Battery storage projects across the EU face the same core problem — how to make a merchant asset bankable — but the answers differ sharply by member state. A comparison of Italy, Germany and Spain, published by Aleasoft Energy Forecasting, shows three distinct models emerging, each with different risk allocation between developers, states and lenders.
Italy: 15-year contracts via MACSE
Italy has gone furthest in de-risking. The MACSE mechanism, managed by Terna, awards 15-year capacity availability contracts through auctions, giving lenders a long-dated, state-backed revenue stream. The first auction, held in September 2025, awarded 10 GWh of capacity with operation expected in 2028. The weighted average price came in at €12,959/MWh per year — well below the €37,000/MWh per year cap — a result that underlined how competitive the process was. Developer demand exceeded the auctioned volume by more than four times.
The second auction is scheduled for 24 November 2026, with delivery in 2029 and a reference need of 16 GWh, which may be adjusted depending on additional capacity available. ARERA has set the maximum price at €27,000/MWh per year. MACSE does not eliminate risk: project execution and battery operation risk remain with the developer, and the scheme limits how freely contracted revenue can be combined with merchant market upside.
Germany: arbitrage plus a new capacity mechanism
German projects have traditionally been financed through hourly price arbitrage and balancing-market participation, leaving developers exposed to price movements and to growing competition from new installations. That model is now being supplemented by state-backed capacity remuneration. On 2 September 2026 the European Commission approved a German capacity mechanism estimated to cost €15.6–35.2 billion, designed to secure supply from 2031, with contracts of up to 15 years open to generation, storage and demand response, both existing and new.
Germany will hold two 2026 auctions for new capacity, each for 4.5 GW of reduced capacity. The first bid deadline closed on 8 September, with Bundesnetzagentur awards expected before 3 November; the second auction will be announced on 10 November. The 2027 and 2029 auctions will be open to all technologies including storage, and a separate structural capacity mechanism is being developed for supply needs from 2032. Bundesnetzagentur is also reviewing the grid fee system, with specific proposals for storage.
Spain: hybrids and merchant exposure
Spain relies more on hybridisation with solar and wind plants and on revenues from the electricity market and adjustment services, without a consolidated capacity mechanism comparable to Italy's or Germany's. Project profitability therefore depends heavily on hourly price developments and on regulatory signals defining the storage remuneration framework.
Across all three markets, competition among battery projects will be a determining factor as installed capacity rises.
The common conclusion is that developers must refine revenue models that blend capacity contracts, price arbitrage, balancing services and renewable hybridisation, tailored to each national framework rather than transferred wholesale across borders.
Source: Energelia, citing Aleasoft Energy Forecasting
This article was assisted by AI analysis. Please refer to the original source for official information.