Italy’s battery energy storage system (BESS) market is going through a slowdown, with residential installations declining, the C&I segment showing greater resilience and utility-scale installations recording a 197% increase quarter on quarter, driven in part by the country’s Macse storage procurement scheme.
“According to research by Anie Rinnovabili’s Energy Storage Observatory, the positive trend in 2025 has reversed: over the past 12 months, newly installed capacity has fallen by 58%, while power capacity has declined by 42%,” said Stefano Percoco, industrial key account manager in Sparq’s Industrial Division, in a statement to pv magazine Italia.
The slowdown follows a period of growth in 2025 and reflects a market undergoing a gradual shift in composition across residential, C&I and utility-scale applications.
Market contraction
The utility-scale segment, covering systems larger than 1 MW, is showing the strongest signs of renewed activity. It now accounts for about 28% of Italy’s total installed storage capacity, with more than 12.5 GW across nearly 2,850 operational installations.
“In the first half of 2026, large-scale installations showed strong signs of recovery, increasing by 197% quarter on quarter, also driven by Macse auctions and the first standalone storage projects,” Percoco said.
Developers still face lengthy permitting procedures, volatile battery prices and grid congestion. Capital expenditure for systems larger than 1 MW is estimated at €280/kWh to €450/kWh.
“This situation means companies increasingly need strong project development expertise and integration capabilities,” Percoco said.
Overall market figures, however, show a sharper downturn. As of June 30, 2026, Italy had nearly 942,000 installed storage systems, with a combined power capacity of 7,961 MW and energy capacity of 19.3 GWh.
During the first half of 2026, 60,030 new systems were installed, adding 593 MW of power capacity and 1.35 GWh of energy capacity. The decline was more pronounced in the second quarter: between April and June, newly installed energy capacity fell by 82% year on year, while power capacity dropped by 68%.
“The residential segment, which represents almost half of total capacity at around 9.5 GWh, recorded its 11th consecutive quarterly decline, with capacity falling by 36% in the second quarter of 2026 compared with the same period in 2025,” Percoco said.
While residential storage continues to decline, the commercial and industrial segment, covering systems with capacities between 20 kWh and 1,000 kWh, is showing a more stable trend. Its installed energy capacity now exceeds 2.2 GWh.
In the first quarter of 2026, the segment recorded 91 MWh of newly connected capacity, up from 54 MWh in the same period of 2025.
However, the first-quarter figure was down from 130 MWh in the fourth quarter of 2025. Percoco said businesses continued to invest in storage to optimize energy consumption, stabilize electricity costs, participate in flexibility services and reduce exposure to volatile energy prices.
At the end of June 2025, Italy had nearly 16.5 GWh of installed storage capacity and 6,750 MW of power capacity across more than 815,000 systems. Energy capacity has therefore increased by almost 3 GWh in a year, despite a marked slowdown in new installations.
“This shift reflects a more mature sector, with more structured projects and business models based on ancillary services and energy arbitrage. At the same time, project development and permitting are becoming more complex,” Percoco said.
Storage targets
European and Italian policy frameworks set ambitious targets for renewable energy and storage development, but actual deployment is lagging behind planned trajectories, according to Percoco.
At the end of 2025, Italy was approximately 1.6 GW ahead of the renewable energy deployment pathway set under its burden-sharing framework, reflecting installations in previous years. With 2.9 GW of new installations and 550 MW of repowering in the first half of 2026, cumulative progress has reached around 5 GW, Percoco said.
This remains below the 8.3 GW target for 2026. With the target rising to 10 GW in 2027, installation rates will need to accelerate further.
Terna estimates incorporated into Italy’s National Energy and Climate Plan (NECP) project total storage capacity of approximately 122 GWh by 2030, compared with around 18 GWh to 19 GWh today.
Of the projected 122 GWh, about 50 GWh is expected to come from pumped hydro storage, largely through existing facilities, while battery energy storage systems are expected to provide most of the remainder.
The NECP specifically identifies a need for approximately 50 GWh, equivalent to 6 GW to 8 GW, of new utility-scale storage capacity, primarily in southern Italy and the islands. A further 4 GW of distributed residential and C&I storage is also envisaged, Percoco said.
Permitting delays, outstanding implementing decrees and differences between regional regulations remain obstacles to project development.
“In this context, the ability to provide turnkey solutions, from design through operational management to participation in flexibility markets and Macse auctions, can become a competitive advantage,” Percoco said.
From pv magazine Italia
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