Italy and Spain are moving at different speeds on capacity markets, creating a more complex revenue landscape for battery storage in Southern Europe.

Italy’s transmission system operator Terna confirmed that the main capacity market auction for the 2028 delivery period will be held on 21 December 2026, starting at 10:00. Applications opened on 20 October and close on 3 November at 12:00. Technical documentation and guarantees are due on 23 November, and participation deposits are due on 14 December.

Italy cuts BESS derating factors

The auction is accompanied by a significant change in how storage capacity is accredited. Italy’s Ministry of Environment and Energy Security approved modifications on 16 October to power accreditation coefficients, or derating factors, for storage systems. The changes include cuts of up to 47.5% in the capacity allocated to new battery storage and energy efficiency systems.

Derating factors determine how much firm capacity a BESS unit is recognised as providing. A deeper cut reduces the capacity that can be sold into the market and can materially affect project revenues and financing. Developers will need to reassess revenue models, particularly for standalone batteries that rely on capacity payments alongside energy and ancillary service income.

Spain has framework but no auction yet

Spain approved Order TED/966/2026, published on 17 September in the Official State Gazette, establishing the regulatory framework for its capacity market. However, Spain is still awaiting the first calls for bids that will define contracting conditions.

The contrast is instructive. Italy is running a mature auction process but tightening accreditation for new BESS. Spain has created the legal architecture but has not yet translated it into bankable auction parameters. For investors, Italy offers nearer-term revenue visibility with higher regulatory risk on derating, while Spain offers a framework that still needs detailed auction design.

Implications

The two markets reflect a wider EU trend: capacity remuneration is becoming a core part of storage bankability, but the rules are being refined as governments balance security of supply with cost control. BESS developers active in either market should model derating, auction timing and contract conditions together rather than treating capacity revenue as a fixed add-on.

Source: Energía Estratégica.

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