A landmark auction, but not the real story
Italy’s first MACSE auction was widely hailed as a landmark moment for battery energy storage. The numbers appeared impressive enough on their own: 10 GWh of storage capacity procured, bids exceeding demand by more than four times, and clearing prices significantly below expectations. Yet focusing solely on the auction results risks overlooking a much larger story that is beginning to emerge.
What Italy is building through MACSE is not simply a mechanism for procuring batteries. The Voice of Renewables understands this not as a standalone market intervention, but as the foundations of one of Europe’s largest long-term energy storage investment programmes.
From market design to system necessity
The Mercato a Termine degli Stoccaggi Elettrici, or MACSE, was designed by transmission system operator Terna to secure the storage capacity required to support Italy’s rapidly evolving electricity system. As renewable generation continues to expand, the challenge is no longer simply adding more solar and wind capacity. The increasingly pressing question is how to manage the intermittency, congestion and flexibility requirements that accompany such growth.
The first auction and the shift in investor perception
The first MACSE auction provided a clear indication that investors are willing to back that vision. The tender awarded the full 10 GWh sought by Terna, attracting strong competition from developers and resulting in an average clearing price of €12,959 per MWh per year, substantially below the €37,000 reserve premium established for the auction. The projects are expected to enter commercial operation in 2028 and represent approximately €1 billion in investment. Commenting on the outcome, Terna Chief Executive Giuseppina Di Foggia said the results demonstrated “strong competition and robust market interest”, adding that the investment would help integrate greater volumes of renewable energy while reducing reliance on thermoelectric generation and natural gas. Future auctions, she noted, would evolve in line with renewable deployment and grid development.
For many observers, the low clearing price was the headline. For investors, however, the more important signal was that battery storage in Italy is beginning to move beyond a merchant revenue model and towards a contracted infrastructure model.
From merchant volatility to contracted infrastructure
For much of the past decade, battery developers have relied on increasingly complex revenue stacks combining wholesale market arbitrage, balancing services and ancillary service revenues. While potentially lucrative, such models have often proved difficult to finance at scale because future revenues remain uncertain. MACSE changes that equation. By providing long-term contracted revenues, the mechanism offers a degree of predictability that infrastructure investors have historically struggled to find in the battery sector.
Italy’s storage requirement gap
This shift has implications far beyond the projects awarded in the first auction. According to Terna’s 2025 Development Plan, Italy will require 71.5 GWh of storage capacity by 2030 in order to accommodate the country’s accelerating renewable energy deployment. The figure is striking not only because of its scale but because it highlights how early the market still is in its development.
While the first MACSE auction secured 10 GWh, Italy had already contracted a further 11 GWh through previous Capacity Market auctions. Together, these mechanisms have secured approximately 21 GWh of storage capacity. Even so, more than 50 GWh remains to be delivered if the country is to meet Terna’s identified requirements by the end of the decade.
The 2026 MACSE auction and what comes next
The next stage is already taking shape. Terna has confirmed a second MACSE auction scheduled for November 2026, targeting an additional 16 GWh of storage capacity with delivery expected in 2029. If fully subscribed, total contracted storage would rise to around 37 GWh. That would still leave Italy requiring more than 34 GWh of additional capacity before 2030.
The significance of that figure should not be underestimated. Even after two substantial auction rounds, less than half of Terna’s identified storage requirement would have been secured. While the transmission operator has yet to formally announce the volumes and timetable for subsequent procurement rounds, the arithmetic itself points towards further auctions. Unless Italy’s storage requirement is revised downward, additional MACSE tenders appear less a possibility than a necessity.
The implication is significant for developers and investors alike. Rather than competing for a single market opportunity, participants are increasingly positioning themselves for what could become a sequence of large-scale procurements extending throughout the remainder of the decade. In effect, the first auction may prove to have been the opening chapter of a much larger programme.
Why MACSE is becoming an infrastructure pipeline
Viewed through that lens, the significance of MACSE changes considerably. Rather than representing a single successful procurement exercise, the mechanism increasingly resembles a multi-year infrastructure programme with a pipeline extending well beyond the current auction cycle. This is why institutional investors, utilities and infrastructure funds are paying such close attention to MACSE. The Voice of Renewables concludes that the investment story is no longer the 10 GWh procured in the first auction or even the 16 GWh expected in the second. The investment story is the remaining 34 to 50 GWh that still needs to be secured if Italy is to achieve its storage objectives by 2030.
