Italy Opening New Revenue Streams For Energy Storage Systems in February 2026

Italy Launches Competitive Market for Frequency Containment Reserves, Opening New Revenue Streams for Energy Storage Systems in February 2026

Italy will launch a competitive market for frequency containment reserves in February 2026, opening new revenue streams for . The market will utilize a pay-as-bid competitive auction, gradually phasing out the existing mechanism where traditional synchronous units provide primary response within 15 seconds at approximately 5% of their rated power free of charge. It will allow all assets exceeding 1 MW of power to participate, including .

 

 

The new market will operate independently of the Italian balancing market and will not be managed by the Italian energy market operator. System operator Terna will directly award contracts through its reserve data management platform. Market deployment will be phased, with an initial testing phase opening only a limited number of time slots for competitive bidding, while the remaining demand will still be managed through the existing mechanism. New time slots will be gradually incorporated starting in August 2026, with this transitional scheme continuing until the end of 2027.

 

lithium-based energy storage solutions, stand to benefit significantly from this market opening, as their scalable battery systems are well-suited to provide fast and reliable frequency containment services. The regulatory authority ARERA has approved service pricing guidelines, requiring Terna to introduce a price cap mechanism linked to the execution price of the capacity market. Therefore, auction bids cannot exceed the execution price of the most recent capacity auction. This move marks the beginning of the integration phase of the TIDE dispatch reform and signifies a transition from an administratively managed reserve scheme to a market-based procurement model.