Italy faces a significant challenge with virtual grid saturation, impacting the integration of new renewable projects and the deployment of Battery Energy Storage Systems (BESS).

According to Simone Prato, Country Lead – Italy at Enertis Applus+, grid connection requests for battery storage projects are treated the same as those for thermal and renewable energy plants.

“Paradoxically, this could lead to a situation where the virtual saturation of the high-voltage grid delays the deployment of BESS, one of the most effective tools for grid stabilization. Often, the construction of new TSO Electrical Stations, which represent the grid interconnection points, becomes the critical path for their completion,” Prato explained in an interview with Energía Estratégica España.

Prato further noted that, under the Grid Code and the Active Connection Rules (TICA), BESS projects must adhere to the same connection procedures as thermal or renewable plants, often involving long timelines and the construction of new electrical stations. “This could result in significant delays in deploying this technology, which is crucial for grid stabilization,” he added.

He also pointed out that while establishing temporary grid connections could help overcome this challenge, a paradigm shift in grid regulation is expected to provide a systemic solution.

Current Installed Capacity and Geographical Distribution

Italy has an installed capacity of 900 MW and 3,000 MWh of standalone BESS, representing 25% of the country’s total storage capacity. Additionally, 70 MW and 60 MWh of batteries are co-located with thermal plants, while another 4 GW and 8 GWh of small-scale systems are hybridized with solar photovoltaic plants, accounting for 75% of the installed capacity, according to Prato.

Most large-scale installations are concentrated in northern Italy, particularly in regions like Piedmont, Emilia-Romagna, Friuli Venezia Giulia, and Lombardy.

“This distribution can be attributed to two incentive mechanisms: Terna’s Fast Reserve Pilot Project launched in 2021 and the 2022 Capacity Market Auction, with a delivery period set for 2024,” explained the Enertis Applus+ representative.

However, the landscape is changing rapidly, with several hundred MW currently under construction in Sardinia. Prato highlighted significant growth in project development in southern Italy and Sicily.

A May 2024 report by the Italian Ministry of Environment and Energy Security (MASE) revealed that over 1.9 GW of BESS had been authorized, while more than 150 projects, primarily in southern Italy with a total capacity of 15 GW, were under review.

“This means that, with 900 MW already operational, an additional 1 GW of capacity was ready for construction. Between May and November 2024, MASE authorized 13 more projects, adding 1.2 GW of BESS capacity,” the specialist stated.

He further noted that MASE has authorized over 3.3 GW of utility-scale batteries to date, including those operational, under construction, or ready for construction. These figures exclude Sicily, where BESS authorizations fall outside MASE’s scope but are expected to significantly contribute to new installations.

Regulations and Their Impact on BESS Projects

The regulatory framework in Italy has seen significant simplifications in recent years. According to Prato, the “Decreto Semplificazioni” and “Decreto Semplificazioni bis” have streamlined project requirements, boosting the development of battery storage technology.

For example, standalone battery projects under 10 MW do not require construction permits. BESS projects located within existing thermal or renewable plants (up to 300 MW) benefit from a simplified permitting process, while other standalone battery projects above 10 MW require a Single Authorization issued by MASE but are exempt from Environmental Impact Assessments (EIA).

Moreover, in 2024, MASE approved a new Capacity Market regulation, enabling Capacity Market Auctions for delivery periods in 2025, 2026, 2027, and 2028. This is expected to become a cornerstone for storage investments over the next 5–6 years.

Projections and the Role of MACSE

To meet its 2030 targets, Italy needs to achieve 122 GWh of storage capacity. Of this, 50 GWh will come from existing pumped hydro systems, 14 GWh from small-scale battery storage, 8 GWh from BESS contracted in the Capacity Market, and another 50 GWh from utility-scale projects expected to be awarded through mechanisms like MACSE.

The first auction under this system, scheduled for 2025, is generating high expectations and fierce competition among developers.

“This will be an opportunity for operators to familiarize themselves with the incentive mechanism, which could lead to unexpected outcomes. It represents a critical step toward an efficient and cost-effective strategy to integrate renewable energy into Italy’s system, unlocking the country’s full potential in the energy transition,” Prato emphasized.

Within six months after the auction deadline, Terna will publish detailed documents outlining the demand for BESS capacity by area and the technical requirements for projects during the contract period.

“Since only authorized BESS projects that have not started construction can participate in the MACSE auction, competition for the first round of MACSE capacity is expected to be fierce, driven by declining battery CapEx. New battery suppliers and system integrators, especially from China, are entering the Italian market, further intensifying competition for supply contracts with auction winners,” Prato concluded.