Revenues Mechanisms. (a) Capacity market is one of the main BESS revenue mechanisms, with implications for optimisation. Italy's capacity market regime is one of the primary revenue drivers for BESS. Participating in the capacity market does not prevent other optimisation or trading arrangements, but combining capacity market participation with other incentives or support mechanisms is subject to anti-cumulation and additional rules which could require careful structuring that affects how projects are financed and contracted. (b) MACSE creates a bankable route to market for BESS, but its first auction demonstrated intense competition. Under MACSE, Terna competitively procures new storage capacity under long-term contracts offering capacity-like payments, improving revenue predictability while requiring developers to meet material guarantee and delivery obligations. However, pre- and post-auction guarantees, performance obligations and restrictions associated with committed capacity must be reflected in project structuring and financing. The first auction in September 2025 procured 10 GWh of lithium-ion BESS for 2028 delivery across Southern Italy, Sicily and Sardinia. Bids exceeded demand by more than four times and cleared substantially below the reserve premium, demonstrating strong investor appetite but also significant pricing pressure. The next auction, for 2029 delivery, is scheduled for 24 November 2026.

Supply chain, grid infrastructure, and land constraints remain key obstacles. Supply chain issues (particularly batteries and transformers), the need for grid strengthening in Southern Italy and the Islands, suitable land availability, and planning constraints all present barriers. The growing role of intermittent renewable generation made storage infrastructure increasingly critical. This is particularly relevant in Italy because most renewable production originates in Southern Italy, while electricity demand is concentrated in the North. BESS are becoming essential not only for energy storage, but also for congestion management, frequency regulation and optimization of the transmission grid. The Italian market for BESS is rapidly growing and currently we are at about 2.3 GW of installed storage capacity, which almost exclusively consists of small residential scale systems (capacity <20 kWh). Lombardy is the region with the largest number of installed systems (for about 448 MW), followed by Veneto (about 330 MW) and Emilia-Romagna (about 240 MW). A strong growth is forecasted in the next few years due to Italy’s ambitious PNIEC goals and such growth expectations are confirmed by last two years data, which indicate increasing requests for connections of BESS to the national grid, almost doubling on a 6-month basis.