant driven profit sharing models. The profit-sharing arrangements allow assets to respond directly to market signals, with revenues linked to optimization performance rather than contractual guarantees. The critical importance of fully back-to-back guarantees is reduced and, in some cases, eliminated altogether. Greater diligence is placed instead on assumptions around price volatility, optimizer capability, dispatch strategy and operational performance.

Financing and bankability

This newly gained flexibility also allows projects to reach financial close on the back of only draft optimizer agreements. In this rapidly evolving market environment, sponsors prefer to finalize commercial terms closer to operations, keeping their options open in case new revenue streams or regulatory mechanisms emerge. Far from undermining bankability, this approach reflects a pragmatic response to current conditions, where flexibility and optimization for hybrid storage/PV assets, are increasingly the primary value drivers.

The reality shows how wholesale price volatility is incentivizing storage projects to operate as an active optimization tool rather than a passively contracted asset. Contractual solutions prioritizing operational freedom are therefore better aligned with market fundamentals than rigid risk transfer mechanisms. Even if the underlying financing structures remain relatively simple, in the absence of long-term contracted revenues or capacity based support, lenders and investors increasingly assess projects based on their technical and operational robustness rather than on predefined revenue certainty alone.

From a technical perspective, this places greater emphasis on the quality of revenue modeling assumptions and the credibility of the optimization strategy. Downside sensitivity to price volatility, curtailment and negative pricing is now treated as a central design consideration. As a result, technical due diligence is expanding beyond traditional energy yield assessments to include a closer review of storage dispatch logic, cycling assumptions, degradation expectations and the interfaces between the PV plant, BESS and optimization platform.

This way, aggregator and optimizer agreements are now viewed less as pure commercial instruments and more as operational enablers. Rather than focusing on contractual guarantees, project stakeholders increasingly seek comfort through alignment of incentives, clarity on control and dispatch responsibilities, transparency of performance reporting and well defined operational fallback arrangements. Where lighter contractual structures are adopted, technical safeguards and governance frameworks play a key role in mitigating execution risk.

Overall, this shift does not imply that Iberian hybrid projects are less bankable, but rather that bankability is being demonstrated differently. Integrated assessments that link market behavior, asset performance and optimization capability into a coherent, defensible project narrative are most needed.

Defined by flexibility

Hybridization is a central response to market realities. Persistent price volatility and decreasing PV captured price, increasing curtailment, limited interconnection capacity, and the absence of capacity based remuneration have shifted value creation away from contractual certainty toward operational flexibility.

What differentiates Iberia is not simply the lack of capacity markets, but how developers, investors, and lenders are adapting to that absence. Rather than replicating established European templates, the market is converging on merchant led models that reward optimization capability, informed risk taking, and robust operational strategies. While regulatory evolution may introduce additional revenue stability over time, flexibility is set to remain the cornerstone of value for hybrid assets in the region.

About the author

Ana Bamonde has been working in the renewable energy sector since 2014, building experience across a range of technologies and markets. Over the years, she has contributed to projects in multiple countries, mainly in Europe but also in South America and Africa, with a focus on solar and energy storage and exposure to the full project lifecycle. At Everoze, after two years in the UK office, Bamonde co-led the opening of the Madrid office in 2019. Since then, she has focused on market development, due diligence, and operational advisory services across Iberia and other European markets. Alongside her techno-commercial consultancy work in solar and storage, Bamonde represents Everoze’s shareholding on the board of Skyray SAS.

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