Winners and competitive dynamics
For large utilities such as Enel, which emerged as one of the principal beneficiaries of the first auction, this creates a substantial opportunity to leverage scale, development expertise and access to low-cost capital. As competition intensifies, those advantages are likely to become increasingly important. Storage projects supported by long-term contracts reward efficient execution and disciplined financing as much as technological innovation.
The same dynamic is attracting growing interest from infrastructure funds and institutional investors. Long-duration contracted revenues align far more closely with traditional infrastructure investment models than merchant battery projects ever could. As a result, storage is beginning to attract a broader pool of capital, including investors that previously remained cautious about entering the sector.
Independent power producers face a more nuanced landscape. On one hand, MACSE significantly improves project bankability and facilitates access to financing. On the other, competitive auctions naturally compress returns and favour participants capable of operating at scale. The result may be a market that becomes increasingly attractive to investors while simultaneously becoming more challenging for smaller developers.
Storage within Italy’s wider grid transformation
The broader context makes the storage story even more compelling. Terna’s latest Development Plan outlines approximately €23 billion of transmission investments over the coming decade as Italy prepares for a substantial expansion of renewable generation. The operator expects solar and wind capacity to grow from roughly 57 GW today to around 107 GW by 2030. Presenting the plan, Di Foggia argued that investing in the planning, modernisation and digitalisation of electricity networks would be essential to support growing demand and the integration of renewable energy. The scale of the investment programme underlines the extent to which storage, transmission and renewable generation are increasingly being planned as parts of the same system rather than as separate sectors.
Italy as a Mediterranean energy hub
Italy’s strategic geographical position at the centre of the Mediterranean further reinforces this systemic view. The 2025 Development Plan confirms a series of international interconnection projects designed to strengthen security, sustainability and system flexibility by enabling mutual support between interconnected electricity systems. These links also enhance the system’s ability to manage the variability of renewable generation by allowing storage and generation resources to be shared across borders.
Key projects include the modernisation of the Sardinia–Corsica–Tuscany interconnection (Co.I.3), supported by EU REPowerEU funding, with construction already underway on its Sardinian land section. Another major development is ELMED, the Italy–Tunisia interconnection, supported by more than €300 million from the EU’s Connecting Europe Facility and embedded within the broader Mattei Plan for Africa framework. Authorised by both Italian and Tunisian authorities, it represents a significant step in linking European and North African energy systems.
A further project involves the doubling of the Italy–Greece interconnection, consisting of two 250 km submarine cables and associated land connections up to 1,000 MW of capacity. This will enhance system security in southern Italy, improve market coupling efficiency and maintain cross-border flows even during maintenance periods.
The 2034 transmission reinforcement programme
The scale of Italy’s energy transition becomes even clearer when viewed alongside Terna’s longer-term grid reinforcement programme extending into the mid-2030s. Beyond MACSE and the immediate 2030 horizon, the transmission system operator is planning a series of major infrastructure upgrades designed to reshape the geography of electricity flows across the country.
Among the most significant projects is the Milan–Montalto high-voltage direct current link, a 525 kV, 2,100 MW connection spanning approximately 500 kilometres between Lazio and Lombardy, including both submarine and overhead sections. The project is intended to strengthen north–south transmission capacity across regions that are increasingly central to Italy’s renewable energy build-out.
Another key intervention is the Adriatic Backbone, a direct current corridor between Foggia and Forlì designed to reinforce exchange capacity along the eastern side of the country, effectively strengthening one of Italy’s most important renewable generation corridors.
Terna is also advancing the Central Link, which involves the reconstruction of 220 kV lines between Umbria and Tuscany, improving the secure transfer of electricity from central generation zones towards higher demand areas.
In southern Italy, the Montecorvino–Benevento connection will add a new 380 kV corridor supported by upgrades to existing substations, designed to improve system reliability and enable the integration of additional renewable capacity.
Alongside these inter-regional projects, Terna is also reinforcing intra-regional transmission capacity through a series of 380 kV upgrades in Sicily and Lombardy, including new links such as Chiaramonte Gulfi–Ciminna, Caracoli–Ciminna, Paternò–Priolo, and Milan–Brescia. These interventions are primarily aimed at relieving local congestion and improving the internal flexibility of regional grids.
