Italy Methodology

1. Introduction

This document sets out every rule used to compute the ME BESS IT Indices, Modo Energy's measured revenue indices for Italian battery energy storage.

1.1 Representation

The ME BESS IT Indices track the market revenue that operational, grid-scale battery energy storage systems (BESS) in Italy actually earn. They are measured indices, not simulations: every value comes from the accepted bids, offers and trades that GME, the Italian market operator, publishes for each production unit. The simulated counterpart, built on a representative battery, is the ME vBESS IT index, which has its own methodology.

An index value is the revenue earned by the assets in the index divided by their rated power. It shows what an average megawatt of operational Italian battery capacity earned on the energy and balancing markets over a period.

The index measures the gross market value of the positions each battery holds on GME's markets. It is not an asset's full cash revenue or profit: bilateral contract prices, capacity payments, imbalance settlement and costs are outside its scope (§3.2).

The index covers batteries that GME publishes individually: units above Terna's relevance threshold, each with its own offer point. Smaller batteries are traded inside aggregated units and cannot be measured asset by asset (§4.1).

Why measured revenue. GME publishes every accepted award of each relevant unit, so the revenue these batteries earn on its markets can be measured directly. A measured index shows what the operational fleet earned, including the effect of each owner's trading choices and availability. The ME vBESS IT index answers a different question: what a representative battery could earn.

1.2 Definitions

Clearing times follow the pan-European SDAC and SIDC schedules as applied by GME. Exact clock times should be read against GME's current market timetable.

2. Index construction

2.1 The ME BESS IT Indices

Modo Energy produces one national index and a family of sub-indices: one per bidding zone and one per duration band. A sub-index is published only while it meets the publication rule below.

An asset outside both bands counts only in the national and zonal indices.

Publication rule. A sub-index is published for a month only if, in that month, it holds at least three assets and no single asset holds more than 60% of its rated power. Below that, one asset's outage or trading choices would drive the value, and the sub-index would describe one battery rather than a market. Assets in a zone or band that does not meet the rule still count in the national index and in any other index they qualify for.

When a sub-index gains or loses assets.

• A sub-index starts in the first complete month in which it meets the publication rule. Its history starts that month and is not extended backwards.
• If a published sub-index does not meet the rule in a month, no value is published for that month. The national index is not affected.

Every asset is listed, except Fast Reserve units. The asset list covers every Italian battery in Modo Energy's register, whether or not it belongs to a published index, with its owner, bidding zone, rated power, energy capacity and, for an excluded asset, the reason (§5.1). Batteries under a Terna Fast Reserve contract are not shown while the contract runs (§2.2.2). Each asset's revenue, by market, is shown on its asset page and in the breakdown of every index it belongs to, together with its throughput and cycles.

2.2 Inclusion criteria

An asset is included when all of the following hold.

1. Register. It is in Modo Energy's asset register as an Italian BESS, with a nameplate power (MW) and an energy capacity (MWh).
2. Technology. Electrochemical battery storage. Other storage technologies, such as pumped hydro or CO2 storage, are not included.
3. Own offer point. It has its own GME UP, which carries no other generation or load. Assets that share a UP with co-located generation and assets inside aggregated units are not included, because their battery revenue cannot be separated.
4. Contracted capacity. An asset under a Terna Fast Reserve contract is out of the index and is not shown while the contract runs, until 31 December 2027 (§2.2.2). Capacity contracted under MACSE, whose first delivery year is 2028, is not yet covered by this methodology.
5. Commercial operation. An asset enters the index on the first day of the month after its first accepted award on a GME market. When the owner's documented commercial operation date is available, it may be recorded in the asset register with its source and replace this proxy.

2.2.1 Asset availability

Availability is assessed for each market day. An asset is active on a day if it holds at least one accepted award that day on any market in the index (MGP, MI, XBID, MSD, MB or aFRR). Inactive days are excluded from both the revenue and the divisor. This is an activity test, not an outage feed.

2.2.2 Fast Reserve units

Terna's Fast Reserve pilot (delivery January 2023 to December 2027) pays the awarded units a fixed fee to hold a fast frequency response band for up to 1,000 hours a year. Terna's auction notice publishes the awarded price of each unit, in €/MW/year. The fee is not in GME's data, which only show these batteries' market trades. Their market revenue is therefore not comparable with a merchant battery's: the hours of service are not published, and the battery must hold the contracted state of charge outside them too.

• They are out of the index and are not shown in the asset list while their contract runs, until 31 December 2027. Without the contract payment, their market revenue alone would be misleading.
• The contract payment is never added to an index value.

