Battery gold rush: How energy is creating a new market in Italy
From plans on paper to batteries up and running: how the energy market is being reshaped and energy storage is becoming ever more valuable
The energy landscape in Italy is undergoing a transformation, driven by the rapid growth of renewable energy sources and the need for reliable storage solutions. Household electricity bills remain high, but the wholesale market has a unique twist: operators can even be paid to consume energy, a phenomenon resulting from the intermittent nature of solar and wind power. Battery energy storage systems (BESS) are essential to absorb excess energy and feed it back into the grid when needed, creating a new market opportunity.
The demand for BESS in Italy is immense, with 300 GW of connection requests submitted to Terna by the end of 2025. However, only 56 GW have received approval, and just 6.8 GW are ready for construction. Installed systems currently provide 7.4 GW of power and 17.9 GWh of capacity, with Terna estimating a need of around 72 GWh by 2030, with projections rising further. These requests not only represent projects already in operation but also significant booking ahead for the future electricity system.
Ursula von der Leyen, in her State of the Union address, emphasized the need to speed up grid connections and develop storage solutions to match the rapid growth in renewable capacity. Germany has jumped on this bandwagon, receiving 18,158 applications for large storage systems in 2025, totaling 573.5 GW. However, the Bundesnetzagentur warns that some applications are duplicates, with developers submitting the same project at multiple grid points.
Financing in the storage sector has become increasingly important. Kyon Energy, a German company, exemplifies this shift. In January 2024, TotalEnergies purchased the company from its founders for 90 million euros, plus additional earn-outs. Kyon had developed 770 MW and had a pipeline for another 2 GW. Two years later, TotalEnergies sold a 50% stake in eleven Kyon projects, valued at 789 MW and 1,628 MWh, to Allianz Global Investors.
Structured tolling agreements, which secure a share of contracted revenues, help make cash flows more predictable.
Italy has also begun to address the issue of grid saturation. The Bollette decree of February 2026 introduced reforms to tackle the virtual saturation of the grid, requiring definitive allocation of capacity to authorized projects and potentially leading to the lapse of some connections obtained through immature schemes. Italy's first battery auction in September 2025 awarded 10 GWh of capacity, with bids exceeding four times the volume on offer and the weighted average price falling to 12,959 euros/MWh per year.
Capital is flowing into the sector, with Modo Energy reporting 82 BESS deals in Europe in 2025, worth a disclosed 8.6 billion euros.
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