This paper by ERRA Regulatory Specialist, Mr. Luca Lo Schiavo analyzes the fact-finding investigation of the Italian regulatory Authority (ARERA) into economic generation capacity withholding in Italy's day-ahead electricity market, examining its methodology, findings, and the resulting controversy with the generation operator. Through a three-phase approach based on REMIT framework and ACER guidance, ARERA identified systematic capacity withholding patterns across multiple technologies (CCGT, wind, solar), with estimated price impacts of 4-12 €/MWh (depending on year, bidding zones and assumptions on variable standard costs for CCGT). The investigation sparked fierce industry opposition and parliamentary scrutiny, revealing structural challenges in regulating energy markets during the renewable transition: technical complexity, communication difficulties, and divergent stakeholder interests. In addition, it also looks at the German ‘Dunkelflauten’ investigation, also looking at issues with capacity withholding.