2.3 Asset information

Owner, optimiser, rated power (MW), energy capacity (MWh), bidding zone and dates come from Modo Energy's asset register. They reflect Modo Energy's best current view, built from public announcements, Terna and GME registry data, owner confirmations and Modo Energy's analysis. Rated power is the battery's nameplate, not its grid connection.

Two checks keep the register consistent with what each asset does on the market.

• Power check. An asset's rated power is compared with the power it offers on MGP: the 99th percentile of its offered quantities over the trailing twelve months. Offered power is used rather than awarded power because a unit may trade only part of its capacity. MSD and MB offers are not used, because they are measured from the unit's schedule and can reach twice its rated power. When offered power stays below 75% of the rated power, the gap is investigated and the register may be corrected.
• Energy check. An asset's energy capacity is compared with the largest daily swing of its net programme (§4.2), taken as the 95th percentile over the trailing twelve months. The swing is measured on the grid side, so it includes charging losses; for assets whose registered capacity is correct, it falls within 15% of it. When it departs from the registered capacity by more than 25%, the capacity is investigated and may be corrected. The duration, and therefore the duration band, follows the corrected capacity.

2.4 Index calculation methodology

The calculation is rule-based, with no discretionary adjustment. The index is computed daily:

daily index = Σ revenue of active assets ÷ Σ rated power of active assets

2.4.1 Divisor

The divisor is the sum of the nameplate MW of the assets active that day (§2.2.1). It is recalculated every day, so commissioning and inactive days are handled at daily grain. Nameplate power is used because it is the capacity owners build and finance, and it is the divisor of Modo Energy's other asset-level indices. The per-MWh and absolute views in §2.5 are alternative displays of the same revenue.

2.5 Index value representation

Index values can be normalised on two axes.

• Capacity: per MW of rated power, per MWh of energy capacity, or none.
• Time: per year (annualised), per hour, or none.

For a period, the total index value is the sum of the daily index values. Per year divides it by the number of days and multiplies by 365. Per hour divides it by days × 24. The headline unit is EUR/MW/year. All values are in euros.

Excluded assets are listed with the reason for their exclusion (§5.1).

2.6 Publication cadence and revisions

Index values are published monthly, in a single final edition, once GME has published the month's per-unit MB and aFRR data. In practice this is about two months after the month ends (M+2). No provisional edition is published. Published values may be revised (§6.4).

2.7 Published history

History starts on 1 January 2025. GME publishes every revenue stream per unit for 2025, so the same rules apply throughout. Three market changes show in the series. They are changes in the markets, not in the method.

• MGP is hourly until 30 September 2025, then quarter-hourly.
• Battery acceptances in MSD ex-ante drop to almost nothing from 1 July 2025.
• aFRR energy is settled in MB under the secondary-reserve scope until 24 November 2025, then through PICASSO. Both are reported in the aFRR energy stream (§3.1).

Each sub-index starts in its first month that meets the publication rule (§2.1): ME BESS IT Sardinia starts in July 2025 and ME BESS IT Centre-South in March 2025.

2.8 Parameters set by Modo Energy

3. Revenue components

3.1 Revenue components of the index

A battery that both charges and discharges yields one net revenue figure. Sales add to revenue and purchases subtract from it. Every executed trade counts, including positions opened and closed again (for example a sale in MGP bought back in MI, or an XBID purchase resold in the same quarter-hour): the index measures what the asset earned on the markets, not only the value of the energy it delivered.

Each accepted record is counted once.

Published markets. The index reports nine markets, with the same keys as the ME vBESS IT virtual assets. The three energy markets keep their net revenue: Day-Ahead Energy (MGP and registered bilateral schedules), Intraday Auction (MI-A1 to MI-A3) and Intraday Continuous (XBID). Each balancing service is split into an upward market, the value of the energy sold, and a downward market, the value of the energy bought, shown as a cost: MSD, MB and aFRR energy, positive and negative. A quarter-hour in which a unit both sells and buys counts on both sides. The total is the same as the net figure.

3.2 Excluded revenues

• Capacity Market and MACSE: contract-specific capacity payments.
• Fast Reserve contract payments: the awarded price is public per unit in Terna's auction notice, but the hours of service and the activations are not. It is a contract payment, not market revenue. Fast Reserve units are out of the index while their contract runs (§2.2.2).
• UVAM capacity payments: not public per unit.
• Primary reserve (FCR): Terna has bought FCR capacity in auctions since June 2026. Per-unit results are not yet part of the index.
• Secondary reserve band: not remunerated separately. Only activated aFRR energy is paid, and it is included.
• Imbalance settlement: not observable per unit. Positions are taken as the published awards. An asset's physical output can differ from its schedule, and that difference is settled outside GME's markets.
• Bilateral contract prices (PPAs, tolling, floors): not public. Some owners, Enel in particular, sell part of their batteries' output through bilateral contracts registered on GME's platform (PCE). GME shows the scheduled volumes, not the contract price. The index values these volumes at the zonal day-ahead price, as if they had been sold in the auction: the difference between the contract price and the zonal price is not known and is not in the index.
• Grid fees, levies, dispatching charges, operating and maintenance costs, degradation: site-specific and outside gross market revenue.

