The reform comes with the start of the consolidation phase of the TIDE dispatching reform and marks a shift from administratively managed reserves towards market-based procurement.
The FCR service (or primary reserve) is currently already in operation in Italy but is not open to competition. All spinning units (traditional generating assets like CCGT, hydro and coal) must reserve around 5% of nominal capacity to be available for FCR ramp-up on short notice (sub 15 seconds) for free. By opening up the FCR service to competitive, pay-as-bid auctions, the TSO and regulator will be gradually removing the free component and introducing remuneration to the service, as well as allowing all assets above 1 MW (renewables and BESS in particular) access to an additional revenue stream.
Unlike other ancillary services such as secondary or tertiary reserve, the new FCR market will sit outside Italy’s balancing market and will not be operated by market operator Gestore Mercati Energetici (GME). Instead, procurement will take place directly through the TSO Terna’s Gestione Dati Riservati (GDR) platform.
In its initial phase, the FCR market will be launched in trial mode, with only a limited number of hourly bands opened to competitive procurement, while the remainder of FCR volumes will continue to be managed under the existing arrangements. From August 2026 onwards, additional bands are expected to be progressively exposed to competition, allowing Terna to gradually test system performance and market response. This phased approach will remain in place until end-2027, when the full FCR requirement is expected to be procured through the competitive mechanism.
Regulator ARERA has recently approved new pricing guidelines for the service, under which Terna has been instructed to introduce a price cap mechanism linked to the capacity market strike price. This means that, as an attempt to limit excessive price volatility in the early phase, the capacity prices submitted into the FCR auction cannot surpass the strike price of the latest capacity market auction.
For BESS operators, the opening of FCR to competition is significant. Until now, Italy has lacked a fully developed ancillary service market, limiting the monetization of fast frequency response. From 2026, storage assets will be able to stack FCR revenues alongside existing income from balancing, and wholesale arbitrage, improving overall project economics and bankability.
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