Italy MACSE Auction Cap Rises to €27,000, but Will Bids Follow?

The first Italian battery-storage auction carried a reserve premium of €37,000 per megawatt-hour per year. It cleared at a weighted average of €12,959, roughly a third of that ceiling. That gap should change how you read the new cap for the second Italy MACSE auction.

Italy’s energy regulator, ARERA, has now set that cap at €27,000/MWh-year. The decision came in Resolution 332/2026/R/eel on 24 September 2026, and it lands above the €22,000 figure the regulator proposed in its July consultation.

The second round tenders 16 GWh of storage for 2029 delivery on 24 November 2026. It is the first test of whether the mechanism works once the novelty of its exceptionally competitive opening round has worn off.

The higher number looks generous on paper. This analysis separates the parts of the cap that carry real information from the parts that are noise, and shows where the bankability risks actually sit.

What the Italy MACSE auction is and why the cap is only a ceiling

How MACSE works

MACSE is the mechanism Terna, Italy’s grid operator, uses to buy long-term electricity storage capacity. Winners sign 15-year contracts paying a fixed annual premium per megawatt-hour of qualified capacity, in exchange for making that storage available to the system. The design targets lithium-ion batteries; pumped hydro was postponed because the regulator judged it not yet ready.

Record European battery storage additions in 2025 show how quickly the continent is scaling deployment, and why Italy’s zonal procurement sits within a much wider storage build-out.

The auction runs pay-as-bid. Each winner receives the price it bid, not a single market-wide price.

That detail matters. The cap is simply the highest bid ARERA will accept, while competition decides what is actually paid.

Capacity is procured by zone: Central-South, South & Calabria, Sicily and Sardinia. Northern Italy is excluded because the need sits where renewables are concentrated and the grid is congested. Bidders must post a pre-auction guarantee equal to 10% of qualified MWh multiplied by the reserve premium, so a higher cap also raises the cash a bidder must commit upfront.

What the first round proved

The first auction, held on 30 September 2025, awarded 10 GWh after bids exceeded the required volume more than four times. Every zone cleared far below the ceiling.

Market framing Voice of Renewables described the first round as “exceptionally competitive” and characterised MACSE as “turning battery storage into infrastructure.”

The lesson is plain. If you judge the second auction by its cap alone, you will misread the returns on offer.

How ARERA got from €22,000 to €27,000

The path ran from €37,000 in the first round to €22,000 in consultation and then to €27,000 in the final resolution. The rebound reflects new inputs rather than a change of heart.

Start with capital cost. ARERA lifted benchmark CAPEX (the upfront cost to build the system) from €125,000/MWh to €150,500/MWh, after developers pointed to higher lithium carbonate prices, the expected end of Chinese export tax incentives and rising EPC costs. EPC refers to engineering, procurement and construction, the main contractor package that delivers a project.

ARERA’s higher CAPEX benchmark runs against the broader pattern of BESS cost compression driven by manufacturing overcapacity, which helps explain why bidders may still price well below the new ceiling.

Add overplanting and construction costs, and the investment value reaches €189,790/MWh. The weighted average cost of capital (WACC), the blended return lenders and equity investors require, moved from 8.0% to 8.2% on data as of 31 August. Operating costs rise in money terms simply because they are calculated as a share of the larger CAPEX figure.

The more revealing part of the resolution is what ARERA refused. It turned down several developer requests:

• Raising the 12% oversizing coefficient, the extra battery capacity built to offset degradation
• Adjusting the beta parameter, after finding no evidence of extra degradation or added risk
• Indexing the premium to lithium prices
• Setting a separate ceiling for smaller or greenfield projects

The lithium decision has a direct cost. The cap must be published at least 60 days before the auction, so you know the ceiling in advance, but the developer absorbs any lithium price swing in those final two months.

The single ceiling cuts in a similar direction. Industry comments cited in the resolution argued that the benchmark costs reflect large installations on developed sites, which means smaller or greenfield bidders may find the headroom thinner than the headline suggests.

Is €27,000 enough? Reading the cap against likely clearing prices

Here is the tension. The ceiling has risen, yet the last round cleared at roughly half of the new cap.

No source sets an explicit bankability threshold, so the market will answer the question. The most useful counterweight to the headline comes from ICIS.

ICIS scenario (June 2026) With gas at €22/MWh, ICIS modelled a MACSE clearing price of €20,900/MWh/year, implying a national battery need of about 42 GWh by 2030.

