The Italian battery playbook 2025: How to make money with storage
Source：www.ess-news.com
Mauro Moroni offers a quick guide to revenue streams for Italian battery energy storage systems (BESS), including the MACSE procurement, the Testo Integrato del Dispacciamento Elettrico (TIDE), zonal spreads, and the capacity market (CM).
By Mauro Moroni, Sep 05, 2025
A battery plant in Assemini, in Cagliari, Italy. | Image: Eni/Plenitude
Everyone’s talking about batteries. Politicians, utilities, investors: it seems like the magic word that solves every transition problem. But the truth is that not all standalone BESS applications are created equal. Some guarantee solid returns, others rely only on optimistic scenarios, and still others risk turning into traps.
BESS aren’t black boxes that store energy and generate revenue. They’re complex tools, halfway between industry and finance. They only work if the business model is clear and those who manage them know how to navigate markets, regulations, and volatility.
But there’s a new development: a drastic drop in investment cost has lowered break-even thresholds. This means that more models are now becoming bankable and scenarios that until recently seemed borderline are finally entering investor radars.
So let’s sort out the various opportunities the market offers us and see where BESS will really make money.
1. MACSE and the CM
The MACSE’s [Mercato a termine degli stoccaggi] debut is just around the corner: September 2025, with 10 GWh up for tender, contracts up to 15 years, and a starting price of €37,000 ($43,000) per megawatt-hour. For BESS, it’s the backbone of bankability: stable cash flow, managed operational risk, and flowing project finance.
What is it, in clear and simple terms?
Capacity (not energy) is procured by Terna through a reverse auction. BESS owners bid for availability at a regulated price; the one who bids the least wins. After the auction, the purchased capacity is made available on the market through GME [the Gestore dei mercati energetici], so it can be used for temporal energy shifting (arbitrage) and for system stabilization during critical moments. MACSE obligations include minimum performance, a delivery window, penalties for non-delivery, technical requirements (for durability, power, efficiency), and timely monitoring.
Why banks like it: Predictable flows (via payments for availability), solid counter-parties, and measurable risks. Those seeking stability love it. Those seeking extra margins criticize it: the fixed price limits upside.
The operational truth is that MACSE is the industrial foundation upon which to build capacity and a supply chain. The winning formula will be a hybrid model featuring a portion of the plant tied to MACSE (for stable cost coverage and serene debt), and a portion left to merchants for arbitrage and services (via TIDE at 15-minute intervals, UVAM [the Unità Virtuali Abilitate Miste], [and] MSD [the Mercato per il Servizio di Dispacciamento]), where the extra profit is at stake.
At the same time, the CM remains the cornerstone of the Italian electricity system’s security. The February 2025 auction, for the 2027 delivery year, assigned approximately 38 GW of existing capacity and nearly 600 MW of new capacity, over 90% of which was BESS. The equilibrium price stood at around €47,000/MW/year: not explosive but sufficient to ensure project stability.
The next CM auction, for the 2028 delivery year, is expected between late 2025 and early 2026, following the first MACSE auction, in September.
MACSE and the CM have different roles: For the country’s energy system, they complement each other: the CM ensures overall capacity, while the MACSE promotes long-term storage. These two tools, when combined, strengthen the grid’s security and flexibility. For individual projects they are alternatives: A BESS cannot be paid twice for the same capacity. In practice, the system benefits from both but each individual facility must choose which door to knock on.
For the investor, this means carefully evaluating which mechanism offers the best combination of stability and returns and then integrating it with the merchant quota.
2. Revenue stacking
A battery doesn’t have to choose: it can perform arbitrage, provide frequency regulation, sell capacity, or cover a PPA [power purchase agreement]. The real art is doing it all together, dynamically allocating power and energy in different windows of the day (and year), while respecting technical and contractual constraints.
And here’s the thing, it’s not the list of services that creates value; it’s how you combine them across time and available power.
Polytechnic University of Milan professor Maurizio Delfanti has summed up batteries by stating: “BESS produce many benefits but you need to know how to combine them together. It’s not a simple algebraic sum; we could call it a vector sum.”
Translated into practice that means advanced EMS [energy management systems], forecasting (of prices, weather, and loads), priority rules, and service suspension – when one “eats” another’s margin. Without these building blocks, the revenue vector remains short and poorly oriented.
Revenue stacking requires algorithms, reliable telemetry, near-real-time trading, and strict discipline regarding SOC [state-of-charge], degradation, and penalties. With declining investment costs, it is now the most powerful strategy for extracting value from every cycle.
Within stacking, the most relevant pieces today are energy arbitrage and ancillary services. Arbitrage – the “old school” kind: buy low and sell high – remains volatile today but in areas like Sicily and Sardinia, day-ahead spreads are still 40% higher than in the North. Integrated into stacking, it becomes gold again. Ancillary services are the invisible part that supports the system: frequency regulation, rapid reserve. In Italy, TIDE still earns little and power matters more than capacity but as part of a well-orchestrated stacking system, they add stability to revenues.
For investors, stacking potentially offers very high returns but it is not for those seeking comfort. It requires structure (a team, EMS, and risk management) and governance. It’s the best way to boost IRR [internal rate of return] without losing control of risk.
3. Tolling contracts
These are still not very widespread in Italy but are destined to grow. Tolling works with the investor making the battery available to a trader or utility in return for a fixed (or semi-fixed) flow. Whoever manages the battery assumes the market risk and any upside.
For infrastructure funds, this model is gold: it transfers operational complexity to those who know how to trade. Falling costs have made margins more comfortable and today there’s room to reward both investors and traders.
The limit? In hyper-profitable markets, the owner only sees fixed income. The advantage? There’s no need for an in-house trading desk.
For investors it represents a “comfort” contract. It doesn’t maximize returns but it reduces risks and is starting to appeal to banks. Pay attention to the term and price.
4. PPA: conditional stability
Power purchase agreements provide visibility and certainly make sense for solar-plus-BESS hybrid projects but not all prices are the same. Below €65/MWh to €75/MWh, a project struggles to sustain itself; above €80/MWh to €90/MWh, it enters the comfort zone.
The risk? Locking in low prices and forgoing upside. The benefit? Stabilizing revenues and facilitating finance.
For the investor it is good as a partial hedge but not as the only leg of the table.
In summary
Anyone who thinks that MACSE is the only way to create standalone BESS is missing the point that we are on the first step in a major revolution.
BESS are both industrial and financial assets. To function, they require:
a strategy (location makes a difference);
operational intelligence (regarding algorithms, forecasting, and trading);
entrepreneurial courage (accepting volatility and risk); and
commercial engineering (knowing how to stitch together, in a well-conceived strategy, MACSE, the CM, tolling, a PPA, and stacking).
Italy is doing its part: MACSE, the CM, TIDE, 15-minute markets, and zonal spreads are opening up new opportunities. Not to mention FER [Fonti di Energia Rinnovabile] Z, the opportunities for which we will explore in greater detail in a future article.
The stage is set. Now we need real players, not spectators. Batteries aren’t appliances, they’re infrastructure, margins, and the future. Those who invest now lead and those who wait will arrive late: the table will already be set.
From pv magazine Italia.