EP.272 – Renewables at Scale: Flexibility, Grids and the Future Power System

This April Aurora Energy Researches Flagship Spring Forum returns to London for its 12th year. On 29th April 2026, join over 450 senior energy leaders for a full day of insight, debate and high-level networking. Here's CEO Keynotes from Global Energy and Finance Leaders, explored geopolitics, system resilience and investment strategy, and experienced live debates, breakout sessions and a recording of Aurora's energy unplugged podcast. As the energy transition enters a decisive phase, be part of the conversation shaping what comes next. Head to auroraer.com/events to book your pass and use the code podcast20.com/podcast20 for an exclusive 20% discount. Welcome to Energy Unplugged, the go-to podcast focusing on the Global Energy Transition. My name is Anna Varillas and I'm Aurora's managing director for Iberia and Latum. And today I'm delighted to welcome my guest, Anna Paola Marquez. Anna, welcome. Thank you, Anna. It's a pleasure to be here with you today. Anna is an executive board member at EDP leading the Global Renewable Generation Asset Platform, and also oversees transversal areas within the EDP group, digital and tech, and safety security and business continuity. So today we'll be talking about a couple of things like the Global Energy Transition, how renewables are now participating across different types of markets, and of course, the Iberia Blackout. So I'm really looking forward to the conversation. Just a little bit of a background and Anna Paola holds an MBA from in Seattle and has completed executive education programs at Harvard Business School, IMD and LBS. And she's an economist. She graduated in economics from the University of Puerto. So, Anna, before we get started, you know, you have her, you have held board and leadership positions across several companies outside of the energy space, including sport TV and actually you started your career in proctor and gamble. So maybe just to start, what surprised you the most, I guess, about the energy industry when you started in the sector? Well, thank you, Anna, for the question. When I joined the sector, I came from 23 years in Telco, so I was quite expecting what was different, what was the same. I think that the two things that surprised me the most, the first one is how the energy sector is so central for nations, for companies, for citizens. And so it's really about, I didn't imagine how much geopolitics would play a role in terms of the energy sector. So that was really interesting. And secondly, probably how people in the energy sector really feel a family. So really across competitors, other companies that play India system like Aurora and others, it has, it's really a sector where people know each other for many, many years and where people really take a significant pleasure in working for this sector. I think that's absolutely right. I think it's a fascinating sector. I think it's also a sector where you, you kind of learn a lot from each other. And that's probably where kind of this collegiality comes from, I guess. Like, I cannot tell you how many times when we start a kind of market, kind of coverage, people say, oh, but this is a very different market. Like, you know, kind of Brazil is very different. Chile is very different. And actually, once you get to the bottom of kind of how things work, there's a lot of similarities and there are a lot of ways of learning from from other markets. So that's probably part of that family feeling that you get, I guess. Which actually, it leads me to kind of the first question. So you have a global kind of remit, which is fantastic, to talk a little bit about how you see the global energy transition progressing across EDP's footprint. You know, what common challenges do you observe across the different regions that you're in? And maybe what stands out as unique to a barrier, obviously, you're based in Lisbon. So, you know, you're kind of here. Can you tell me a little bit about that? Well, in terms of challenges, I think that for the last couple of years, we have been leaving with profound geopolitical uncertainty. And that's, it's a common trait all across the globe, the rising protectionism, growing concerns over energy affordability, security and independence, and also recurring supply chain disruptions. And it's really reshaping how economies are operating worldwide. And despite all these all these add-winds, the energy transition is really progressing. So the world added almost 2.5 terawatts of renewables in the last five years, and it's set to double up to 2030. And I see that at the same time, we are entering a new era of electricity and growing electrification, because power demand is regaining momentum driven by AI and data center growth. Global electrification is set to accelerate, we see 21% by 2030. And so when we look at NAFET International Energy Agency, all the projections show this, and renewables are more needed than ever to really meet this increasing power demand. And even with this uncertainty, they are the fastest to deploy, when we compare it to gas or to nuclear, they are cheaper, and they are more scalable energy sources. And that's why in terms of GDP, we really focus a lot in terms of the renewables energy. And the energy system, as it gets dominated by renewables, it needs greater flexibility to balance intermittent supply and demand as well as system resilience. And at the same time, power grids must expand and modernize dramatically. Because without resilience, interconnected and smart grids, we cannot fully harness the clean energy being built. So global investment really needs to increase by 1.7 times to really be on track to net zero. And there are several challenges that need to be addressed. And when I look all across the globe, we can see the topic of speed and scale, permitting and grid connection. There are really common traits all around the world, labor shortages also in many of the geographies. And also a common topic