Italy’s MACSE: What Low Tariffs Mean for Green Tech

Why Italy’s MACSE Auction Matters for Green Technology

MACSE tariffs for grid-scale batteries in Italy cleared at levels that stunned the market. Yet those same low numbers may quietly accelerate some of the most important green technology in Europe.

This matters because battery energy storage systems (BESS) are the backbone of a renewable grid. Without storage, Italy can’t rely on its fast-growing solar and wind fleets. And without smart asset management, storage projects can’t survive on lean revenue streams from MACSE and the capacity market.

Here’s the thing about Italy’s first MACSE auction: it exposed how competitive the storage market has already become, but it also highlighted exactly where value will come from next—technology, optimisation, and smarter risk-sharing.

In this article, I’ll break down what MACSE really changes, how asset managers are responding, and where AI-enabled optimisation fits into the future of green technology in Italy and across Europe.

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MACSE, Capacity Market and the New Economics of Storage

Italy’s MACSE scheme and the capacity market (CM) define the long-term revenue backbone for grid-scale BESS. Both are managed by Terna, the Italian TSO, and both now look increasingly competitive.

What MACSE did to storage revenues

The first MACSE auction awarded 15-year contracts to about 10GWh of storage, with Enel capturing roughly 65% of the awarded volume. The surprise wasn’t the volume; it was the tariff level. Clearing prices came in far lower than developers had pencilled in their models.

That tells you three things immediately:

1. Industrial players are confident – Enel and other winners clearly believe they can build and operate assets profitably at those levels.
2. Costs have fallen faster than expected – from battery prices to EPC and grid connection, large portfolios with brownfield options have a cost advantage.
3. Merchant upside and optimisation are no longer optional – projects can’t rely on MACSE alone. They need active market strategies layered on top.

The capacity market adds another long-term anchor. CM contracts can also last up to 15 years, creating a dual structure of regulated-like floor income plus merchant and ancillary upside. Over time, as more storage enters MACSE and CM, those tariffs will tend to fall further, but the relative value of flexibility assets should climb as renewables saturate the grid.

The reality? BESS operators are moving from a simple “contract and forget” model to a multi-revenue, optimisation-heavy business.

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How BESS Asset Management Is Evolving in Europe

Across Europe, BESS asset management has split into two broad models: contracted and merchant. The winning projects under MACSE will often blend both.

Contracted models: tolling and revenue stability

In a tolling agreement, the trader (or optimiser) pays the BESS owner a fixed fee and takes over commercial operation of the asset for several years, often 5–7. The trader manages:

• Participation in the Day-Ahead Market
• Intraday trading
• Ancillary services (frequency response, balancing, etc.)
• Time-shifting to arbitrage price spreads

The owner gets predictable, bankable cash flows that help with project financing. The trader takes the market risk but also captures the upside if their optimisation strategy outperforms.

This model works particularly well when:

• Debt providers prioritise cash flow certainty
• Owners don’t want to build in-house trading desks
• The trader has sophisticated forecasting and optimisation tools

Merchant and profit-sharing models

On the other side, merchant BESS assets rely heavily on spot markets, balancing services, and ancillary revenues. Here, a profit-sharing setup is common: the trader and asset owner split the net profit according to a pre-agreed formula.

This structure:

• Aligns incentives on both sides
• Shares both risk and opportunity
• Encourages aggressive optimisation, since both parties win from better performance

As MACSE and CM tariffs become more competitive over time, I expect more projects to shift from pure fixed-fee models to hybrid or profit-sharing arrangements. Long-term contracted revenue will still anchor the business case, but the real differentiator will be how much additional value your optimiser can extract from the market.

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The New Playbook: Optimising BESS Under Thin Margins

When tariffs come in low, performance mistakes get expensive. Every percentage point of utilisation, efficiency, or degradation now matters.

Key levers to maximise BESS returns

Experienced optimisers like Ego Energy (now part of Shell) approach BESS as a multi-dimensional optimisation problem. For each asset they look at:

• Nominal power and usable energy capacity
• Location and local grid constraints
• Expected commercial operation date (COD)
• Technical parameters such as round-trip efficiency, ramp rates, and degradation curves

From there, they orchestrate:

• Short-term optimisation – Day-ahead, intraday, and real-time dispatch based on price signals and system needs.
• Long-term price fixing – Hedging strategies that secure margins over months or years.
• Ancillary services participation – Frequency response, balancing reserves, and congestion management.
• Time-shifting of renewables – Aligning solar and wind output with evening peaks or high-price periods.

The more flexible and intelligent the optimisation layer, the more value you can stack on top of relatively low MACSE tariffs.

