ARERA’s new resolution on MACSE raises the maximum premium to €27,000/MWh/year for the auction with a 2029 delivery year, exceeding the level proposed during consultation. But beyond the new premium, broader questions remain: annual updates to technology parameters, the availability of grid capacity, battery costs and project bankability.
pv magazine Italy spoke with three lawyers. They largely addressed the same issues, although their interpretations differed slightly. Germana Cassar, a partner at DLA Piper, explains that Resolution 332/2026 sets the maximum premium for the next auction while also introducing a regular, ongoing process for updating MACSE parameters with industry input. It does not, however, resolve doubts about grid capacity availability.
Marcello Astolfi, founder of Project Lex, says the resolution has not introduced a separate ceiling for smaller installations or projects on greenfield sites. It also leaves developers fully exposed to lithium price fluctuations during the two months before the auction.
Cristina Martorana, a partner at Legance, says the 2029 auction is probably the first real test of MACSE’s long-term sustainability, particularly because there is still no visibility on auction volumes beyond 2029.
“The 2029 auction represents an important juncture not only for the storage sector, but for the entire decarbonization of Italy’s electricity system,” she says.
Other issues discussed include the right to withdraw, the mismatch between project permitting timelines and MACSE deadlines, the volumes that can be procured, particularly in southern Italy and the islands, the number and timing of auctions, consultation timelines and the deadline for submitting documentation for the pre-auction guarantee.
pv magazine Italy: What has changed under the new resolution?
Marcello Astolfi: ARERA’s recent resolution has essentially set the maximum premium at €27,000/MWh/year, lower than in the first auction but higher than the level proposed in the consultation document. This follows industry submissions concerning increases in lithium battery costs and plant construction costs.
ARERA has therefore partially accepted developers’ comments. However, it has left unchanged the 12% oversizing factor used in the economic model to estimate the benchmark investment cost, which some developers had proposed increasing. The new ceiling nevertheless remains well below the €37,000/MWh/year set for the first auction.
The recent resolution also amended Annex A to Resolution 247/2023/R/eel, requiring Terna’s technology study to be updated annually rather than at least every two years. It also requires a consultation lasting at least 30 days and submission of the study to the authority at least 180 days before each auction.
The stated purpose is to obtain up-to-date information to calculate the premiums correctly. An updated version of the study was not available for the second battery auction.
Germana Cassar: The most widely reported change is certainly the decision to set the maximum premium for the second MACSE auction, with a 2029 delivery year, at €27,000/MWh/year, compared with the €22,000/MWh/year initially proposed during consultation. This is the bid ceiling; the actual price will depend on competition in the auction.
The increase in the maximum premium was necessary to reflect the benchmark CAPEX, which rose from €125,000/MWh to €150,500/MWh. The adjustment concerns two components: battery costs, revised upward in light of higher lithium carbonate prices and the expected removal of Chinese export tax incentives, and EPC costs, which have also increased. Alongside this, the WACC has been updated from 8.0% to 8.2%, with a resulting increase in operating costs.
But there is another important regulatory change that may be less obvious. ARERA has amended Section 4.4 of the MACSE rules, introducing a standing mechanism for updating Terna’s storage technology study, provided for under Section 4.1.
The study must be updated annually, following a consultation lasting at least 30 days, and submitted to ARERA at least 180 days before the auction.
This is a significant change because it recognizes how quickly storage technology, costs and economic characteristics evolve. The parameters used by MACSE cannot therefore remain fixed; they must be updated periodically. At the same time, the advance consultation allows developers to contribute to the technical and economic basis on which the mechanism is built.
Cristina Martorana: The main change is that ARERA has responded, at least in part, to the economic concerns raised during consultation, setting the maximum premium for the MACSE 2029 auction, scheduled for November 24, at €27,000/MWh/year rather than the initial €22,000/MWh/year.
Despite the downward trend in battery costs, uncertainties affecting investment costs persist. These include lithium price volatility, the announced removal of Chinese export tax incentives and pressure on supply chains. ARERA has therefore raised the reference CAPEX from €125,000/MWh to €150,500/MWh.
This is an important intervention because it confirms the regulator’s intention to keep MACSE aligned with actual market conditions and maintain its appeal to investors. At the same time, the premium remains significantly below the €37,000/MWh/year set for the first auction, reflecting the substantial reduction in storage technology costs recorded in recent years.