Taken together, these projects underline a structural point: MACSE is not operating in isolation. It sits within a much broader programme of transmission expansion that extends well beyond 2030 and into the mid-2030s, where grid reinforcement, interconnection and storage are being developed as interdependent components of the same system architecture.
Government backing and strategic framing
The Italian government appears to share that assessment. When the development plan was unveiled, Environment and Energy Security Minister Gilberto Pichetto Fratin described the €23 billion programme as “the backbone of the national energy system”. It was a telling choice of words. Storage is often discussed as a technology story, but the language increasingly being used by both policymakers and system operators is the language of national infrastructure.
How the market is interpreting MACSE and Italy’s grid build-out
Despite the scale of Italy’s energy transition programme, analytical coverage of MACSE and the associated grid investment cycle remains relatively fragmented across the market.
Most industry reporting has so far concentrated on the mechanics of the first MACSE auction and early pricing signals, with outlets such as Energy-Storage.news highlighting strong oversubscription levels and the unexpectedly competitive clearing price of the initial 10 GWh tender. These analyses have been valuable in confirming early investor appetite for contracted storage capacity, but remain largely focused on auction-level outcomes rather than system-level implications.
Consultancy and industry intelligence providers such as ICIS have taken a broader view of Italy’s storage requirement, modelling scenarios in which total system needs could range from approximately 40 GWh under conservative assumptions to well above 100 GWh under higher electrification trajectories. This work underscores the scale of the challenge, but tends to remain within commodity-style market forecasting frameworks rather than examining financing structures or regulated investment pathways.
Similarly, transmission operator Terna’s own publications provide detailed visibility on system planning, including the MACSE mechanism, capacity targets, and grid reinforcement projects extending into the 2030s and 2034 horizon. However, these materials are necessarily descriptive and policy-oriented, and do not typically extend into capital structure analysis or investor strategy implications.
Industry associations such as ANIE Confindustria have contributed further insight into deployment trends, particularly around the rapid expansion of utility-scale battery storage and declining capacity market prices. Yet their analysis is primarily industrial in nature, focusing on technology uptake and sector development rather than macro-financial design.
Against this backdrop, a clear analytical gap emerges between operational reporting and investment-grade system interpretation. This is where recent institutional research, including analysis by the Institute for Energy Economics and Financial Analysis (IEEFA), becomes particularly relevant. It is one of the few assessments to explicitly connect Italy’s grid expansion programme to its financing architecture, including regulated asset base mechanisms, green bond issuance, and the role of long-term tariff stability in sustaining multi-decade infrastructure investment.
Taken together, the current body of commentary confirms three points: that Italy is undergoing one of Europe’s most significant storage and grid build-outs, that MACSE is already reshaping storage procurement dynamics, and that the scale of required investment is substantial. What remains far less developed in mainstream analysis is a unified view of how MACSE, transmission expansion, interconnection projects and capital markets form a single, coherent infrastructure investment cycle.
Conclusion: the real investment story
This is perhaps the most important point. MACSE exists not because Italy wants more batteries, but because the country’s wider energy transition strategy cannot be delivered without them.
For years, battery storage has been portrayed as an emerging technology searching for viable business models. Italy’s approach suggests a different future. Through MACSE, storage is increasingly being treated as a strategic infrastructure asset, planned alongside transmission networks, interconnection corridors and renewable generation rather than operating on the margins of the power system.
The first auction’s 10 GWh may ultimately prove significant not because of the capacity procured, but because of what it revealed about the direction of travel. The real story is not that Italy has launched a successful battery auction programme. It is that the country has identified a requirement for more than 70 GWh of storage, contracted only a fraction of that volume so far, and is building a procurement framework capable of delivering the rest.
That is why investors are looking beyond the headline auction results. The first auction demonstrated that the model works. The second auction will test whether it can be scaled. But the investment opportunity lies in what comes afterwards. As things stand, tens of gigawatt-hours of storage still need to be procured before the end of the decade. The investment story is not the capacity already awarded. It is the capacity that remains to be built.
Author: Derek Michalski, Editor