That figure sits well below the cap, and it sits well above the first round’s outcome near €13,000. Federico Martorana of Legance has warned that the surprise of the first round could repeat, given the number of newly authorised projects in the eligible zones.

Three illustrative cases frame the reasoning. These are not forecasts:

• Near the first round (about €13,000): heavy competition returns, and returns rest on lean costs and merchant and ancillary upside
• ICIS-implied (about €20,900): a tighter field or higher costs lift bids toward a modelled system value
• Near the cap (€27,000): competition thins sharply, which the first round’s oversubscription makes harder to assume

The read you should take is that the cap marks a risk boundary. If you are building a return model, anchor it to competitive clearing scenarios well below €27,000, and treat the ceiling as the outer edge of the range.

Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors.

The annual technology study: a quiet structural change

Buried in the resolution is a procedural amendment that may outlast the headline number.

Terna’s technology study, which feeds the cost assumptions behind the cap, will now be updated every year with industry input. This amends Annex A to Resolution 247/2023/R/eel and Section 4.4 of the MACSE rules, replacing the earlier requirement to update it at least every two years. The cycle runs as follows:

1. Terna opens a public consultation lasting at least 30 days
2. Terna submits the updated study to ARERA at least 180 days before the auction
3. ARERA reviews the study and sets the premium parameters
4. The auction proceeds with the maximum premium published at least 60 days in advance

The timing gap is worth noting. No updated study was ready for this second auction, although Terna’s parameters were refreshed to reflect the latest cost data.

Volumes are also moving to an annual rhythm. Ministerial Decree 162/2026 leaves later-year quantities to yearly assessments of storage costs, gas and CO2 prices, renewables growth and Capacity Market results.

For you, the trade-off cuts both ways. Future caps should track real costs more closely, which reduces the risk of a stale ceiling, but premiums beyond 2029 become harder to predict. Investors who follow each consultation will see the next cap forming months before it is announced.

Where bankability is really decided: grid, permits and delivery

The first round gave plenty of grounds for confidence: full award, fourfold oversubscription and keen pricing. The 2029 deadline is where that confidence meets physical constraints.

Grid and Open Season

Gaetano Cassar of DLA Piper has flagged grid availability as a leading concern. New Open Season rules, introduced through an amended Article 10-bis of TU FER (Italy’s consolidated renewables law) and Ministerial Decree 291/2026, aim to clear virtual saturation. Virtual saturation occurs when connection requests occupy grid capacity that may never be used. Projects without a definitive grid reservation risk delay, and winners must be operating by the delivery date.

Italy’s virtual saturation problem has a much larger parallel in the U.S. interconnection backlog, where multi-year queue waits have made grid access a first-order valuation input for storage and generation projects.

Permitting against a 2029 deadline

Permitting for medium-to-large battery energy storage systems (BESS) typically takes 24 to 42 months. Measured from late 2026, the upper end of that range overshoots a 2029 start. Edoardo Astolfi of Project Lex has warned that this mismatch risks penalties or contract termination.

Contract and capacity-market risk

The volume itself is not fixed. The 16 GWh quota may be reduced by Capacity Market awards made before 4 November 2026, and MACSE contracts cannot be combined with capacity-market participation.

There is no single-operator award cap, so well-capitalised developers can scale their positions across zones.

The case for optimism

None of this erased appetite last time. Fixed premiums over 15 years give lenders the revenue visibility they need, provided penalties remain clear and manageable.

Even so, the screening question is simple. A project without a secured grid reservation and a credible permit path is the weak link, however attractive its premium looks.

What the second auction will and will not settle

The November result will become the remuneration benchmark for investors and lenders, and Martorana calls it the first real test of MACSE’s long-term sustainability.

It will not settle everything. The cap sets the boundary, competition sets the price, and grid access and permits decide who can actually deliver.

Three variables deserve your attention:

• The clearing price relative to the first round’s €12,959
• How far Capacity Market awards before 4 November reduce the tendered volume
• What the first annual technology study signals for caps beyond 2029

If clearing prices stay near first-round levels, the cap will have mattered far less than the ability to build on time.

Investors weighing storage against other clean energy plays can use our deep-dive into renewable energy investment opportunities to compare risk and return across technologies.

These statements are speculative and subject to change based on market developments and company performance. This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.