A second significant element is the decision to update the storage technology study annually. This may appear to be a technical change, but it is highly relevant because it allows the mechanism’s parameters to be adjusted more frequently as technology develops and costs change rapidly.
Resolution 332/2026 therefore does more than determine the maximum premium for the next auction. It also introduces a regular, ongoing process for updating MACSE parameters with industry input.
pv magazine: What issues still need to be resolved?
Martorana: The main question concerns MACSE’s ability to attract sufficiently broad participation. The results of last year’s auction certainly caught the market off guard, and there is considerable concern that the same “phenomenon” could recur.
It will certainly be a highly competitive auction, given the large number of projects that have since received authorization in the market areas covered by MACSE. The increase in the maximum premium is undoubtedly a positive signal, but the market will determine whether that level of remuneration is sufficient to support new investment.
There is also the question of visibility on auction volumes beyond 2029. Ministerial Decree No. 162/2026 leaves assessments for subsequent years to the annual updates. These must consider changes in the electricity system, storage costs, gas and CO₂ prices, renewable energy development and the results of the Capacity Market.
Approval for 2029 is settled. Planning projects intended for future auctions, however, requires continual reassessment.
This inevitably prevents investors from defining their investment strategies, particularly given the uncertainty that still surrounds the Capacity Market. Neither the date of the first auction nor the number of auctions to be held is currently known, and uncertainty remains over derating and other key elements of the rules. This is in a context where relying entirely on merchant revenues is not yet an option.
The challenge remains to find the right balance between public support and market signals, and between bankability and an adequate return on investment.
Then there is the question of long-duration technologies. MACSE is still essentially designed around electrochemical batteries, while the process for pumped hydro storage has been postponed because the projects are not sufficiently mature. And when we talk about electrochemical batteries, the reference is exclusively to lithium-ion technologies, rather than sodium-ion, for example.
Cassar: In our view, one of the main issues is no longer simply MACSE’s economic design, but whether projects can actually be delivered, particularly given the availability of grid capacity.
This issue is now even more important in light of the new Open Season rules, introduced by the energy bills decree-law through an amendment to Article 10-bis of the consolidated renewable energy legislation, known as TU FER. Initial implementing rules were introduced through Ministerial Decree 291/2026 to address so-called virtual grid saturation and rationalize capacity allocation.
The aim of the new system is certainly to make more efficient use of the grid and prevent capacity nominally tied up by projects that are not progressing from blocking more mature developments.
However, during the initial implementation phase, particular attention will need to be paid to coordinating these new rules with BESS projects that have already begun the permitting process, or have already received authorization but have not yet secured a definitive reservation of grid capacity.
The risk is that the grid, beyond being infrastructure required to build the project, becomes a factor that constrains or delays development, as well as the project’s ability to participate in MACSE.
This is particularly relevant under MACSE because successful bidders undertake to have a completed, operational plant by the delivery date. Grid availability therefore becomes an integral part of project bankability.
In other words, there is a need for close coordination between MACSE, Open Season, permitting procedures and connection rules. The aim should be to release capacity occupied by immature projects without penalizing those that are genuinely progressing through permitting and are intended to contribute to storage development targets.
Other important issues remain: the appropriate allocation of risks relating to delays, unavailability and battery degradation; consistency between MACSE obligations and EPC, O&M and financing contracts; and, finally, how time-shifting contracts and their secondary market work in practice.
Astolfi: To answer that question, we need to distinguish between industry requests that were rejected and issues that remain to be tested.
As mentioned, ARERA decided not to increase the 12% oversizing factor because it found no evidence of battery degradation beyond what had already been accounted for. It did not raise the beta parameter because there was no evidence of additional risks. Nor did it accept the request to increase the percentage used to calculate OPEX, although the monetary amount still rises as a result of the increase in CAPEX.
Some developers also proposed indexing the maximum premium to lithium carbonate prices, allowing it to adjust to changes in the cost of batteries’ main raw material. ARERA did not accept the proposal, citing the requirement to announce the maximum premium at least 60 days before the auction.
This decision gives developers advance certainty about the auction’s price ceiling, but leaves them fully exposed to lithium price fluctuations during the two months before the auction.
This reflects a cautious approach by ARERA, which chose to accept only some of the market’s recommendations, revising certain CAPEX components while leaving the oversizing and OPEX criteria unchanged.
