Electricity update from Europe technology, market & regulation: the case of Italy

Electricity in Italy, the UK and Spain lessons learnt and future directions A seminar from IVA s Electricity Crossroads project. Electricity update from Europe technology, market & regulation: the case of Italy Maurizio Delfanti maurizio.delfanti@polimi.it Politecnico di Milano Department of Energy

Index 2 Italian electricity scenario RES-E support schemes: principles and results Technical issues for T&D networks: innovative requirements for DG technical connection rules Regulation-driven projects / innovations: smart distribution grids storage operated by TSO evolution of dispatching incl DSO

The Italian Electricity System: 2014 provisional data by Terna National net Production 267,6 TWh Traditional sources 151,0 TWh Pumps 1,7 Thermal 149,3 (gas 62%; coal 26%) Olio (2%) Renewable Carbone sources (15%) 116,6 Gas naturale TWh (38%) Hydro* Altro 56,4 (48%) (6%) Geothermal 5,5 (5%) Wind 15,0 (13%) Photovoltaic 23,3 (20%) Bioenergies 16,4 (14%) % of Net production 57% 43% 3 Energy supplied 309,0 TWh Agriculture Industry Household % of Supplied 2% 42% 22% * Natural inflows hydro production, Net import: 43,7 TWh Import 46,7 Export 3,0 Thermal production is the most important source (56%) o recent renewal of thermal generation assets o gas covers about 45% of the overall generated energy o most from modern, efficient CCGT plants Renewable Energy Sources (RES) contribute for the 44% to the overall balance Services Pumping Consumption Oil 2% 56% Coal 14% Gas 35% Solar 9% Other 5% Hydro 21% Wind 6% 34% 2,3 TWh Geotherm al 2% 44% Bioenergy 6%

The Italian Electric System: the electric demand 4 o 2014 electric demand: 309 TWh total energy 51.6 GW peak power (installed: 120 GW) o Demand still below the values ante-2008 worldwide financial crisis: 2007 peak power 57 GW o Significant seasonality of electric demand: winter and summer peak summer peak getting higher low demand periods: spring august

5,5 6,3 6,4 6,5 6,6 6,8 7,2 7,7 7,6 8,3 8,8 8,9 8,6 8,5 9,0 9,4 10,2 11,0 11,7 11,9 11,0 10,7 10,4 10,4 10,2 9,6 9,4 9,3 9,4 9,5 9,5 9,4 10,0 10,9 10,9 11,0 10,4 10,0 10,2 10,0 9,8 9,4 9,3 c /kwh 3,80 3,01 3,01 3,01 2,96 2,96 2,96 2,96 2,96 2,96 1,00 0,94 0,97 0,97 1,03 1,04 0,69 0,69 1,12 1,94 1,94 1,95 1,96 1,98 1,99 1,99 2,05 2,08 1,14 1,38 1,48 1,65 1,65 1,61 1,61 1,63 2,96 2,96 3,10 3,10 2,64 2,64 2,39 2,39 2,39 2,39 2,49 2,49 2,51 2,51 2,50 2,50 2,50 2,52 2,49 2,49 2,49 2,49 2,56 2,56 2,56 2,56 2,77 2,78 2,77 2,77 2,82 3,00 3,00 12,27 12,16 12,29 12,42 12,62 12,83 12,83 13,39 13,73 14,51 2,15 2,22 2,25 2,25 2,24 2,24 2,27 2,33 1,41 1,41 1,33 1,23 1,23 1,36 1,36 1,30 1,40 1,51 1,56 1,47 1,90 2,17 2,25 2,38 2,39 2,46 2,47 2,39 2,36 2,34 2,34 2,31 2,26 2,25 2,25 2,24 2,30 2,33 2,33 2,38 3,10 3,16 3,27 3,44 3,64 3,64 3,71 3,98 4,07 4,10 15,35 15,60 15,60 15,53 15,53 15,91 16,51 17,19 17,93 18,07 17,15 16,80 16,63 16,63 16,26 15,76 15,68 15,59 15,57 16,18 16,49 16,49 17,28 2,54 2,55 2,57 2,55 2,53 2,55 2,54 2,55 2,53 2,53 19,09 19,13 19,40 19,13 18,94 19,20 19,05 19,19 18,98 18,97 Percentage composition of the electricity price for a household consumer 5 In Italy network costs + general system charges are more than 35% of electrical energy bill, and continue to increase it is an indirect incentive to use RES for self-consumption 22 20 18 16 14 12 10 8 6 4 2 0 Network charges General system charges energia Production e approvvigionamento and supply costi di rete oneri generali di sistema imposte Taxes I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II **III IV I II III IV I II III

Index 6 Italian electricity scenario RES-E support schemes: principles and results Technical issues for T&D networks: innovative requirements for DG technical connection rules Regulation-driven projects / innovations: smart distribution grids storage operated by TSO evolution of dispatching incl DSO

Italian instruments operated by GSE to achieve the RES targets 7 GSE promotes the development of renewable energy sources and energy efficiency in Italy, by granting economic incentives and supporting policy makers. RES sector Support schemes Other measures RES-E RES-H RES-T Green Certificates (phasing out) Feed in tariff & Feed in premium Net metering Tax exemption (not by GSE ) Grants: Heating Account White Certificates Fiscal Incentives EU ETS (indirect) Blending obligation EU ETS (aviation) Market access services for RES Services for grid integration Certifications (Guarantees of Origin) Technical Regulation Innovation for administrative simplification Monitoring, controlling and reporting Training and information

