Italy’s market for BESS is one of the most attractive globally, underpinned by a reliable grid operator, a widening imbalance between intermittent renewables production in the south and growing demand in the north, and a robust incentive framework, notably the capacity market and more recently MACSE (an abbreviation of an Italian phrase meaning ‘electricity storage capacity procurement mechanism’).

These schemes provide basically a 15-year availability fee either with minimal merchant exposure (MACSE) or with some merchant exposure (capacity market). The first 10 GWh MACSE auction in September 2025 cleared at a surprisingly low weighted average just below €13,000/MWh per year, with most capacity awarded to state-backed utilities including Enel and Eni.

As a result, developers and investors are pivoting to private offtake contracts to secure bankable revenues outside the regulated regime. Private offtake contracts may include tolling contracts (that is, offtake contracts with a fixed price) or optimisation contracts. They are offtake contracts with a floor price, a minimum price with a sharing of the upside between the offtaker and the asset owner if there are revenues above the floor – for example a typical share involves the owner keeping 80% or 90% of the revenues in excess of the floor and the offtaker keeps the balance.

Recent transactions include Aer Soléir’s tolling with Shell in early September 2025 (with project financing), Zelestra’s tolling with BKW later that month and Sunprime’s tolling with Engie in December 2025, with several similar deals reportedly advancing. Ashurst has worked and is working on many of these transactions.

BESS offtake agreements 
On the basis of our experience the key points of a BESS offtake agreement include:

Price
Price structures now centre on two models. As noted above, tolling agreements pay a fixed fee; optimisation agreements pair a floor with upside sharing. Pricing is generally not indexed based on inflation and may be above the MACSE clearing price. Fees can step down if ancillary services are unavailable or grid charges are applied to the offtaker, except unbalancing charges which typically stay with the offtaker. (Unbalancing charges, oneri di sbilanciamento, are the charges applied in case the energy injected into the grid does not meet the estimates previously provided to the grid operator.)

Expiry
The term of an offtake agreement remains the core trade-off. Market norms range from seven to 15 years, with convergence near 10. Longer terms enable fully amortising debt but tend to compress fees, as the most profitable years for offtakers are the next few years when only few batteries will be operational and therefore trading margins for offtakers will be heftier. Shorter terms can price higher but often need debt which cannot be entirely repaid before the expiry of the offtake agreement (known as a ‘mini perm’) with a large last repayment instalment (‘balloon’) which leaves the parties with merchant refinancing risk. We see a tilt to higher fees/medium tenor/mini perm debt, especially for higher cost-of-capital sponsors prioritising front-end debt sizing.

Construction risk
Construction risk typically sits with the owner, evidenced by a target completion date with delay liquidated damages, a completion deadline protected by a termination event and a capacity guarantee with the relevant liquidated damages.

Operational phase
After completion, the owner guarantees minimum availability and energy capacity (degrading over time), with liquidated damages and termination rights if unavailability exceeds thresholds (eg 50% for six months). A BESS-specific protection is the so-called round-trip efficiency guarantee (which basically measures losses during the charge/discharge cycle), also covered by liquidated damages. The offtaker, in turn, undertakes not to exceed a certain number of cycles of charging/discharging the BESS (overcycling) through a target number of cycles with liquidated damages if exceeded and a hard cap that can trigger termination if exceeded. Overcycling under an offtake agreement must be aligned with overcycling under the long-term service agreement (LTSA) with the BESS supplier.

Termination
Termination rights extend beyond standard breaches to capture the BESS-specific failures above. Some agreements also treat a change of control in relation to the owner of the BESS as a termination event unless the new controlling party meets set criteria (for example, proven experience with comparable BESS). Damages on termination are often contentious; to simplify enforcement, some contracts use a pre-agreed termination amount, sometimes fixed for the whole term.

Credit support
Credit support is bilateral. Owners – typically project-financed dedicated vehicles/special purpose vehicles (SPVs) – post security provided by the project finance lenders. This avoids ‘intercreditor issues’ between project finance lenders and the providers of the guarantee (as both would be concurring creditors of the SPV) and such security often mirrors any agreed termination amount. Offtakers (if they are trading arms of utilities) provide parent or bank guarantees which can be as high as 50% of the contract value and which step down over time.

Project financing backed by BESS offtake
One of the main reasons for an owner to enter into an offtake agreement is to ensure certainty of revenues and therefore bankability. Key structural aspects of a project financing backed by a BESS offtake contract include:

Debt sizing 
For contracts with a price floor, lenders typically size debt on the floor and treat any additional merchant revenues cautiously. Where merchant revenues are included in debt sizing, lenders apply higher debt service coverage ratios (for example up to 1.80:1) and a key negotiation aspect is which provider of price curves, and which scenario of those price curves, should be used.

Debt to equity
The debt-to-equity ratio varies widely – from about 60:40 to 80:20 – depending also on whether the offtake stands alone or is combined with regulated revenues such as the capacity market.

Tenor
Debt tenor is usually aligned with the term of the offtake which creates the dilemma regarding the term of the offtake mentioned above.

Pricing
Pricing is transaction-specific; margins tend to be nearer 2% when revenues are fully contracted (for example, MACSE) and closer to 3% when merchant exposure is involved.

Overcycling 
A recurring topic is the treatment of the overcycling indemnity payable by the offtaker and, in particular, whether it should be applied as mandatory prepayment (on the basis that overcycling reduces the asset’s long-term cash-generation capacity) or be treated as cash available for distribution. We have seen different solutions, including a split between the two.

BESS mergers and acquisitions (M&A) 
The above new revenue structures for Italian BESS outside MACSE, together with the related financing, are restarting the BESS M&A market by providing clearer tools to assess enterprise value. Previously, in the absence of regulated revenues, the lack of predictable revenue streams made it difficult for buyers and sellers to agree on the value of a BESS project. Offtake agreements provide stable, foreseeable cash flows, giving investors clearer benchmarks on how to price these assets. We therefore expect an increase in BESS M&A going forward.

The views and opinions expressed in this article are strictly those of the author only and are not necessarily given or endorsed by or on behalf of the Energy Institute.

• Further reading: ‘Solar showdown: Italy versus Europe’. Patrick Donati, Co-Founder and Managing Director of Italian independent power producer Terrawatt, offers a comparative analysis of the renewable energy landscapes in Italy and the European Union (EU), with plans to improve connectivity between the continent’s power grids.
• ‘Pioneering the green energy revolution in the Adriatic Sea’. At a time when the need for sustainable energy solutions is paramount, AGNES (Adriatic Green Network of Energy Sources) Romagna, a startup founded in 2019 in Ravenna, Italy, is emerging as a leading player in the development of green energy hubs in the coastal and marine areas of the Adriatic Sea.