that it's really the regulation and incentive gap. And you've asked me in terms of Iberia, I believe that Iberia has a significant opportunity in the energy transition. Because first, it can leverage in its abundant renewable resources. In its slower electricity prices, even when we look at 2024, 2025, and we compare the average EU wholesale prices, we see Iberia 23-25% below. And it has very strong renewable penetration. And in addition to that, it has also the most competitive LCOEs, 30-40% lower in solar, 10-12% lower in wind, a lot of high renewable generation, and also the largest PPA markets in Europe. So all in all, Iberia, I believe it's very well-positioned to attract investment and to really scale clean industries like the data centers, batteries, I think it's a very good positioning for Iberia. Absolutely. And we'll get a little bit to kind of, you know, what sort of things are needed to kind of scale up that the man in a little bit. So in terms of kind of EDP's approach to investing, Anna, like what do you think distinguishes EDP's approach and investing, but probably also managing and a renewable assets kind of worldwide. And I know that's almost an impossible question. Is there a common kind of threat across how you think about this at a global scale? Well, we've just presented our strategic plan to the market, our 2026-28 planned market. And for us, it's really about how we are combining scale, technological diversity, because we have a diversified portfolio of technologies. And how do we have a discipline focus into value creation? And at this plan, we are investing around in three years, 12 billion euros, 7.5 in renewables and 3.6 in electricity networks, because we are also scaling that up across the geographies where we are present in networks in Portugal, Spain and Brazil. And about 90% of this investment will be deployed in a rate plate markets with North America and the Iberia region accounting for 35% and 30% respectively. So we have a diversified portfolio in terms of technologies and in terms of geographies. And you've asked us what's common on how we manage our assets? I would highlight three priorities. The first one is really to drive more value from our multi-technology portfolio. This is about optimizing operations and having a very disciplined life-cycle management of these assets. The second one is really about how do we support the system stability by expanding the flexible generation. And here, hydro-pumping storage really play a crucial role. And it's also really about how do we accelerate digital and AI adoption? Because for us as a company, it's really a driver of operational efficiency through predictive maintenance, autonomous monitoring and smart decision-making. So these strategic priorities are grounded in a way that we manage our multi-technology, multi-regional portfolio of around its 30 gigawatts across wind, solar, hydro, CCGTs and storage all around the world. And this diversity really allows us to really leverage on global technology and engineering expertise to really leverage on data and synergies across the world and to really create a feedback loop that allows us to enhance the efficiency, the reliability and resilience. But in a company like our own, it's really about how do we manage this good equilibrium between, at the same time, knowing that each market, each technology has its own dynamics. And that's why we take a very transversal approach, but also adaptable to really guarantee that we apply global learnings all across the company. Otherwise, we would be a sum of small companies, but to really also tailor decisions locally. So we are managing it through platforms and also through regions across our company. And for us, like in wind, we are optimizing our mature fleet through the right ONM partnerships and digital solutions. In solar, we are expanding relatively and using really data and AI to manage more complex contractual structures and to improve our performance. And in hydro, where downtime is very costly, we really focus on speed and customization to really maintain the flexibility and reliability. So across everything we do, all across the different geographies, we really leverage on the insights that we have from the different markets, but at the same time to also really guarantee that we capture what is unique and balance these two realities. Fantastic. And again, you talked a lot about like operational kind of excellence, and I guess, and how you manage things. You also talked about markets. One of the things that I think has become increasingly prevalent across some European markets, and we definitely saw it in the Abyrian markets, particularly Spain, over the last kind of year and a half or so, is that renewables are becoming increasingly active in dance delivery services. So this ties a little bit back to what you were saying about kind of operational kind of flexibility and becoming part of the solution, I guess. How involved are EDP's assets today in providing kind of this sort of services, or not just energy, but ancillary services across the different markets that you cover and why, I guess. Well, our portfolio, our asset portfolio is already very engaged in ancillary services markets across several geographies. In Europe, our win and solar assets actively participate in manual frequency restoration reserves across all markets, and also in automatic frequency restoration services, specifically in Abyria. And of course, this expansion has accelerated as assets, exits, regulated in schemes, and as new projects are built fully ready to participate in these services. From a technical standpoint, we have invested to really ensure that our assets can deliver real grid support. So our win, solar, and storage plans are equipped with advanced power plant controllers that really enable reactive power control, voltage regulation, and frequency containment, around 60% of our fleet, and these capabilities are now embedded in the design of every project, supported by secure time communication