According to the industry comments cited in the resolution, ARERA’s initial cost estimates mainly reflected large installations on already developed sites, underestimating the cost per unit of capacity for smaller installations or those built on new sites.
Following consultation, ARERA increased some cost items but did not introduce a separate ceiling for smaller installations or projects on greenfield sites. These are sites that must be developed from scratch and, unlike brownfield sites with existing infrastructure, may require greater investment in the works needed to build the plant.
It remains to be seen whether a single maximum premium can adequately account for projects with substantially different cost structures. The auction results will be the main test of whether this approach has allowed projects with higher unit costs to remain competitive.
A further uncertainty is the mismatch between project permitting timelines and MACSE deadlines. Projects participating in the November 2026 auction must be operational from 2029. However, given permitting timelines, generally between 24 and 42 months for medium-to-large BESS projects, there is a real risk that delays in obtaining or retaining permits, or during construction, could trigger contractual penalties and, in the most serious cases, termination of the MACSE contract.
pv magazine: What do you consider the most interesting aspects of MACSE with a 2029 delivery year?
Astolfi: Several significant points emerge from a comparison with MACSE 2028.
First, the projected requirement rises from 10 GWh to 16 GWh, with larger volumes available for procurement, particularly in southern Italy and the islands.
On the operational side, the 2026 MACSE rules change the deadline for submitting documentation for the pre-auction guarantee, setting it at least 35 days before the auction begins under Article 7.2.
They also distinguish between the payment repayment rules applicable when storage participates in the balancing market individually, as a UAS, and when it participates through an aggregation, as a UVAN, under Articles 24–27.
Finally, Article 28 sets out withdrawal provisions in greater detail, allowing withdrawal before the construction obligation has been fulfilled, even if the delivery period has already begun, subject to payment of the specified amount.
This broadens the options for exiting a project that has not yet been completed, although the financial cost still needs to be assessed in each case.
Cassar: The first element is certainly the scale of the operation. Terna has provisionally identified a national requirement for 16 GWh of new storage capacity in 2029. The amount actually procured may take account of capacity that enters operation in the meantime or is procured through other mechanisms, such as the Capacity Market.
The geographical distribution of that requirement is also significant, concentrated primarily in the Center-South, South and Calabria areas, Sicily and Sardinia.
This clearly illustrates storage’s role in the electricity system. It is not simply about developing a new investment asset class, but about creating the infrastructure needed to integrate growing amounts of renewable generation and manage overgeneration.
The second interesting aspect is precisely the relationship between MACSE and the grid. The 2029 auction will take place during a period of profound change in Italy’s connection system through Open Season. It will therefore be an important test of whether planning for new storage capacity and grid capacity can genuinely proceed in a coordinated way.
The third element concerns bankability. MACSE gives investors long-term visibility on revenues, thereby reducing a significant component of merchant risk. But it does not eliminate development risk.
On the contrary, the robustness of permits, certainty over connection, the structure of EPC and O&M contracts, performance guarantees and the ability to meet the delivery date become even more important.
For this reason, I believe the 2029 auction will be particularly interesting. It will measure not only competition between developers and the price of storage capacity, but also the Italian system’s ability to turn awarded GWh into plants that are actually authorized, connected, financed and operational by the required date.
From this perspective, the real challenge will be to ensure that the new grid capacity and Open Season rules help select genuinely mature projects without becoming another source of uncertainty or delay for those already progressing through development and permitting.
Martorana: The 2029 auction is probably the first real test of MACSE’s long-term sustainability. The first auction demonstrated market interest. The 2029 auction will show whether the mechanism can support the large-scale development of the storage needed for Italy’s energy transition.
The most interesting element is that MACSE is gradually becoming the economic reference point for the storage sector. Auctions do more than award capacity: they also help establish a remuneration benchmark for investors, lenders and developers. The premium resulting from the auction will therefore be watched particularly closely across the market.
There is also a system-wide aspect. The storage requirement identified by Terna and approved by the Ministry of the Environment and Energy Security, MASE, stems from the need to integrate ever-greater shares of non-dispatchable renewable generation and reduce overgeneration and grid congestion.
The 2029 auction represents an important juncture not only for the storage sector, but for the entire decarbonization of Italy’s electricity system.
It therefore represents a significant opportunity for projects that can combine cost competitiveness, readiness in terms of permitting and construction, and a robust contractual allocation of risks.
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