Overview of revenue streams available to battery storage in the Italian market
Available Markets
In Italy, battery storage assets can participate in the following revenue streams:
Energy Markets
| Market | Granularity | Description |
|---|---|---|
| Day-ahead (MGP) | 15-minute | Main wholesale market, cleared the day before delivery, priced per bidding zone |
| Intraday (MI-A auctions + XBID continuous) | 15-minute | Position adjustment after the day-ahead close, through zonal auctions and continuous cross-border trading |
Balancing and Ancillary Services
| Service | Description |
|---|---|
| Balancing market (MSD / MB) | Terna-procured dispatching services — scheduling (ex-ante) and real-time balancing — used to keep the system in balance |
| aFRR | Automatic secondary frequency regulation, procured by Terna |
| MACSE | Dedicated storage capacity mechanism: long-term tolling contracts for new grid-scale storage, with Terna dispatching the asset |
More information on these below.
Day-ahead Market (MGP)
The day-ahead market is the primary wholesale market where most energy is traded. Key characteristics:
- Zonal pricing — each of Italy’s seven bidding zones clears at its own price, reflecting internal transmission constraints
- 15-minute granularity — aligned with the European target model
- Pay-as-cleared — accepted bids receive the marginal zonal clearing price
Batteries capture the day-ahead spread by charging in low-price periods and discharging in high-price periods. Solar-heavy southern zones and the islands show the widest daily spreads, and therefore the strongest arbitrage signal.
Intraday Market
The intraday market allows participants to adjust positions after the day-ahead market closes, through a combination of discrete zonal auctions (MI-A) and continuous cross-border trading (XBID). Prices can deviate from day-ahead as renewable forecasts update closer to delivery, creating additional trading opportunities.
Balancing Market (MSD / MB)
Italy’s balancing market (Mercato per il Servizio di Dispacciamento) is where Terna procures the resources needed to balance the system in real time. It is a pay-as-bid market, distinct from the pay-as-cleared energy markets, and historically the highest-value stream for flexible assets. Storage participation is growing as the market opens to new technologies.
MACSE Storage Capacity Mechanism
MACSE (Meccanismo di Approvvigionamento di Capacità di Stoccaggio Elettrico) is a dedicated mechanism to bring forward new grid-scale storage. Key features:
- Long-term tolling contracts awarded by competitive auction, providing revenue certainty for new-build storage
- Terna-dispatched — the system operator controls the charge/discharge schedule of contracted capacity in the energy and balancing markets
- Balancing revenue clawback — a large share of the market revenue earned by the tolled capacity is returned, so the tolling fee is the primary revenue for contracted assets
MACSE is the main driver of Italy’s near-term grid-scale storage buildout, concentrated in the southern zones where the deployment need is greatest.
What the fundamentals model captures
The Europe fundamentals model values battery storage on wholesale arbitrage across the day-ahead and intraday markets at the zonal level. Balancing-market (MSD) and ancillary-service revenues are not added within the fundamentals model; the detailed revenue split across day-ahead, intraday, balancing, and aFRR is produced separately in the Global Dispatch Model. This page describes the full market for context, but forecast battery revenues from the fundamentals model reflect the arbitrage stack.
Related Pages
- Dispatch Model – How the model optimises across these revenue streams
- Capacity Expansion Model – Projected buildout across Europe