Battery gold rush: How energy is creating a new market in Italy
Household electricity bills remain high, yet on the wholesale market some players can even be paid to consume energy. It is one of the paradoxes created by the growth of renewables: sun and wind generate when...
Household electricity bills remain high, yet on the wholesale market some players can even be paid to consume energy. It is one of the paradoxes created by the growth of renewables: sun and wind generate when they can, not when the grid needs them, and at times of oversupply prices can turn negative.
That is why the system needs huge batteries, BESS (Battery Energy Storage Systems), able to absorb surplus power and feed it back into the grid later on. Their role is so strategic that it has triggered a genuine gold rush, in which Italy is playing a leading part.
Batteries, 300 GW of grid-connection requests in Italy
By the end of 2025, requests to connect high- and extra-high-voltage storage systems filed with Terna had reached 300 GW. But only 56 of these had received the green light and just 6.8 GW were ready to start construction.
Installed storage plants, by contrast, had 7.4 GW of power and 17.9 GWh of capacity. Terna estimates that by 2030 the system will need around 72 GWh, rising further in scenarios to 2040.
The 300 GW requested are therefore not just projects due to come into operation soon. They are also a gigantic advance booking on the future electricity system.
In her State of the Union address on 16 September, Ursula von der Leyen recalled that in 2025 Europe installed over 80 GW of new renewable capacity, while capacity six times larger is still waiting to be connected to the grid. "We need to invest faster. Speed up grid connections. Develop storage," she said.
Germany, an even bigger race for batteries
Germany shows the same dynamic in an even more extreme form. In 2025 alone, grid operators received 18,158 applications for large-scale storage systems, totalling 573.5 GW.
The connection offers issued covered 54.2 GW; plants actually in operation from medium voltage upwards amounted to 3.6 GW.
The Bundesnetzagentur also warns that some applications are duplicates: the same developer can submit the same project at several points on the grid and decide later where to build.
In practice, even before batteries themselves, what is being bought are options.
When the banks move in: storage becomes an investment
The story of German company Kyon Energy shows how quickly the sector’s financing has changed. In January 2024 TotalEnergies bought the firm from its three founders, paying 90 million euros upfront plus further earn-outs. Kyon had already developed 770 MW and had an advanced pipeline of another 2 GW.
At the time, co-founder Philipp Merk explained that funding large batteries was still difficult: Kyon initially built with its own capital and sought bank refinancing only once plants were up and running.
Two years on, the picture is different. In 2026 TotalEnergies sold Allianz Global Investors 50% of eleven Kyon projects, for 789 MW and 1,628 MWh; in July a project financing worth around 440 million euros was announced, signed by ten financial institutions.
Structured tolling agreements, a kind of leasing of battery capacity, secure a share of contracted revenues and make cash flows more predictable.
Real value can emerge before construction
This is the mechanism described by Stefano Endrizzi, a partner at MergersCorp, who works on extraordinary finance deals in the renewables sector as well.
"How many players have the financial strength to build? Very few, perhaps one in fifty," he notes. Many, however, can lock in a piece of land and develop the project entirely on paper. Value is therefore created even before construction.
Major investment funds and energy companies or engineering, procurement and construction firms, EPCs, prefer to acquire authorised projects and move straight into the development phase: a practical way to buy time without getting lost in the maze of permitting and bureaucracy.
In Italy, the first battery auction draws a flood of bids
In Italy the competition is already visible. At the first MACSE auction in September 2025 Terna awarded 10 GWh of capacity, all in lithium-ion batteries.
Bids were more than four times higher than demand and the weighted average price fell to 12,959 euros/MWh per year, compared with a reserve premium of 37,000 euros: about 65% less.
In the meantime, capital is pouring in. In 2025 Modo Energy recorded 82 BESS deals in Europe, compared with 25 the previous year, with a declared value of 8.6 billion euros. Disclosed debt rose from 1.4 to 6.1 billion; project finance accounts for half of the transactions.
The crackdown on "ghost projects"
The European Commission has now explicitly recognised the problem. In the guidance on grid connections published in December 2025 it identifies speculative requests and projects that fail to mature as one of the causes of long queues.
It cites the hoarding of grid capacity, multiple applications for the same project and even cases where a connection is blocked with the aim of later selling on the rights.
Among the countermeasures, it suggests criteria linked to project maturity, deadlines, penalties and financial deposits that can be forfeited if the investment does not go ahead.
Italy, new rules against grid saturation
Italy has already started to change course. The "Bollette decree" of February 2026 introduced a reform to tackle the "virtual saturation" of the grid: capacity will have to be definitively allocated to authorised projects and some connections obtained by still immature initiatives may lapse.
The implementing decree from MASE was signed on 8 September; the last regulatory step from ARERA is still missing.
The paradox is that the squeeze comes after years in which Brussels and national governments tried to speed up precisely those procedures that now also have to be made more selective.
The RED III directive set shorter deadlines for many permits and provided fast-track lanes for renewables and storage linked to generation plants; in Italy, procedures for stand-alone BESS have also been simplified over time.
Energy projects: simplifying does not make everything simple
"It is an enormous job," says Endrizzi. "Even for just 4 or 5 megawatts we are talking about thousands of documents."
But the outlay needed to develop a project remains a fraction of what is required to build the plant, while an authorised project can acquire value of its own and be sold on.
And this is where a second paradox appears. To clear the queues, authorities can demand larger financial guarantees and evidence of maturity. But this makes it harder for small developers to hold a position for years, while utilities, funds and large groups have the capital they need.
The fight against speculation can therefore also promote concentration.
The land rush for renewables, BESS and data centres
The financial race ultimately comes back down to land. Solar, agrivoltaic, wind and BESS projects are all seeking sites and grid connections, while data centres are also rapidly increasing potential demand on the grid.
CREA calculates an average value of around 22,400 euros per hectare for Italian farmland in 2024 and points to the impact on prices of the spread of renewable plants; in some cases it documents solar offers in the region of 60,000 euros per hectare.
In Endrizzi’s experience, farmland in northern Italy that might be worth 15,000-25,000 euros per hectare can, once it becomes attractive for energy development, see asking prices move to around 90,000-100,000.
Because in the new energy market the value of land no longer depends only on what can grow on it. It also depends on how much power can flow past it and on the possibility of booking today a position in tomorrow’s electricity system.
The language of storage: key definitions
GW (gigawatt) - Measures power, meaning how quickly a battery can absorb or release energy.
GWh (gigawatt hour) - Measures capacity, meaning how much energy a battery can store. A system rated at 1 GW that can deliver that power for four hours has a capacity of 4 GWh.
Arbitrage - This is the mechanism by which a battery is charged when electricity is cheap, or when the price goes negative, and the energy is then sold when the price rises.
Merchant - Refers to revenues that are directly exposed to movements in the power market, without a fixed remuneration guaranteed by contract.
Tolling - An operator pays a fee to use, under contract, a battery’s capacity. The owner thereby secures a more predictable revenue component.
Pumped hydro storage - A form of storage that uses surplus electricity to pump water uphill from a lower to a higher reservoir. The water can then flow back down through turbines to generate new power.
