Italy's new regulatory framework for electricity dispatching, known as TIDE, will enter its consolidation phase on 1 February 2026 and run until 2028, as part of a broader effort to ensure system security and align the Italian power market with European standards.
A provisional version of TIDE has been in place since the start of 2025, marking the transition from a single national power price (Pun) to zonal pricing. During this transitional phase, electricity is traded at zonal prices, while market operator GME calculates a Pun index as the weighted average of those prices. Market participants receive compensation equal to the difference between the zonal price and the Pun index, effectively maintaining settlement at the Pun level.
Italy has also shortened its balancing timeframe to 15 minutes, from hourly intervals, to better integrate variable renewables and harmonise with other European markets. The change took effect for intra-day balancing auctions on 1 January and for the day-ahead market on 1 October.
Under TIDE, non-dispatchable renewable sources such as solar and wind will be allowed to participate in the balancing market. The framework also enables the aggregation of different resources, opening participation to small-scale producers and consumers, energy communities and virtually aggregated mixed units. Aggregation can take place at either zonal or nodal level, with the latter referring to smaller transmission points.
Renewable plants supported under the Fer-X contracts-for-difference scheme are required to participate in the balancing market. In the first Fer-X auction, Italian energy agency GSE awarded 7.7GW of solar photovoltaic (PV) capacity out of 8GW available, alongside 940MW of wind capacity from the 2.5GW on offer. In the second Fer-X auction, GSE awarded 1.1GW of new solar PV capacity across 88 plants, against 1.6GW available for projects using non-Chinese components.
But it is unlikely that many other renewable plants will participate in the balancing market in February. Larger units, typically thermal plants, are likely to remain dominant, meaning no immediate change in dispatching mechanisms, a regulatory affairs expert told Argus.
The growing share of renewables in the Italian power mix, and their potential contribution through fast modulation and ancillary services, represents a structural shift that could eventually alter system management, although participants expect the impact to be limited in the short term. "Many plants still face technical constraints that make it difficult to modulate quickly in both directions, as required by more dynamic services," a short-term power trader told Argus.
Some participants expect price effects to emerge later in the year. "In the second quarter, we expect effects [on prices] both from the new rules and from growing renewable generation," a trader said. "This combination could lead to generally lower average price levels, and it will be interesting to see whether the occurrence of zero prices increases, which could significantly affect imbalance prices."
The second quarter of 2025 was assessed at €105.25-128.15/MWh over December 2024 and the first week of January 2025, while the average Pun index over April-June cleared at €101.65/MWh. The second quarter of 2026 has been trading at €85.80-90.60/MWh since 1 December.
Other market experts said the shift to a 15-minute timeframe is more likely to lead to negative prices and widen the spread between midday and evening price periods.
The updated framework also introduces two new roles — the balancing service provider (BSP) and the balance responsible party (BRP) — replacing the former dispatch operator. BSPs provide balancing services to grid operator Terna, while BRPs are responsible for ensuring scheduled positions closely match real-time needs. This separation could potentially increase speculative trading, according to a trader.
To comply with European regulation, GME will reduce cross-border intra-day trading and nomination deadlines by 30 minutes from 14 January, matching the same schedule used the balancing market. Trading will close 30 minutes before delivery, instead of one hour, while nominations will close 27 minutes before delivery rather than 57 minutes. Some traders expect this alignment with balancing market timelines to concentrate liquidity closer to gate closure, allowing last-minute adjustments in response to forecast uncertainty.
Italy rejoined European automatic frequency restoration reserve platform Picasso on 25 November, after leaving it in March 2024 owing to persistent price volatility. The return was possible because of a change in the pricing algorithm designed to avoid spikes. No price anomalies have been recorded since.