4. Data sources and methodology

4.1 Data inputs and visibility

Source. Every market figure in the index is computed from GME's published results. Source: Gestore dei Mercati Energetici S.p.A.

What is visible. Every accepted award of every UP on the six markets, that is, the full traded position of a relevant unit on GME's markets. For XBID, every executed trade is listed with its time and price; an order can be filled in several executions, and each execution counts. On the median day, per-unit XBID volumes add up to more than 99% of GME's published zonal XBID volumes.

What is not visible.

• Batteries inside aggregated units, and batteries that share a UP with other plants.
• Prices of bilateral contracts; only the scheduled volumes are visible.
• Imbalance, the difference between physical output and the final schedule.
• Capacity contract payments (Capacity Market, Fast Reserve, MACSE, UVAM) and FCR capacity payments.
• Hedges taken outside GME's markets (futures, over-the-counter).

4.2 Operational metrics

Operational metrics do not affect the index value. They describe how the assets operate and are shown for each asset in an index's breakdown.

• Net programme: for each ISP, the sum over all markets in the index of an asset's sold minus bought power (MW). Positive means discharge.
• Throughput: the energy of the positive part of the net programme (MWh).
• Cycles: throughput divided by the energy capacity, per active day.
• Observed energy capacity: the largest swing, within a market day, of the cumulative net programme, on the grid side; the 95th percentile over twelve months. It feeds the energy check (§2.3).

4.3 Revenue calculation methodology

• Only accepted awards count.
• Sign: an offer (sale or upward) is positive; a bid (purchase or downward) is negative.
• Energy: GME publishes the awarded quantity as an average power over the product. It is converted to energy by the product length: × 0.25 for 15-minute products, × 0.5 for 30-minute products, × 1 for hourly products.
• Revenue is computed per unit, market day and market:

revenue = Σ sign × awarded power × product length (h) × price

4.4 Data quality rules

• Duplicate rows. Exact duplicate rows, identical in every field, are removed before the calculation. Each XBID execution is kept, even when an order is filled several times.
• Register code dates. An asset's GME code is valid in the asset register from the asset's first day of operation, not from a later registration or qualification date. Every accepted award of the unit is therefore attributed to the asset.
• Valid days. One calendar of valid market days is applied to the index, to asset figures and to the operational metrics. If a market day published by GME is missing from Modo Energy's data, it is reloaded before publication; a day that cannot be reloaded is left out everywhere, never counted as zero.
• GME publication defects. Some intraday session files published by GME hold no accepted offers although the session cleared. They are not imputed.
• GME republications. Data are re-read when the monthly final edition is produced. Republications after publication follow §6.4.

4.5 Expert judgment

Judgment is confined to the asset register (rated power, energy capacity, dates, flags) and to applying the inclusion criteria (§2.2). There is no discretion on prices, volumes or the formula, and revenue performance is never an inclusion criterion. Register corrections and inclusion decisions are made by the Modo Energy analysts who maintain the index, on the evidence described in §2.3. Register values and exclusions are dated in the asset register, each exclusion with its reason, and they are reviewed with the release checks (§7.1) before each publication.

4.6 Market disruption and missing data

Values are published only once the month's per-unit data are final (§2.6). If GME publishes late, publication waits. There is no fallback source. A market day missing from Modo Energy's data is reloaded from GME; a day that cannot be reloaded is left out of the index and of every related figure, never counted as zero (§4.4). If a market is suspended or decoupled, the index reflects the awards GME publishes for that period. No value is estimated or modelled.

5. Governance and compliance

5.1 Transparency

The methodology is public. The asset list covers every Italian battery in the register, in or out of a published index (§2.1), except batteries under a Fast Reserve contract (§2.2.2), with its owner, bidding zone, rated power, energy capacity and, for an excluded asset, the reason. Asset-level revenue is published on each asset's page and in each index's breakdown (§2.1). Every change is recorded in the change log (Appendix I).

6. Methodology changes

6.1 Versions

Each version of this methodology is numbered and dated in the change log (Appendix I).

6.2 Internal review

The methodology is reviewed internally by the Modo Energy team that maintains the index. A review may be prompted by a change in Italian market design or regulation (GME, Terna, ARERA), a change in a source data series, an excluded revenue stream starting to apply (MACSE), or the end of the Fast Reserve contracts in December 2027.

