This latest update reflects revised assumptions on the electricity mix, including lower demand projections and adjusted renewable capacity outlooks for onshore and offshore wind. The deployment and geographical distribution of battery energy storage systems and other flexibility assets, such as pumped hydro, have been reassessed based on capacity mechanism results, planned MACSE auctions, and announced projects.

Key changes in assumptions:

• Updated electricity mix assumptions with lower demand projections, discounting demand growth due to hydrogen production
• Reduced offshore and onshore wind capacity. Onshore wind curve has been adjusted downward to reflect the negative signal from the undersubscribed transitory FER X auction’s wind segment. Offshore wind forecast has also been adjusted downwards post a review of the interconnection queue.
• BESS deployment and distribution of the BESS (and flexiblity in general which includes pumped hydro) has been reassessed based on capacity mechanism auction, planned MACSE auctions, planned projects etc.

𝗠𝗮𝗶𝗻 𝗰𝗵𝗮𝗻𝗴𝗲𝘀 𝗶𝗻 𝗺𝗲𝘁𝗵𝗼𝗱𝗼𝗹𝗼𝗴𝘆

• Intraday auction and continuous revenue projections now take into account the growth of the intraday volume with the increasing renewable production in Italy as well as the cannibalisation effect of BESS on the revenues. The methodology also now takes into account the fact that revenues on the intraday are higher for 3 and 4h BESS than for 2h BESS.
• Future flexibility is now estimated accounting not only the net technical flexibility demand, but also the cost rationality of installing flexible storage assets, by comparing the Levelized Cost of Storage with the daily spread on the day-ahead market.

𝗠𝗮𝗷𝗼𝗿 𝘂𝗽𝗴𝗿𝗮𝗱𝗲𝘀 𝘁𝗼 𝘁𝗵𝗲 𝗖𝗢𝗦𝗠𝗢𝗦 𝘀𝗶𝗺𝘂𝗹𝗮𝘁𝗶𝗼𝗻 𝘁𝗼𝗼𝗹

• Asymmetric prequalification to MSD and MB is now enabled in COSMOS, enabling the BESS to capture higher revenues on MSD and MB when prices are higher in one direction.
• The dispatch strategy has been optimised to maximise BESS cycling.

Learn more: Price Forecast. Italy. S2. 2025

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