Italy’s MACSE Auction: Battery storage price cap boosted to €37,000/MW/year

Italy’s Regulatory Authority for Energy, Networks and Environment (ARERA) has approved a series of modifications impacting the maximum price that can be offered in the country’s first forward capacity market auction for electricity storage (MACSE). The decision raises the ceiling from €32,000/MW/year to €37,000/MW/year.

The adjustment is a result of ARERA’s revision of three critical parameters that determine the auction’s price cap.

“The INV parameter has been increased to €264,000/MW, reflecting the rise in costs outside the battery’s direct scope. These external costs are now calculated as the average of the corresponding value range reported in the [relevant] study, incorporating feedback from consultation participants regarding connection costs for greenfield projects,” ARERA stated.

The INV parameter represents the sum of the lower range of investment costs, expenses related to plant oversizing, and financing costs incurred during the construction period.

ARERA has also updated the rate of return on invested capital, setting it at a nominal pre-tax rate of 8.1%. “This rate is the result of applying the consulted methodology as of June 30, 2025,” the authority noted.
Furthermore, the operational cost factor, or CFO (Capacity Factor Output), has been raised to €6,000/MW/year. This increase is intended to “include the extension of warranties for the entire delivery period and any additional charges or elements of risk and uncertainty not otherwise considered.”

ARERA explained that many participants in the public consultation requested an increase in the CFO parameter. The regulator clarified, “The increase in the CFO parameter is intended, among other things, to cover the extension of warranties to 15 years and to account for the fact that many operators, lacking consolidated experience in developing and managing utility-scale batteries, may need to enter into full-service contracts.”

The new maximum auction price follows the methodological framework outlined in consultation document 168/2025/R/eel.

MACSE Explainer: “Forward Procurement Market for Electricity Storage Capacity” (in Italian: Mercato per l’Approvvigionamento a termine di Capacità di Stoccaggio Elettrico):

MACSE is a specific auction mechanism designed by Italy to procure a target amount of new battery energy storage system (BESS) capacity. Through these auctions, the government provides a guaranteed annual revenue stream (or “premium” / “award”) to successful project developers for a fixed period (for example, 15 years). This long-term revenue certainty acts to de-risks the significant upfront investment and capital for large-scale battery projects.