The first auctions for the acquisition of new storage capacity are scheduled for the second quarter of 2025.
MACSE has a crucial role in achieving Italy’s decarbonisation targets, with 72 GWh of storage capacity needed by 2030 in order to meet the EU’s “Fit for 55” targets. 50 GWh for new utility-scale systems would be supported through MACSE.
Most of the need for new utility-scale storage capacity is concentrated in Southern Italy and the islands, with 16.8 GWh required 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 investments in energy storage, balancing risks and returns. The MACSE auction system allows for the competition of assets with different durations and efficiencies, through the application by the TSO of adjustment coefficients to the offers, Aurora notes. Developers can benefit from the fixed fee determined at the auction for the 15-year MACSE contract, 20 percent of the profits from the Ancillary Services Market (MSD) and potential trading on the markets once the contractual period has ended.
The Internal Rate of Return (IRR) analysis highlights the financial sustainability of MACSE-supported projects. For example, projects in Southern Italy and Sardinia achieve IRRs above 9 percent despite minimal exposure to market volatility, given the high level of revenue security provided by MACSE. One element that operators will need to monitor is compliance with MACSE availability and maintenance requirements: Aurora’s report estimates for example that an 8-hour battery would need to be oversized by 18 percent to ensure compliance with the technical requirements imposed by MACSE for the entire duration of the contract.
MACSE should not be considered only as a tool to support investments in storage capacity, but should be evaluated in the context of the broader decarbonisation process of the Italian energy system. Renewable electricity production in fact needs to be complemented by technologies that provide flexibility to the system. Incentivising investments in the high-efficiency storage sector is therefore an essential step towards a sustainable and low-CO2 emission energy system.
“The ambitious target of 50GWh of new utility-scale storage capacity by 2030 makes Italy a very attractive market for investors, who can already count on very favorable investment opportunities given the expected renewable penetration” said Maddalena Cerreto, Senior Associate at Aurora Energy Research. “In fact, we expect that at the national level the volatility of market prices will significantly increase in the coming years with the growth of RES [renewable energy services], such that on average the difference between the maximum and minimum daily price of electricity will increase by around 10 euros/MWh in the five-year period 2030-2035 alone. This increase in price volatility will favour arbitrage opportunities on the markets by storage assets. Although the penetration of renewable sources can guarantee a good return on investment depending on the geographical location and the technical specifications of the asset, MACSE contracts offer protection against different risk scenarios, ensuring highly bankable projects. However, the competitive dynamics of the auction could impact the expected profitability, and it is therefore essential for developers to analyse the optimal investment strategy. Portfolio diversification, combining different business strategies and market areas, represents a good compromise between investment risk and return.”
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