Italy Raises BESS Auction Premium Cap as Project Costs Climb

Italy’s energy regulator Arera has approved revised terms for the Macse auction mechanism, which targets battery storage deployment by 2029, lifting the ceiling on annual support payments by nearly a quarter.

The maximum annual premium per megawatt-hour of qualified capacity rises from €22,000 to €27,000. Alongside that change, the reference investment benchmark used to set the ceiling has been revised upward — from €125,000 to €150,500 per MWh — and the weighted average cost of capital has been adjusted to 8.2%.

Commenting in PV Magazine Italy, researcher Mario Iovino pointed to rising costs as the driver behind the revision, citing higher lithium carbonate prices and the announced removal of export tax concessions by Chinese manufacturers.

The Macse mechanism locks in a fixed annual premium for fifteen years; in exchange, battery operators surrender part of their open-market revenues. The 23% expansion of the cap does not automatically translate into higher expenditure on support: competitive bidding determines what is actually paid, and each developer’s offer will reflect its own minimum acceptable return rather than any notional ceiling. The ceiling sets only the outer boundary of eligible bids.

The revised methodology is published annually and can be verified by market participants, giving developers a clearer basis for project planning. One structural constraint remains: for eight-hour storage assets, a qualification discount reduces the portion of investment value that the mechanism effectively covers, leaving developers to bridge the gap through lower project costs or retained market revenues.

Source: PV Magazine