Battery storage is advancing across Europe, but the financing models behind it are diverging rather than converging. A comparison of Spain, Italy and Germany shows three distinct routes to bankability, in which capacity mechanisms, auction design and merchant price exposure play very different roles in determining whether a BESS project can reach financial close.

Italy: the MACSE contract model

Italy has built the most explicit long-term contracting framework of the three. The MACSE mechanism, managed by Terna, awards long-term capacity contracts providing availability remuneration over 15 years. In September 2025 Terna held the first MACSE auction, awarding 10 GWh of storage capacity with operation expected in 2028. The weighted average award price was €12,959/MWh per year, well below the €37,000/MWh per year cap — a clear signal of competitive tension, since offered capacity exceeded auction demand by more than four times.

The second auction is scheduled for 24 November 2026, with delivery in 2029 and a reference storage need of 16 GWh, adjustable depending on additional available capacity. In September 2026 the Italian regulator ARERA set a maximum price of €27,000/MWh per year for this auction, lower than the first auction's cap. MACSE revenue can facilitate financing, but it cannot be combined without restrictions with merchant opportunities for the same capacity.

Germany: a capacity mechanism approved at EU level

On 2 September 2026 the European Commission approved a German capacity mechanism with an estimated cost of €15.6bn–€35.2bn, aimed at ensuring security of supply from 2031. The mechanism includes contracts of up to 15 years and allows participation by generation, storage and demand management, covering both existing facilities and new investments under auction conditions.

Germany planned two 2026 auctions for new capacity able to guarantee supply over prolonged periods, each with 4.5 GW of reduced power. The first auction's bid submission deadline closed on 8 September 2026, with Bundesnetzagentur awards expected before 3 November, and the second auction is to be announced on 10 November. Later auctions in 2027 and 2029 will be open to all technologies, including storage, and to both existing and new capacity.

Spain: merchant signals still dominate

Spain's business case rests far more heavily on hourly price spreads, ancillary service remuneration and regulatory conditions, with project profitability determined by market operation rather than by a single long-term auction product. That makes forecasting methodology — not just capital cost — a decisive input for lenders.

Hourly prices, ancillary services and regulatory conditions determine BESS project profitability, which is why market-specific long-term forecasts are needed rather than a single European model.

The practical implication for investors is that a single pan-European storage thesis is inadequate. Auction calendars, contract durations and price caps in Rome and Berlin, and merchant price assumptions in Madrid, each require their own modelling framework.

Source: El Periódico de la Energía

This article was assisted by AI analysis. Please refer to the original source for official information.