between each asset and our central dispatch centers. So this integration allows us to respond to system operator signals within seconds, very precisely, really reliable, and of course, always prevailing in terms of cyber resilience. We also see hybridization as a next step in this evolution, because by combining renewables with battery storage, we are turning variable generation into flexible, despachable resources that are capable of injecting, storing, or absorbing energy, depending on the system needs. And we've seen very recently that the system has a lot of needs. So this approach really strengthens both the grid stability and the commercial value of our assets. So all of this is coordinated in terms also of our global energy management platform, because we are consolidating operational data from every site into standardized and real-time models. And even if we look at, for example, North America, the shift is also underway, because while renewable participation in insuliary services has historically been limited without storage, we are starting to see meaningful progress. For example, we even have some wind farms, the Blue Canyon wind farms that have just been approved to join the regulation down market, and this is expected to be launched by the end of this year. So we see significant progress in terms of insuliary services. Now it's also really about creating the right frameworks to have the adequate remuneration of those services. Absolutely. We can have it to get into that. That's a big topic, I think, when it comes to, how do you really quantify the need for some of these insuliary services, and then obviously how you compensate those players are able to provide such needs. But before we get into that, maybe how, you know, I guess with the benefit of seeing all of this insuliary services market evolving across kind of different jurisdictions, how would you compare the maturity of insuliary services framework in a barrier versus other regions where ADP operates? And, you know, how does that influence, I guess, kind of investment and operational strategy? First, it's really comparing the maturity of insuliary services is really interesting to compare all across the different geographies because operating worldwide, we have the opportunity to see the similarities and differences. I think that when we talk about an insuliary service framework, it's important to separate frequency-related services from non-frequency ones because their maturity levels differ quite a bit across regions. So in Iberia, frequency services are still catching up. The primary reserve isn't remunerated. And until very recently, Portugal had price caps on AFRR. So these limitations have dampened a bit the market interest and slowed investment in technologies like batteries that are key for flexibility. And on the other hand, for non-frequency services, the whole Europe is still relatively immature. Though there are some bright spots, like I'm thinking about Ireland being the most advanced with a comprehensive framework that properly remunerates these services. Germany also began procuring Black Start and voltage control services, Spain following the recent events where we've seen the first steps towards remunerated voltage control services, which is a positive development. And when compared to more developed frameworks like the US, Iberia still operates at national level, we'd separate procurement of tertiary reserves and less time-economic remuneration. So those more mature markets where we have competitive bidding and real-time pricing are providing clear investment signals and more stable revenue streams. So these naturally influences where and how we invest. Of course, we prioritize markets that have transparent, predictable frameworks where because we need to adapt our asset design and really this requires engaging in regulatory discussions to really help Iberia evolve in that direction. And I think that's all our colleagues in the Iberian markets both in Portugal and Spain have been at company level and at sector level actively engaging in those discussions. And at the same time, the growing ability of renewables to really contribute to the system resilience is also a good opportunity. So the new Spanish voltage control services is a good example as it opens the door for wind and solar to participate in system services and to really generate additional services and additional revenues. And we are actively analyzing these opportunities across our portfolio, not only in Iberia, but in other geographies where emerging technologies like synthetic inertia or grid forming capabilities will soon enable new forms of participation. So overall, we see Iberia moving in the right direction, but there is still work to be done to really create a level playing field that fully values flexibility and resilient services, which are critical to the energy transition. I know that many times the market sends to think it's about renewables, it's about resilience, no, it's about everything, it's about having more and more renewables into the system that are bringing more affordability to the market, but at the same time to really guaranteeing that has you have more volatility, that you have the types of services that allows you to manage the system in a very resilient way and all the different assets are ready to do that or some of them not ready, but they can be adapted. But we really need to guarantee that we have the right and correct remuneration schemes to create the right incentives for the whole system to work properly. I completely agree and again, whenever I have conversations with people that are not too familiar with the Iberian market and for our listeners that are not just to give you some context, there are less than 100 megawatts of operating battery capacity in the Iberian market at the moment and about 18 gigawatts in the pipeline and everyone asks me how is it possible, but this is the case when so much solar is installed and I do think it comes back to this and