Italy’s energy regulator has proposed cutting the maximum annual payment for the country’s second battery storage capacity auction by about 40%, reflecting lower battery costs ahead of the 2029 delivery auction.
The Italian Regulatory Authority for Energy, Networks and Environment (Arera) has proposed setting the maximum bid at €22,000/MWh/year for the second auction under Italy’s long-term electricity storage capacity procurement mechanism (Macse), scheduled for Nov. 24, 2026 with delivery in 2029.
The proposal, published for consultation until Sept. 7, compares with the €37,000/MWh/year cap set for the first battery auction, which procured capacity for 2028 delivery. That auction, held in September 2025, awarded 9,968 MWh of storage against a 10 GWh procurement target, with clearing prices ranging from €14,354/MWh/year in southern Italy and Calabria to €18,816/MWh/year in Sicily.
The 2029 auction will seek 16 GWh of storage capacity, compared with Terna’s estimated requirement of 32 GWh by 2030.
Arera said the proposed reduction reflects sharp declines in battery costs since the first auction. Because Terna updates its storage technology cost study only every two years, the regulator said relying on January 2025 data for the 2029 auction “does not appear reasonable.” Instead, it used more recent market data compiled with Italian research organization RSE.
The regulator cited a BloombergNEF report published in December 2025 estimating global stationary battery pack costs at about $70,000/MWh, excluding power electronics, down 45% from 2024. It also referenced an Ember analysis estimating battery packs shipped from China at $75,000/MWh, including power electronics but excluding transformers, with a further $50,000/MWh required for EPC and other project costs.
Based on those figures, Arera estimated total investment costs at €125,000/MWh, down from €209,500/MWh used for the first auction. Including oversizing requirements to offset battery degradation and financing costs during construction, the regulator calculated an investment parameter of €158,000/MWh, resulting in a cost of new entry (CONE) of approximately €22,000/MWh/year.
Arera also proposes updating Terna’s storage cost study annually rather than every two years, citing continued volatility in battery prices. The consultation does not cover the maximum payment for pumped hydro storage, which will be addressed separately.
Stakeholders can submit comments until Sept. 7. During the previous consultation, Arera initially proposed a €32,000/MWh/year cap before raising it to €37,000/MWh/year in the final decision after revising external cost assumptions.
From pv magazine Italy
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