During the last week of January, at Sphera Energy we organized an off-site 2025 kick-off workshop to start the year. It was an important occasion for the team reflect collectively on last year’s achievements, acknowledge the many lessons learnt and set-out clear goals and priorities for the new year.
The day-long session started with a general outlook of how we expect the year 2025 to unfold and laying out our origination, development and delivery strategy.
Very importantly, we also took time for an honest discussion to uncover and analyze those areas where we could have done better, where we learnt precious lessons, and we made a point of integrating these learnings into our future modus operandi.
We finally proceeded with a series of brainstorming and knowledge sharing sessions dedicated to four important regulatory and market topics, with the objective to ensure each team member is fully up to date and tuned-in to.
TUR – Testo Unico Rinnovabili. The introduction in late 2024 by the government of a new regulatory framework for the permitting of renewable energy projects in Italy (which covers also standalone battery storage projects) has significantly changed the outlook for new projects. Amongst various novelties, many of which more subtle, the main change has been that whereas so far the permitting authority for our utility scale BESS projects was centralized MASE (ministry of environment and energy security), the new regulation has decentralized the handling of projects >10 MW and up to 200 MW to the Regions.
MACSE – The MACSE auction mechanism is finally expected to be launched in Italy later in 2025, with the first auctions taking place supposedly before the end of the year. Under this strongly regulated government-backed revenue structure, the TSO Terna will be running auctions to procure energy storage capacity (2 buckets of technologies have been defined: battery storage and pumped hydro) to be operated according to the TSO’s algorithms and provide time-shifting and other ancillary services to the electricity market. Project owners will receive long term 15 year fixed price contracts (similar to a toll) which on one hand will leave little merchant optimization upside, but on the other will provide a very strong basis for the underwriting of equity and debt investments.
CAPACITY MARKET – With two Capacity Market auctions having been held in the second half of 2024 (for delivery in 2025 and 2026), the new year starts with the confirmation of a new auction to be held in February (for delivery in 2027) and a strong expectation of a second auction for delivery in 2028 to be held before year end. Whilst the Capacity Market mechanism is not designed specifically for battery storage, it is expected that securing a CM contract for 15 years (for new build assets) will provide a strong contracted base on which sponsors will then be able to revenue-stack wholesale and ancillary service market merchant revenues to unlock investment in projects, especially in the north of Italy where it is not expected any MACSE capacity will be awarded at least in the first few auctions.
TECHNOLOGY SUPPLY CHAIN – The pace of technological development and cost-out in the utility scale battery storage sector continues to be breathtaking. Just when the industry was getting used to a commoditization of OEM products around 20ft containerized solutions with 5 MWh capacity, a raft of recent product announcements have proven that the rate of innovation is still very steep. In the past months we have seen ever more energy-dense AC and DC block solutions being launched, with some innovative form factors and interesting modularity concepts to overcome the increasingly problematic weight constraint issues. While news is broadly very positive from the BESS OEM landscape, as sponsors we are also dedicating a lot of focus and work on other areas of the supply chain, in particular in relation to high-voltage equipment suppliers and BOP contractors.
Our 2025 kick-off event was finally concluded with a team-building laser game challenge to reinforce our competitive team spirit.
Looking ahead to 2025, we are confident that the opportunities before us are vast, and we are fully prepared to tackle them with focus and determination.
