ITA BESS | Beyond MACSE: Alternatives Available for Italian BESS Investors

The upcoming MACSE auction has naturally taken center stage in Italy’s energy storage sector. Yet some investors are already looking beyond the immediate results to a more diverse and enduring revenue landscape.

As Italy has been preparing for this morning’s first MACSE auction, the energy storage community faces a critical question that extends far beyond the auction results. With a maximum premium set at 37,000 €/MWh-year for the 15-year delivery period—though a large share of the participants expects clearing prices to settle well below 30,000 €/MWh-year, depending on the market zone—the stakes are high. But perhaps the more strategic question isn’t who wins the auction, but rather: what lasting opportunities await projects that don’t secure MACSE support?

Even as discussions around the auction reach a fever pitch, a robust merchant business case continues to remain interesting to capture the strategic value of Italian BESS. Recent developments suggest that this opportunity is compelling, even as revenue cannibalization concerns persist. If installed capacity grows in line with Terna’s ambitious targets set out in the development plan, the merchant model is set to remain strong.

Two Core Revenue Streams Powering the Merchant Model

Modern BESS projects thrive on two main revenue clusters, each offering distinct optimization opportunities:

1. Time-shifting (arbitrage) on Day Ahead and Intra Day Markets– Charging during low-price periods (usually when renewables are abundant) and discharging during high-price periods (when demand rises). Our modelling for a 4h BESS shows that merchant revenues per cycle can achieve up to 60 €/MWh-cycle in the first years thanks to the time shifting activities, depending on the market zone.
2. Ancillary services – Grid support functions such as frequency reserves, voltage support, and stability services. These are increasingly valuable as renewable penetration grows, even though the uncertainty remains high due to the ongoing regulatory change. 

These streams, though shaped by market dynamics, represent the intrinsic value BESS assets provide to the grid.

Navigating Cannibalization: A Mature Market Outlook

Revenue cannibalization is a real concern that requires dynamic strategies. For this reason, we have made a quantitative assessment of the risk in different market areas if the utility scale installed BESS capacity reaches Terna development plan’s target by 2030. Our model has shown a decrease of 10-25% of the revenues from the DAM compared to a minimal-competition scenarios, supporting viable business cases for well-positioned projects.

---

Alternative and Complementary Revenue Streams

Pioneering players are already securing value through market-based hedging structures in order to reduce the risk and enable project financing.

This month, the first two tolling agreements have been closed in Italy, marking the maturation of alternative models to capture value of MACSE and beyond—or alongside—Capacity Market. These agreements can de-risk merchant exposure by fixing the totality or a part of the asset revenues. Different tolling structures are available on the market, from an “all inclusive” fixed fee to more sophisticated floor + profit sharing mechanisms.

Strategic Implications for Non-MACSE Projects

In conclusion, rather than seeing MACSE exclusion as a setback, strategic investors should consider:

• Market Differentiation – Merchant projects free from MACSE’s operational rules can pursue more agile optimization strategies.
• Contractual Flexibility – Market hedged projects adapt quickly to evolving signals, unburdened by incentive restrictions.
• Timing Advantage – Developers can align project schedules with shifting market conditions.
• Portfolio Balance – Blending MACSE-supported, merchant, and market hedged assets reduces concentration risk while maintaining exposure to Italy’s expanding storage sector.

---

 

The Path Forward

The Italian BESS market stands at an inflection point. While cannibalization requires careful management, the merchant model remains fundamentally interesting, especially in some market zones.

The emergence of tolling agreements and risk-sharing PPAs shows the market evolving beyond binary “incentive vs. merchant” thinking. Success now requires combining, optimizing, and contracting different revenue streams into resilient, profitable strategies.

The question isn’t whether to invest in Italian BESS after MACSE—it’s how to structure those investments to fully capture Italy’s evolving storage opportunities.

At Our New Energy, we combine deep market insights with hands-on experience in battery technology to help investors navigate this dynamic landscape. From optimizing merchant revenues to designing innovative tolling and PPA structures, we support our clients in turning market complexity into strategic advantage.

Whether you are exploring incentives-based projects, purely merchant opportunities, or hybrid models, our team is ready to partner with you in shaping resilient, profitable BESS investments that contribute to Italy’s energy transition while delivering attractive returns.