Where AI and digital platforms step in

Modern BESS management leans heavily on data science and IoT:

• Real-time plant monitoring across thousands of data points
• Predictive models for price, demand, and grid constraints
• Battery degradation models that link dispatch patterns to state-of-health
• Automated dispatch decisions, executed within seconds

AI-driven optimisation is particularly powerful in three areas:

1. Forecasting volatility – Better forecasts mean more accurate positioning for price spikes or ancillary calls.
2. Scenario-based decision-making – Evaluating millions of potential dispatch paths and selecting the one with the best risk-return profile.
3. Degradation-aware dispatch – Avoiding cycles that generate marginal revenue but accelerate wear, especially when replacement capex is high.

For investors serious about green technology, the message is blunt: the value isn’t just in the hardware anymore. It’s in the software and the team operating it.

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Balancing Profit and Battery Health

Running a BESS is a constant trade-off between short-term profit and long-term asset value. High cycling earns more today but shortens the useful life of the cells.

Technical constraints are non-negotiable

Serious asset managers treat technical limits as hard boundaries, not guidelines. That means:

• Respecting state-of-charge (SoC) limits
• Controlling C-rates (charge/discharge power relative to capacity)
• Managing temperature windows
• Following OEM warranties to preserve coverage

Ego Energy describes “full respect of any technical constraints” as mandatory and continuously monitored. That’s not just engineering pride; it’s economic logic. Violate constraints, and you’ll face:

• Faster capacity fade
• Higher replacement costs
• Warranty disputes
• Unplanned downtime

How optimisation tools protect cell health

Well-designed optimisation platforms embed degradation costs into every dispatch decision. In practice, this means assigning a shadow cost to each additional cycle or to aggressive operating regimes.

For example:

• If the market spread is €20/MWh but the marginal degradation cost is equivalent to €15/MWh, cycling is still attractive.
• If the spread drops to €10/MWh, the platform may choose not to dispatch, preserving long-term value.

This is where AI and green technology intersect neatly: the smarter the model, the closer you get to the true economic optimum between short-term revenue and long-term health.

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Risk-Sharing, Co-Location and the Next Phase of Italy’s BESS Market

Low MACSE tariffs are pushing the Italian market toward more sophisticated risk-sharing structures and smarter project configurations.

How risk is being shared today

There are two main risk-sharing relationships to understand:

1. BESS owner vs trader/toller

   • Tolling: trader takes almost all commercial risk, owner gets fixed income.
   • Profit-sharing: both share upside and downside.

2. Developer vs investor

   • Developers are often compensated through earn-out structures, where payments are tied to milestones such as permits, grid connection, and final contracted revenue levels.
   • Investors get a clearer risk profile once MACSE, CM, and key offtake or tolling agreements are locked in.

The trend is clear: financial engineering is catching up with technical engineering. Storage is becoming a mature infrastructure asset class, with nuanced risk allocation instead of simple one-size-fits-all PPAs.

Standalone vs co-located storage in Italy

Italy has a quirk that many other markets don’t: ARERA rules mean there’s essentially no difference in energy cost for charging a BESS whether it’s physically co-located with a plant or not, as long as you structure things correctly.

That opens up two strategies:

• Physical co-location – Storage on the same site as solar or wind, sharing grid connection and benefiting from on-site flexibility.
• Virtual co-location – Separate assets managed under a combined commercial strategy, giving the trader flexibility without physical integration.

Traders and optimisers like co-located projects because BESS can reshape the profile of a PPA:

• Smoothing out production
• Shifting delivery to higher-price hours
• Reducing imbalance costs

In a market where MACSE and CM revenues are tight, this kind of portfolio-level optimisation becomes a major source of additional value.

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What This Means for Green Technology Investors and Developers

Most companies looking at storage in 2025 still underestimate how quickly revenue structures can change. Italy’s MACSE is an early warning: if you’re not planning for long-term competition and falling tariffs, your business case is fragile.

Here’s a better way to approach Italy’s BESS opportunity:

• Anchor your project with long-term contracts like MACSE and capacity market revenue, but don’t depend on them for your entire return.
• Select a trader/optimiser with real technological depth – proven data platforms, degradation models, and a track record in ancillary and intraday markets.
• Use risk-sharing creatively – combine tolling, profit-sharing, and earn-out structures so that each party owns the risk they’re best equipped to manage.
• Design with AI in mind – from day one, assume that your competitive edge will come from software and optimisation, not only battery capex.

Battery storage isn’t just a financial asset; it’s a core piece of the green technology transition. As Italy pushes more renewables onto the grid and MACSE evolves through future auction rounds, the storage owners who win will be the ones who treat asset management as a strategic discipline, not an afterthought.

The next few years will show which portfolios were built for a world of tight tariffs, complex markets, and AI-optimized flexibility. If you’re planning to be part of that story, now’s the time to upgrade how you think about BESS asset management.