Italy is advancing in its energy transition with the first auction under the Electric Storage Capacity Procurement Mechanism (MACSE), scheduled for September 30, 2025. Initially expected before summer, this auction aims to allocate 10 GWh of new storage capacity, with plans for progressive increases in subsequent years, reaching 50 GWh by 2030.

According to Terna, the 2029 and 2030 auctions are projected to each reach 20 GWh. In February, 13.5 GWh were authorized, of which 9.1 GWh were already eligible to participate in the first auction.

Economic Impact and Cost Reduction

Since 2022, storage construction costs have dropped by 40% to 45%, driven by improved availability of raw materials such as lithium, increased battery cell production, and greater market liquidity. This favorable context could lead to competitive prices in the auction.

According to Terna, storage requirements for delivery in 2028 were determined based on avoided overgeneration benefits, valued at the variable cost of a natural gas combined-cycle plant, as well as the system’s adequacy impact, valued at €8,000/MWh per year for technologies with four-hour storage capacity.

“These benefits must be compared with the estimated installation costs of storage systems, which amount to €43,000/MWh per year,” Terna states in its requirement analysis. A series of simulations were conducted, varying the installed storage capacity and calculating the net benefit in each iteration. “The optimal requirement for MSD-enabled storage capacity is reached when the calculated net benefit reaches its maximum,” the company explains, emphasizing that this approach helps define an efficient storage volume aligned with the needs of Italy’s electricity system by 2028.

A Structured Timeline for the First Auction

The award process will be carried out in several phases leading up to the September auction:

• June 2, 2025: Submission of admission requests (120 days before the auction).
• July 17, 2025: Qualification of projects on the MACSE portal.
• August 21, 2025: Submission of pre-auction guarantees (40 days before).
• August 26, 2025: Submission of authorization documents (35 days before).
• September 30, 2025: First auction takes place.

The awarded volume in this first phase will serve as a benchmark for future auctions in 2029 and 2030.

A Growing Storage Market

The need to increase storage capacity in Italy arises in response to growing energy consumption and the expansion of intermittent renewable energy sources. Electricity demand in the country is expected to grow by 9% to reach 335 TWh in 2028, driven by the electrification of various sectors.

Storage will be crucial to ensuring a resilient and flexible energy system, aligned with Italy’s decarbonization goals. By February 2025, 13.5 GWh of battery systems had been authorized. However, Terna expects the authorized capacity to continue increasing until September, which could push the total awarded volume to 14 GWh.

According to the JRC Smart Electricity Systems tool from the European Commission, Italy currently has 112 storage projects, distributed as follows:

• 72 operational projects
• 24 announced projects
• 13 projects under construction
• 3 projects in the permitting phase

In total, Italy has 11.27 GW of storage capacity, positioning itself as a key player in the expansion of this technology in Europe.

At the continental level, energy storage capacity in Europe is at various stages of development:

• 66.8 GW of storage is in operation
• 39.6 GW has been announced
• 12.5 GW is in the permitting phase
• 13.9 GW is under construction

Several European countries have started accelerating their energy transition by deploying new storage infrastructure. In the United Kingdom, operational capacity already stands at 8.4 GW, with 18.9 GW announced. France, Italy, and Spain are also expanding their capabilities, driven by regulatory frameworks that encourage investment in storage.

Geographical Distribution and Award Mechanisms

The MACSE mechanism has been designed to maximize the use of renewable energy, avoiding wasted generation during overproduction periods and redistributing it when demand requires it. According to Terna’s analysis, the distribution of storage systems will be based on renewable energy development and the stability needs of the electrical system. By 2028, the estimated storage capacity per region will be:

• Central-South: 3.0 GWh
• South and Calabria: 7.0 GWh
• Sicily: 0.5 – 1.5 GWh
• Sardinia: 0.5 – 1.0 GWh

Through this mechanism, Terna aims to ensure the integration of renewable energy into the electrical system and reduce dependence on fossil fuels. Over the past year, storage systems have significantly reduced the need for natural gas generation during peak demand hours.

The MACSE launch is also reshaping the dynamics of Italy’s Capacity Market (CM). During the last CM auction, the North zone captured 77% of the new Capacity Available in Probability (CDP), largely due to Terna’s confirmation that the MACSE auction will not allocate capacity in the North and Central-North zones. As a result, developers in these regions have opted to participate in the CM instead of competing in MACSE.

However, the introduction of MACSE creates new opportunities in the South and the Islands, where most of the awarded capacity will be concentrated. This shift could lead to adjustments in future CM auctions, as participants must consider new strategies for risk management and optimizing investments in Battery Energy Storage Systems (BESS).

With Terna’s guidelines shaping supply and demand for capacity, significant changes are expected in upcoming CM auctions, further driving Italy’s energy storage market in the coming years.

Market Expectations and Upcoming Auctions

The MACSE mechanism, approved by the European Commission in December 2023, envisions annual auctions until 2030, with a national storage target of 50 GWh. From 2029 onward, each auction is expected to allocate approximately 20 GWh.

The auction design stipulates that remuneration will be market-driven, though a price cap will be set by the regulatory authority. According to Del Pizzo, the final awarded price could be lower than this limit, thanks to cost reductions and increased sector competition.

From a financial perspective, four-hour storage systems have estimated installation costs of €43,000/MWh per year, with a variation range between €31,000 and €51,000/MWh per year, depending on the technology used. The expected benefit of these systems is estimated at €8,000/MWh per year, ensuring a solid return on investment within the MACSE program.