6.3 Material and non-material changes

Changes are classified as material or non-material. A change is material where it may meaningfully affect benchmark values, the inputs used, or what the benchmark measures. Material changes are announced with not less than 30 days' written notice before they take effect, together with an impact analysis.

Non-material changes are corrections and clarifications that do not alter the substance of the methodology. They may be made without prior consultation and are disclosed as soon as practicable.

Emergency changes needed to protect the integrity of the benchmark or to comply with law may be made without prior consultation, with notice given as promptly as circumstances permit.

All changes are recorded, with their effective date, in the change log.

6.4 Errors and revisions

A methodology change applies from its effective date. Published values may be revised, for example when GME republishes data or when an error is found in the data or the calculation.

7. Consistency and continuity

7.1 Quality assurance

The checks run before each release include:

• duplicate rows per market and day;
• day coverage per market and intraday session;
• per-unit XBID volumes against GME's zonal results;
• per-unit aFRR volumes against ENTSO-E's national activations;
• the power and energy checks (§2.3);
• consistency between each asset's scheduled sales and purchases;
• the list of excluded assets and their reasons, Fast Reserve units included (§2.2.2);
• new storage units in GME's data not yet in the asset register;
• month-on-month moves above 30% for any asset.

7.2 Checks against metered data

Where ENTSO-E publishes them, metered output per unit (batteries of 100 MW and above) and per bidding zone is compared with the net programme of the index assets (§4.2). A large gap is investigated. These checks do not change index values.

7.3 Data integrity and continuity

GME data are stored as loaded, together with the dated asset register, so a published value can be recomputed with the methodology version in force.

8. Limitations

• Coverage. The index measures batteries with their own GME unit. Batteries inside aggregated units, or sharing a unit with other plants, are not measured (§4.1).
• Concentration. A few owners hold most of the rated power, and some bidding zones hold only a few batteries. One owner's trading choices or one asset's outage can move an index, especially a sub-index. Sub-indices are published only when they meet the publication rule (§2.1).
• Thin markets. Some markets clear small volumes, such as MSD ex-ante since July 2025. On such markets a few awards can drive a month's value.
• Positions, not physical output. The index values each unit's accepted awards. Imbalance, capacity payments and costs are outside it (§3.2). In a few quarter-hours, a unit's awards add up to more than its rated power, for example a day-ahead sale plus an upward balancing activation. The index counts both, while the physical shortfall is settled as imbalance. This is rare: in 2025 and 2026 it concerned about 0.2% of quarter-hours and less than 0.1% of the index's revenue.
• Bilateral schedules. Bilateral contracts registered on GME's platform are valued at the zonal day-ahead price, because their contract price is not public (§3.2).
• Publication lag. MB and aFRR data arrive about two months after the month ends, so the index is published at about M+2 (§2.6).
• Contracted assets. Batteries under Fast Reserve contracts are out of the index and not shown until the end of 2027 (§2.2.2), which lowers the number of assets in some zones.

Appendix I: Methodology changes

Disclaimer

This document, including the methodologies and indices described herein, is the proprietary work of MODO ENERGY LIMITED ("Modo Energy") and is provided solely for informational purposes. These indices are designed for use in financial analysis, benchmarking, and decision-making. They do not constitute investment advice or a recommendation regarding any specific financial instrument, asset, or strategy.

While Modo Energy strives to ensure the accuracy, reliability, and transparency of the indices and methodologies, all information is provided "as is", without any express or implied warranties, including but not limited to warranties of merchantability or fitness for a particular purpose. Users should be aware that the indices are derived from publicly available market data that may be subject to revisions, delays, or inaccuracies, and that the ME BESS IT Indices measure the market positions published by GME for each unit rather than the full revenue of each asset. Past performance is not indicative of future results, and external factors such as regulatory changes, market conditions, and asset-specific characteristics may impact index performance.

Modo Energy encourages users to conduct their own due diligence and consult with qualified professionals before making any investment or operational decisions based on the indices or methodologies herein. Modo Energy disclaims any liability for direct, indirect, incidental, or consequential losses or damages arising from the use of the indices, methodologies, or related data.

It is not possible to invest directly in an index. Indices are intended to represent performance benchmarks, and exposure to an asset class represented by an index may be available only through separate investable instruments. Modo Energy does not sponsor, endorse, or manage any financial products that aim to track the performance of its indices.

All intellectual property rights to the indices and methodologies are owned by Modo Energy. Unauthorised use, reproduction, or redistribution of this document, in whole or in part, is strictly prohibited without prior written consent from Modo Energy. This document and the indices it describes are subject to updates and revisions. Significant changes will be communicated to stakeholders as appropriate. For further information, including licensing inquiries, please contact Modo Energy directly. By accessing or using this document, you acknowledge and accept the terms of this disclaimer.