in terms of like the market signals, primary response hasn't been kind of remunerated, there are limited signals, market signals and remuneration for the value that this assets provide and so you cannot always kind of make the business case solely from like arbitrage in Iberia is no different and so that's a key component of the energy transition is providing the right signals, economic signals for investment in what seems like a fundamental need like you know storage in a market that's so defined by solar like the Iberian one, but you know investment won't happen on its own without that sort of remuneration. Probably a good transition actually to the blackout because there was a lot of talk around the needs to remunerate kind of the sort of operability support that the system needs following the blackout and you know Anna you oversee kind of safety security and business continuity for ADP so obviously we're deeply involved in the aftermath of the Iberian blackout. So maybe to start what lessons do you think the blackout left for operators are renewable heavy systems obviously from from your perspective? Well it was definitely a moment I will never forget that the sector will never forget and and I think that in terms of the aftermath lessons I would say the first one resilience and stability I think that the Iberian blackout was above all a real world stress test for a renewable heavy system and it to remind us that resilience must grow at the same pace as decarbonization because there was an attempt to diabolize renewables at that point in time and I think that today it's very clear I wouldn't say for everybody but for almost everybody that is informed about what happened that renewables is not the one to blame. It showed that while renewables are really essential for affordability, for sustainability we also depend on assets that can really provide that that synchronous support and how you manage the whole system for that. How do you manage inertia, voltage control, black starts capability and so I think it's really about how do we evolve the system into this new reality and for sure there were lessons learned. From a company perspective I see that the resilience and stability was one of the of the learnings. Also we had clear examples for example in our case we had a black start operation at Casteldebotte at our teams both on-site in the remote control centers reacted very responsibly and we were able to synchronize the first unity in Portugal in a very short time and that quick response enabled the start of the step-by-step restoration of the Portuguese grid by the TSO. So it was really I think a remarkable demonstration of technical capability, human readiness and coordination and the pressure because it was a lot of pressure in that day and for me I was very happy to see all the different entities in the system working together with a common goal and instead of thinking host to blame to really guarantee that we restored the service and so all the teams in networks, in the DSOs, in the generation teams, in the dispatch centers it was like an amazing collaboration and I think that's that comes to my second lesson that it's all about communication and collaboration because throughout this restoration process the communication and collaboration among the key stakeholders was really crucial. It was very decisive. It has to play in a continuous role. So we remained in permanent contact to with the TSOs, sharing real-time updates on the recovery process, having everyone in the company from the CEO to the board members to all of the directors, to all the teams on the ground in every line of business, to really guarantee that we had the recovery process all aligned all across the company and with all the agents within within the system and so the communications part, how it played and you know that it was very challenging, also how the communications networks prevailed to have backup solutions to really guarantee that we had a safe start-up and really remote control transition. So the fact that we have pre-established channels with civil protection, with governments, with suppliers, with regulators really helped to accelerate the decision-making and coordination and I think it was an excellent case and I think this experience confirmed that command continuity is really king so in a crisis you only control what you can power and what you can reach and so operation hubs, crisis rooms they really must remain fully functional even without degree or public networks and so clarity is essential to have predefined roles, activation thresholds, drills that have been conducted before that help a lot on this, on this, to really guarantee that the government structures prevent confusion from becoming a second crisis so I think that was a really important point. Also the part of the key people proving we are never done so instead we have implemented a comprehensive improvement plan, we were quite happy with the plan that we had all our teams and all our lands of business behave really well but it's really about continuously reinforcing communication redundancy, business continuity procedures, do more drills, even more drills with our people to really guarantee that these exercises build the muscle memory and strengthen coordination across all the stakeholders because in the end and probably the most important lesson is that it's about also the people and how people behave because you can never predict all the situations even if you do a lot of drills but the fact that the people are more prepared, that they have tried different things in the past, builds more operational resilience and this is an essential part of the energy transition and not just enough to thought so I think it was, I think the sector behaved really well as a whole and we've seen that all across the world, you know, like in that day when we were discussing with all the teams all across the world we've had many of those situations in the US for some cold days in some of the states, we've had