Optimising battery dispatch across Italy's zonal markets
Getting Started
The Italian dispatch model builds on the core dispatch model framework. For an overview of the dispatch model architecture and optimisation approach, see the Core Dispatch Model documentation.
For the revenue streams and market structures specific to Italy, see the Revenue Stack page.
Zonal price formation
Battery dispatch is optimised against the price of the bidding zone in which the asset sits. Because Italy clears seven zonal prices, arbitrage value differs markedly by location:
- Southern zones and islands (ITS1, ITCA, ITSI, ITSA) show the widest day-ahead spreads, driven by high solar penetration relative to local demand and limited interconnection. These zones carry the strongest arbitrage signal.
- Northern zones (ITN1, ITCN) have higher average prices but shallower spreads, as stronger interconnection and a larger thermal fleet smooth the daily shape.
Day-ahead and intraday arbitrage
The model captures value by charging in low-price periods and discharging in high-price periods, at 15-minute granularity, across the day-ahead and intraday markets. Storage competes against the rest of the fleet in each zone, so the captured spread reflects the marginal price set by the zonal supply-demand balance in each period.
Spread cannibalisation
As storage capacity grows in a zone, each additional battery flattens the same daily price cycle, so the captured spread narrows. This effect is strongest in the small, solar-saturated island zones, where a modest amount of storage can materially compress the local spread. The model reflects this: southern capture spreads plateau as buildout deepens, and the marginal value of further storage falls.
Intraday liquidity
Continuous intraday trading in Italy is thinner than in Northern European markets. Battery dispatch into the real-time and intraday stages is bounded by the traded liquidity available in each zone, which constrains how much of the theoretical spread a battery can realise — most acutely in the least liquid zones.
Storage representation
Grid-scale storage is modelled with duration-specific power and energy limits and a round-trip efficiency, with charge and discharge subject to a cycling cost. New-build storage is derated relative to nameplate to reflect real-fleet availability. The buildout itself is driven primarily by the MACSE mechanism and the residential trajectory rather than by unconstrained merchant entry — see the Revenue Stack page for MACSE.
Related Pages
- Revenue Stack – Revenue streams available to battery storage in Italy
- Core Dispatch Model – Global dispatch model architecture and methodology