The Capacity Market rewards the availability of generation capacity to ensure the security of the power system. How it works, why it matters and what changes with the auction for 2028.
Anyone working in the energy sector knows the Capacity Market, the capacity market. But why is it so important for the Italian power system?
Updated October 2026. We have updated this article, published in October 2023, with the status of the auctions and the changes for delivery year 2028.
A bit of history
On 28 September 2003 the nationwide blackout left Italy without electricity and opened a broad debate on the security of generation. It was followed by Legislative Decree no. 379/2003, aimed at ensuring an adequate level of electricity generation capacity.
The path towards a market mechanism took several years and European approval: the first Capacity Market auctions run by Terna took place in 2019, for the delivery years 2022 and 2023.
What the Capacity Market is and how it works
The Capacity Market rewards the availability of flexible production capacity. Plants take part in auctions organised by Terna by offering a certain capacity: auction winners sign option contracts and receive a premium for each MW committed, with the obligation to make that capacity available when the system needs it.
The mechanism is part of a European framework that aims to balance supply and demand and integrate non-programmable renewables, ensuring security and stability of supply.
Where we stand
- So far Terna has held six auctions, which secured around 9 GW of new capacity.
- The most recent auction, for delivery year 2027, was held in February 2025 and awarded around 43 GW.
- The auction for 2028 is scheduled for 21 December 2026: programmable and non-programmable production units, consumption units and foreign resources can take part. New features include higher derating coefficients for batteries and photovoltaics.
Why it matters
- System adequacy: ensures the necessary capacity is available at peak times.
- Balance between supply and demand: reduces the risk of supply interruptions.
- Investment signals: encourages new capacity, storage and flexibility.
- Energy transition: supports the integration of renewables while keeping the system secure.
MAS and Capacity Market management
Taking part in the Capacity Market means managing obligations, plant availability, offers and checks in compliance with a complex set of rules. CAMPO, the IDRO Suite module dedicated to the capacity market, replicates the regulations and helps producers manage plants and participation in the Capacity Market safely and efficiently.
Sources: Il Sole 24 Ore, «Mercato della capacità, Terna fissa l'asta 2028 al 21 dicembre», October 2026.
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