that in South America, in Chile, like in many of the different geographies so it's really about the global learnings that all our teams can have, fantastic and in terms of learnings Anna do you think there are any changes needed like whether it's technical institutional regulatory to kind of minimize the risk of a similar event happening again or it's like you know there's not a whole lot I guess we can do to prevent something like this. Well even though we still don't have the full picture of what really caused the Habeerin Blackout and still missing the final report and we, I think some, I wouldn't call it lessons but some points are already clear both on the technical side and how in terms of how we organize and we regulate the energy system. I think that technically I would say that resilience still depends on having enough synchronous generation and flexible assets available so we see that it's very important that we have for instance hydro remains essential not because it generates significant electricity but because hydro and gas power plants they provide voltage control, inertia and Black start capability and so these are services that are in voter base renewables for all their progress cannot yet fully replace so it's really about the combination of all the assets and so we need to have scientific inertia becoming widespread and truly equivalent to really keep these synchronous assets operationally and properly rewarded is absolutely critical and I think that you've mentioned that before it became also more clear in the system. So hydro power in particular offers this unique combination of attributes because it has energy storage, voltage control, inertia and Black start capability and so I would say that expanding pumped storage and upgrading existing hydro units to operate as synchronous compensators can provide a cost effective way to reinforce stability and so from a market perspective we need clear transparent frameworks that value these services such as capacity payments and ciliary service markets and remuneration mechanisms that reflect their real contribution to security of supply so capacity mechanisms they should explicitly incentivize the availability of backup capacity and ciliary service markets should be established and harmonized across the different geographies to really allow stability services to be procured where they are most effective. I also would say that from a regulatory and ecosystem perspective we also should consider resilience as a core system attribute and not as an afterthought it's something that we've always had so we really need to guarantee that we are incentivizing the right behaviors by recognizing and rewarding backup power system storage assets and Black start services that really strengthen these restoration capabilities because we cannot 100% eliminate the risk but we definitely can have a robust, better prepared system and this means that the value needs to come of course from the megawatts we had but we also need to guarantee that the flexibility, the coordination and the foresight that keeps these megawatts stable also matters and gets remunerated adequately. Thank you and you spoke earlier about some of the key things that matter I guess in preparation for the response to the blackout, you mentioned communication and planning and one of the things I think we are certainly missing in a Bariat is something that affects both which is a clear quantification of what is needed in each of those services. That framework that you spoke about needs to start with a clear expectation setting of how much voltage control is needed, how much synchronous compensation, where, how much inertia is needed and I think that's one of the key things that as investors I see kind of some of our clients really missing in terms of making those investment decisions and kind of valuing some of that so hopefully we get to a stage where everyone is clear around kind of what the need is so they can start planning their investments around it, that's the hope at least. Now you talked at the beginning a little bit about kind of the evolution of kind of demand and kind of how the area can set up itself for kind of continuous growth and electrification of many of the sources. So maybe perhaps a question around kind of data centers, how do you see global data center demand evolving? Is it like hype or is it reality? Well we see data center growth really as a reality then we might argue in terms of the dimension of that growth but it's reality when we look at the demand being projected, it's projected to grow 2 to 5 times by 2030, driven primarily by AI workloads, cloud adoption and also the surge in and structure data and we see that global data center power capacity has already grown more than 200 percent in the past decade and from 26 gigawatts that we've had in 2015 to 82 gigawatts in 2025, we have 13 gigawatts that have been added just in the last 12 months alone. So all the research that we see, we can see that growth is expected to come from AI workloads which alone can consume 10 to 20 times more energy than from traditional computing. So this is likely really to be a structural shift because while uncertainties exist on the scale of the demand growth in the next years, the fundamentals like the growth exponential growth in AI and cloud in data, they really make data centers one of the top three global power demand drivers alongside, of course, with electrification of consumption and of course we have good fundamentals where we are seeing demand growing the most in terms of AI is of course the US but we also have strong fundamentals in Spain and Portugal because you are offering some of the lowest power prices in Europe. You have abundant land at competitive costs and a very robust fiber networks and so that positions itself as a good bridge with other regions and they make it attractive for hyperscalers and we've seen several announcements in terms of data center markets in Spain with new capacity and new emerging hubs appearing