- New report details Italy’s path to 72 GWh energy storage capacity by 2030.
ROME, ITALY (AURORA ENERGY RESEARCH) – The latest report published by Aurora Energy Research, a global provider of energy market analysis, examines the auction system of the Italian Energy Storage Capacity Procurement Mechanism (MACSE). This mechanism aims to support the installation of power storage capacity necessary to achieve the country’s renewable energy target of 131 GW by 2030. The first auctions for procuring new storage capacity are expected in the second quarter of 2025.
The updated Terna-Snam scenario highlights the crucial role of MACSE in achieving Italy’s decarbonisation targets. To meet the EU’s “Fit for 55” package goals, 72 GWh of storage capacity will be required by 2030, of which 50 GWh will be allocated to new utility-scale systems supported by MACSE. Most of this new utility-scale storage capacity will be needed in Southern Italy and the islands, with 16.8 GWh in the South, 13.6 GWh in Sicily, and 10.4 GWh in Sardinia.
Aurora’s detailed analysis highlights the MACSE mechanism’s ability to attract significant investment in energy storage by balancing risk and return. The MACSE auction system enables competition among assets with varying durations and efficiencies, with the TSO applying adjustment factors to bids, Aurora notes. Developers benefit from a fixed remuneration determined by the auction for the 15-year MACSE contract, 20% of profits from the Dispatching Services Market (MSD), and potential market trading opportunities once the contract period ends.
The IRR analysis underscores the financial sustainability of projects supported by MACSE. For example, projects in Southern Italy and Sardinia achieve IRRs exceeding 9% even with minimal exposure to energy market volatility, as MACSE provides a high level of revenue security. However, a factor that asset owners will need to manage carefully is the availability and maintenance requirements outlined in MACSE regulations. Aurora’s report estimates that projects would need to be oversized by 18% to safely meet MACSE availability requirements throughout their lifetime.
The MACSE scheme should not be assessed as a standalone policy tool for supporting storage capacity investments but rather in the broader context of transitioning towards a decarbonised energy system in Italy, Aurora assesses. Renewable generation, in fact, must be accompanied by the presence of flexible technologies within the system. Incentivising high-efficiency storage systems paves the way for a sustainable, low-carbon energy future.
Maddalena Cerreto, Research Senior Associate at Aurora Energy Research, comments:
“The ambitious target of 50 GWh of new utility-scale storage capacity by 2030 makes Italy a highly attractive market for investors, who can already benefit from very favourable investment opportunities given the expected penetration of renewable energy. Indeed, we anticipate that market price volatility at the national level will increase significantly in the coming years with the growth of RES. On average, the difference between the daily maximum and minimum electricity prices is expected to rise by approximately €10/MWh in the five-year period from 2030 to 2035. This increase in price volatility will enhance arbitrage opportunities in the markets for storage assets.
“While the penetration of renewable energy sources can ensure good investment returns depending on the geographical location and technical specifications of the asset, MACSE contracts provide protection against various risk scenarios, ensuring highly bankable projects. However, the competitive dynamics of the auction could impact expected profitability, making it crucial for developers to analyse the optimal investment strategy. Diversifying the portfolio by combining different business strategies and market zones represents a sound compromise between investment risk and return.”
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Notes to Editors:
The report “Italian Flexible Energy Market Forecast November 2024” is available now for subscribers. Get in touch for further information.
Press contact:
Gonzalo Montes, Press Officer
+34 682 414 582
Gonzalo.montes@auroraer.com
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Established in 2013, Aurora Energy Research is a leading global provider of power market forecasting and analytics for critical investment and financing decisions. Headquartered in Oxford, we operate out of 15 offices worldwide covering Europe, North & South America, Asia, and Australia. Our comprehensive services include market outlook packages for energy industry participants, advisory support, and innovative software solutions. We foster diversity with a team of over 800 experts with backgrounds in energy, finance, and consulting, offering unparalleled expertise across power, renewables, storage, hydrogen, carbon, and fossil commodities. Our mission is to ease the global energy transition through widely trusted quantitative analysis and high-quality decision support.
