Jan 8, 2026
Italy will revise its power dispatching regulations.
Italy's new electricity dispatching regulatory framework, known as TIDE, will begin its consolidation phase on February 1, 2026, continuing until 2028. This initiative aims to ensure system security and align the Italian power market with European standards.
A provisional version of TIDE has been operational since early 2025, transitioning from a single national power price (Pun) to zonal pricing. During this period, electricity is traded at zonal prices, while the market operator GME calculates a Pun index as the weighted average. Participants receive compensation equal to the difference between the zonal price and the Pun index, effectively keeping settlements at the Pun level.
Italy has also reduced its balancing timeframe to 15 minutes from hourly intervals, facilitating better integration of variable renewables and harmonization with other European markets. This change was implemented for intra-day balancing auctions on January 1 and for the day-ahead market on October 1.
Under TIDE, non-dispatchable renewable sources like solar and wind can participate in the balancing market. The framework allows for the aggregation of different resources, enabling participation from small-scale producers, consumers, energy communities, and virtually aggregated mixed units. Aggregation can occur at zonal or nodal levels, with nodal referring to smaller transmission points.
Renewable plants benefiting from the Fer-X contracts-for-difference scheme are required to engage in the balancing market. In the initial Fer-X auction, the Italian energy agency GSE allocated 7.7GW of solar photovoltaic (PV) capacity from an available 8GW, along with 940MW of wind capacity from 2.5GW. The second Fer-X auction saw GSE award 1.1GW of new solar PV capacity across 88 plants, against 1.6GW available for projects utilizing non-Chinese components.
However, it is doubtful that many additional renewable plants will join the balancing market in February. Larger units, typically thermal plants, are expected to continue to dominate, leading to no immediate changes in dispatching mechanisms, according to a regulatory affairs expert.
The increasing share of renewables in Italy’s energy mix, along with their potential for fast modulation and ancillary services, indicates a structural shift that may eventually change system management. Nonetheless, participants anticipate limited short-term impacts due to ongoing technical constraints that hinder rapid modulation, as noted by a short-term power trader.
Some market participants expect to see price effects later in the year. A trader mentioned, "In the second quarter, we anticipate influences [on prices] from the new rules and from rising renewable generation." This combination could lead to generally lower average price levels, with potential increases in occurrences of zero prices that might significantly affect imbalance prices.
The second quarter of 2025 was estimated at €105.25-128.15/MWh over December 2024 and the first week of January 2025, while the average Pun index from April to June cleared at €101.65/MWh. Since December 1, the second quarter of 2026 has been trading at €85.80-90.60/MWh.
Other market analysts suggested that the transition to a 15-minute timeframe could lead to negative prices and widen the difference between midday and evening price periods.
The updated framework also introduces two new roles: the balancing service provider (BSP) and the balance responsible party (BRP), replacing the previous dispatch operator. BSPs offer balancing services to the grid operator Terna, while BRPs ensure that scheduled positions align closely with real-time needs. This separation might increase speculative trading, according to one trader.
To comply with European regulations, GME will adjust cross-border intra-day trading and nomination deadlines by 30 minutes starting January 14, aligning with the balancing market schedule. Trading will now close 30 minutes before delivery instead of one hour, while nominations will close 27 minutes prior rather than 57 minutes. Some traders expect this synchronization with the balancing market timelines to concentrate liquidity closer to gate closure, allowing for last-minute adjustments based on forecast uncertainties.
Italy rejoined the European automatic frequency restoration reserve platform Picasso on November 25, after exiting in March 2024 due to ongoing price volatility. The return was facilitated by a modification in the pricing algorithm intended to prevent spikes, with no price anomalies reported since.
A provisional version of TIDE has been operational since early 2025, transitioning from a single national power price (Pun) to zonal pricing. During this period, electricity is traded at zonal prices, while the market operator GME calculates a Pun index as the weighted average. Participants receive compensation equal to the difference between the zonal price and the Pun index, effectively keeping settlements at the Pun level.
Italy has also reduced its balancing timeframe to 15 minutes from hourly intervals, facilitating better integration of variable renewables and harmonization with other European markets. This change was implemented for intra-day balancing auctions on January 1 and for the day-ahead market on October 1.
Under TIDE, non-dispatchable renewable sources like solar and wind can participate in the balancing market. The framework allows for the aggregation of different resources, enabling participation from small-scale producers, consumers, energy communities, and virtually aggregated mixed units. Aggregation can occur at zonal or nodal levels, with nodal referring to smaller transmission points.
Renewable plants benefiting from the Fer-X contracts-for-difference scheme are required to engage in the balancing market. In the initial Fer-X auction, the Italian energy agency GSE allocated 7.7GW of solar photovoltaic (PV) capacity from an available 8GW, along with 940MW of wind capacity from 2.5GW. The second Fer-X auction saw GSE award 1.1GW of new solar PV capacity across 88 plants, against 1.6GW available for projects utilizing non-Chinese components.
However, it is doubtful that many additional renewable plants will join the balancing market in February. Larger units, typically thermal plants, are expected to continue to dominate, leading to no immediate changes in dispatching mechanisms, according to a regulatory affairs expert.
The increasing share of renewables in Italy’s energy mix, along with their potential for fast modulation and ancillary services, indicates a structural shift that may eventually change system management. Nonetheless, participants anticipate limited short-term impacts due to ongoing technical constraints that hinder rapid modulation, as noted by a short-term power trader.
Some market participants expect to see price effects later in the year. A trader mentioned, "In the second quarter, we anticipate influences [on prices] from the new rules and from rising renewable generation." This combination could lead to generally lower average price levels, with potential increases in occurrences of zero prices that might significantly affect imbalance prices.
The second quarter of 2025 was estimated at €105.25-128.15/MWh over December 2024 and the first week of January 2025, while the average Pun index from April to June cleared at €101.65/MWh. Since December 1, the second quarter of 2026 has been trading at €85.80-90.60/MWh.
Other market analysts suggested that the transition to a 15-minute timeframe could lead to negative prices and widen the difference between midday and evening price periods.
The updated framework also introduces two new roles: the balancing service provider (BSP) and the balance responsible party (BRP), replacing the previous dispatch operator. BSPs offer balancing services to the grid operator Terna, while BRPs ensure that scheduled positions align closely with real-time needs. This separation might increase speculative trading, according to one trader.
To comply with European regulations, GME will adjust cross-border intra-day trading and nomination deadlines by 30 minutes starting January 14, aligning with the balancing market schedule. Trading will now close 30 minutes before delivery instead of one hour, while nominations will close 27 minutes prior rather than 57 minutes. Some traders expect this synchronization with the balancing market timelines to concentrate liquidity closer to gate closure, allowing for last-minute adjustments based on forecast uncertainties.
Italy rejoined the European automatic frequency restoration reserve platform Picasso on November 25, after exiting in March 2024 due to ongoing price volatility. The return was facilitated by a modification in the pricing algorithm intended to prevent spikes, with no price anomalies reported since.