in Zaragoza, Barcelona and also in Madrid and in Portugal we also see good momentum with concrete examples of this momentum with the start-campus project being announced in C and so we see that this strong investment momentum by the big tax, Google, Microsoft, AWS, Meta oracle that they have announced very significant investments and we believe that the fact that in Iberia we have very strong case for renewables this provides also a good edge and enables green data center development that is aligned also with Europe's climate neutral goals and offers cost advantages in Europe through PPAs and co-location strategies so we have very strong case in US and we also have Iberia with good ingredients to become a good data center hub. Absolutely and I think in what I hear from a lot of clients is if anything that the fundamentals are clear it boils down to some of the permitting for those loads to and the connection of those loads. This is something that I think Virginia has done exceptionally well like you know almost like the coordinated planning between kind of the connection and the incentives to kind of build some of that amount so hopefully we can get there as well in terms of the connection points and the green infrastructure needed to do that. And on this topic Anna so EDP has combined not that long ago it's hydrogen and data center business units and I'm sorry to see that become a thing across some other companies what synergies do you see between those two areas? What's the logic behind this? Well in terms of the company we've created a business unit specifically for hydrogen when we were exploring the opportunity one of our directors and the cadets is managing that that business and when the market has evolved what we have seen as the company was that integrating hydrogen and data centers and the one roof made sense for the company both strategically and operational because as they might seem different from an energy perspective there are many common points. We have both large continuous consumers of electricity water and cooling they are capital intensive and they are deeply tied to the organization and they both require a system flexibility making them both energy intensive businesses in terms of our portfolio. So the person that was responsible for the area saw operational synergies being significant because in terms of you require like deep understanding of the regulatory framework that is applicable to large loads in its engaged complex permitting processes and really secure large scale demand interconnections this means the same expertise and relationships can be leveraged across projects and so our hydrogen business unit already had this perspective and we also believe that it would accelerate the data center development market and that's the reason why as a company we've decided to combine these two under the same roof. Fantastic thank you Anna that's very very interesting so maybe just a quick a fire to kind of end I have two quick questions for you the first one is what do you think will surprise us the most about the next five years of the energy transition? I think that what will surprise us most is how fast the energy system will reinvent itself because we are not talking about decades but just a few years and we are in a sector that every year every month we have a lot of reinvention but I truly believe that the next couple of years the system will reinvent itself. Fantastic yeah technology always seems to surprise us and then second if you could transplant one energy policy or regulation from any country where EDP operates to another what would that be and why? Well Anna this is a tough one because there's no perfect policy in any country I see worldwide that all struggle in a few implementation aspects and lately we all could use some more stability because nothing scares more investors away than taking uncertainty as normal so I think this is the new normal that we are living in but if I would have to choose one probably I would transplant the UK and Ireland's advanced markets for inertia capacity and flexibility to other EDP geographies because in the UK and Ireland these mechanisms are well developed because the system stability is critical in an island grid and adopting some similar market structures could strengthen reliability and could support the energy transition and ensure more system resilience so if I would have to choose one although it's a tough one probably I would choose this one that's great Anna and and I would argue that a lot of investors seem to agree with you given how fast flexibility has evolved in those markets right that that's a clear sign that something is working even if not perfect and nothing is as you say. The beauty of our sector because the ability that companies other other agents of the ecosystem and also the people they they've shown tremendous ability to adapt and if we look back the last five years it's really amazing the degree of change that the sector has been through because as we've mentioned in the beginning geopolitics and geoeconomics are really at the center of the sector that we operate and it's really about having the agility to read those insights to influence them and to navigate turbulent waters without losing our north star. Absolutely and that's a great way to end. Thank you so much for joining us it's been a pleasure having you on the show today. Thank you so much and it was a pleasure thank you to Aurora and particularly to you it was a pleasure. That was Anna Barriass, Aurora's managing director for Iberia and Latam talking to Anna Paola Marquez, executive board member at EDP leading the global renewable generation asset platform. She also oversees transversal areas within the EDP group, digital and tech and safety, security and business continuity. Thanks for listening to Energy Unplug. Do keep an Anna podcast feed for more in-depth conversations with senior members of the energy industry. The best way to do this is to follow the podcast via whatever platform you use.