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Italy’s nascent market hit by post-auction BESS capex spike and ‘too many solar developers’


Italy is seeing “too many solar developers moving into storage” and issues around the spike in BESS capex costs shortly after 2022’s capacity market auction, sources told

Italy is set to soar to one of Europe’s most active large-scale battery energy storage system (BESS) markets in the coming years. But the path to getting there is not without its problems, said two developers interviewed for an upcoming feature in PV Tech Power, Solar Media’s quarterly journal on the downstream solar and storage sectors.

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“The problem that I see is that too many solar developers moved into this dramatic storage development in Italy because it looks easier, right? Because it’s way less land compared to solar,” claimed Rodolfo Bigolin, CEO and co-founder of Innovo Group. The firm is partnering with Spanish utility Iberdrola to deploy solar and storage projects in Italy through a JV, iCube Renewables.

“And the problem with that is that people are throwing around grid connection requests and they’ve secured land without the strategy, without any studies over the specific project. We believe that battery storage cannot be developed like solar. It needs much more work and analysis on every specific project,” he added.

“We’ve had half-a-gigawatt pipelines come across our desk with a point of connection of 10 or 12km, from the same people who were a year ago advising others that you can’t go beyond 2 km. But they found a piece of land and are now throwing grid connections around.”

Another issue in the Italian market is that BESS costs spiked shortly after battery storage won an unprecedented and unexpected amount of contracts in February 2022’s capacity market auctions, said Emanuele Taibi, recently appointed Italy country manager for UK’s Field which is also targeting Italy.

Taibi said the battery storage wins “…happened because the forecasts which the industry provided in terms of capex reduction were looking very aggressive, and the numbers and the caps in the capacity market auction were compatible with that. So people went into the capacity market with an expectation that they’d be able to procure storage later at a much lower price than what we’re seeing in reality today.”

“So there is a bit of an issue there, because the vision was one of a continuous smooth reduction in the capex of storage, which didn’t happen and it actually increased.”

Wärtsilä, one of the largest BESS integrators globally, for example, told in June 2022 that the BESS cost base had increased 25% year-on-year, mainly due to battery cells.

Enel was the big winner of the February 2022 capacity market auction, with 93% of the roughly 1.1GW of BESS projects awarded contracts for 2024 onwards. The Italy-headquartered utility is now starting construction on 1.6GW of BESS projects in Italy, largely to service those contract wins, it announced recently.

“Other players are still hoping to see a bit more of a decline in capex before investing,” Taibi added.

The feature on the Italian grid-scale energy storage market in the 35th PV Tech Power will explore why it is now picking up pace, the all-important reform of the electricity market by TSO Terna, and what opportunities there are. ESN Premium subscription also gives access to the PV Tech Power catalogue.

PV Tech Power 35 will be released later this month, meanwhile, you can already read PV Tech Power 34 here.

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