News
01/09/26
Q&A: Macse and CM expand options for Italian Bess
Q&A: Macse and CM expand options for Italian Bess
London, 1 September (Argus) — The co-existence of the capacity market (CM)
mechanism and the Macse incentive scheme this year offers many options for
battery energy storage systems (Bess) operators, Optimize Energy country manager
Pablo Lopez de Rego Lage told Argus . Which of the two mechanisms is more
attractive for Bess? There is no universally correct answer — it depends on the
investor, the portfolio structure and the risk-allocation strategy. Both
mechanisms ultimately serve the same fundamental purpose: providing a contracted
revenue base that help make a Bess project bankable. The choice between them is
therefore a strategic portfolio decision, rather than a project-level one. Bess
assets are following, at an accelerated pace, the same path that renewables took
over nearly a decade — from dependence on public support schemes to a mature
ecosystem of contracted revenue structures, power purchase agreements and direct
market participation. The difference is speed, enabled by the availability of
proven financial models and a regulatory environment that has rapidly developed
bankability tools specifically for storage. Developers managing diversified
pipelines increasingly build an optimal mix of Macse, CM and private structures
— such as tolling agreements, floor contracts with revenue sharing, and merchant
arrangements — tailored to the overall risk-return profile of their portfolio.
Macse — with its 15-year duration and public offtaker — can become the
foundation that helps stabilise the portfolio cash flows and lower the cost of
capital; the CM and alternative structures allow to capture flexibility and
upside potential. The second Macse tender has already been scheduled for 24
November, while the CM auction for 2029 delivery has been pushed "past the
summer break". If the CM auction were to be held after the Macse one, would that
timeline be intended to discourage Bess from participating in the former? The
interpretation is understandable, but probably incomplete. Grid operator Terna
treats the two mechanisms as communicating vessels: final Macse procurement
volumes may be adjusted close to the auction to reflect capacity already
procured through the CM, and vice versa. Since the incentive mechanisms are
mutually exclusive, capacity contracted under Macse cannot be offered again into
the CM. The sequencing therefore reduces the pool of Bess capacity available for
the second mechanism, but the effect is structural rather than punitive. The
more interesting question is whether this framework is sufficiently adapted to a
market in which sophisticated operators increasingly optimise asset allocation
between the two mechanisms using complex portfolio-management strategies. Energy
regulator Arera has proposed annual maximum remuneration for the second Macse
tender of €22,000/MWh/yr, well below the 2025 level. What are your expectations
for the premium after the first auction held in September last year surprised
everyone on the downside? The outcome of the first auction — approximately
€13,000/MWh annually, compared with a reserve premium of €37,000/MWh — was not
an accident. It reflected a rational combination of structural factors that are
unlikely to be repeated: an already-developed project pipeline, available grid
connections linked to decommissioned capacity, lower equipment costs and a
market eager to secure the first long-term bankable contract in the Italian
storage sector. In that environment, Macse was effectively the only available
bankability vehicle. For 2026, the context has changed. Tolling agreements,
floor structures with revenue sharing, settlement-based swaps, and combinations
involving the CM now represent credible alternatives. This changes how
sophisticated operators price their bids. The premium is no longer determined
solely by capital expenditures or by Macse being the only bankable structure
available, but also by the opportunity cost relative to these alternatives, the
investor's return targets and the project's role within a broader development
pipeline. The price offered into Macse implicitly reflects the level of
contracted revenue that a developer wants within its overall portfolio mix,
while recognising that competitors may have very different cost structures and
return requirements. On the equipment side, trends in commodity markets and
evolving Chinese export conditions introduce uncertainty that could
significantly influence bidding levels. With more than 32GWh in advanced
permitting stages against a requirement of 16GWh, competitive pressure remains
intense. However, the final clearing price will reflect the quality of each
operator's value chain, as much as broader market conditions. Enel secured over
60pc of available capacity in the first Macse auction. Is there a risk of market
concentration in the coming tender? The Macse framework does not include any
award cap for a single operator or corporate group. The issue is already being
discussed by regulators. In its comments to the February 2026 CM consultation,
solar association Italia Solare explicitly called for the introduction of such
limits, acknowledging the excessive concentration observed in Macse auction
outcomes. For the second auction, however, the rules remain unchanged. Several
structural factors continue to favour large players: extensive authorised
project pipelines in eligible zones, economies of scale in equipment
procurement, shared grid-connection infrastructure across multiple assets and
the ability to spread development costs across larger portfolios. These
advantages create a structural gap that is difficult — but not impossible — for
smaller developers and investors to overcome. Will Bess also dominate the CM for
2028 delivery, or will there be room for combined-cycle gas turbines (CCGTs)?
The answer depends primarily on derating factors. Terna has proposed reducing
the coefficients applied to batteries — a four-hour storage system would see its
qualified capacity fall from 67pc to 53pc of nominal power. Each MW of battery
capacity would therefore contribute less to the auction, creating more room for
other technologies and likely pushing clearing prices upward. In such a
scenario, the most efficient CCGTs could become competitive again. However,
there is a more fundamental dimension. Bess and gas-fired generation provide
different and complementary adequacy services: batteries excel at rapid response
and energy arbitrage, while CCGTs provide dispatchable generation during periods
when renewable output is insufficient. The key variable will not simply be who
participates and at what cost, but whether the CM design is calibrated to
properly recognise this complementarity. By Ilenia Reale Send comments and
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