RES-E statistics: RES capacity and production 8 Huge growth of PV in a few years (end 2014: 18,5 GW); continued growth of wind (end 2014: 8,6 GW); recently, remarkable growth of small biogas plants National cumulative burden charged on the customers bills (max: 2016): around 15 billion per year

RES-E in the market: Impact on wholesale prices (yearly average per hour) 9 Ratio between Hourly price and PUN Impact on tariffs of the RES incentives: ~50 /MWh PUN electricity average price (nation-wide): 2011: 72,23 /MWh 2012: 75,47 /MWh 2013: 62,99 /MWh 2014: 52,25 /MWh The strong RES penetration has significantly changed the energy price profile A peak-shaving effect can be observed, driven by the high PV generation during the day A price increase during the evening hours can be observed, where the thermal production is prevalent

Reverse power flow time (RPFT): annual data 2010 2013 Source: Enel Distribuzione 10 High Voltage 150 kv 20 kv Number of HV/MV transformers RPFT > 1% RPFT > 5% Medium Voltage Reverse power flow: the energy flows from MV network to HV network. Reverse Power-flow Time (RPFT) indicator: the percentage of yearly time in which energy flows from MV to HV in a given PS (1-5%). When the energy produced by DG is higher than the energy consumed by end users connected to the same MV distribution network, the network protection and automation techniques are at stake.

Index 11 Italian electricity scenario RES-E support schemes: principles and results Technical issues for T&D networks: innovative requirements for DG technical connection rules Regulation-driven projects / innovations: smart distribution grids storage operated by TSO evolution of dispatching incl DSO

Technical issues for T&D networks 12 The system/network architecture was chosen when RES/DG were rare; this can lead to several technical issues today (and in the next years): RES: new challenges for TSOs the system shall become more flexible (generation dispatching; producers) RES/DG: new challenges for TSOs constraints are mainly related to the automatic frequency disconnection of DG plants RES/DG: new challenges for DSOs constraints are mainly related to reverse power flow voltage regulation and poor performance of Interface Protection Relays A revision is required: Distribution network management (grids from passive to active ); Distribution network protection and control devices. Transmission network is affected too

Actions undertaken in Italy by the TSO (+CEI) since end 2011 13 New Annexes to the Grid Code dedicated to RES were issued: Annex A.70 (approved by AEEG, R.O. 84/2012/R/eel 8 th Mar 2012); extends some existing HV rules to the PV plants (DG on MV and LV), prescribes the protection schemes to be adopted, includes retrofitting of existing DG units (MV, over 50 kw) Annex A.72 (approved by AEEG, R.O. 344/2012/R/eel 2 nd Aug 2012); all RES fed DG (P>50 kw, MV connected) become curtailable on a TSO command (includes new & existing DG units!) DG connected to main MV busbars are disconnected by DSOs (30 min) DG_PRO: other DG units are disconnected on advice by producers (days) MV & LV Connection Standards (enforced by AEEG) to be adopted for the new power plants (CEI 0-16 & CEI 0-21), were duly updated

Innovative Italian IPS: wider thresholds and voltage unlock 14 Power plants on EHV/HV grids Normal operation between 47.5 Hz and 51.5 Hz DG on MV-LV grids Before April 1 st 2012 normal operation between 49.7 Hz and 50.3 Hz After April 1 st 2012: MV 47.5 to 51.5 Hz + retrofitting and LV 49 Hz to 51 Hz 51.5 50.3 50 49.7 49.1 7.5 CONVENTIONAL GENERATION TRIP MV-LV GD TRIP UNDER-FREQUENCY LOAD SHEDDING CONVENTIONAL GENERATION TRIP MV-LV GD TRIP 51.5 50.3 50 49.7 49.1 47.5 CONVENTIONAL GENERATION TRIP MV-LV GD TRIP UNDER-FREQUENCY LOAD SHEDDING CONVENTIONAL GENERATION TRIP MV-LV GD TRIP BEFORE APRIL 2012 AFTER APRIL 2012 Retrofit program: the application of these requirements to the existing DG plants has followed this timing: update to A.70 for plants connected to MV networks with P > 50 kw ( 16 GW): March 2013 (DONE!); update to A.70 for plants connected to MV networks with P 50 kw ( 2 GW): June 2014 (DONE!); update to A.70 for plants connected to LV networks with P > 6 kw: April 2015 (WIP);

Curtailment of DG active power: MV wind and PV plants 15 TSO Operation Center DSO 1 Operation Center DSO 2 Overgeneration Conventional generation insufficient Gateway TSO Primary substation DSO MV network Wind and PV plants (P>100 kw, MV connected) become curtailable on a TSO command through DSO control center GD 1 Modem GSM/GPRS Modem GSM/GPRS GD 2 Retrofit program: update to A.72 for wind and PV plants connected to MV grids with P 100 kw ( 10 GW): January 2016 (WIP!) update to A.72 for DSO: September 2015 (WIP!)

Index 16 Italian electricity scenario RES-E support schemes: principles and results Technical issues for T&D networks: innovative requirements for DG technical connection rules Regulation-driven projects / innovations: smart distribution grids storage operated by TSO evolution of dispatching incl DSO

Actions undertaken in Italy by the National Regulatory Authority (AEEG) 17 AEEG DECISION 344/12 AEEG DECISION 84/12 AEEG DECISION 39/10 active grid VOLTAGE REGULATION DISTR. NETWORK AUTOMATION AEEG DECISION 199/11 AEEG DECISION 5/10 RECHARGING INFRASTRUCTURE AEEG DECISION 242/10 wind integr. LARGE SCALE INTERMITT. GD ELECTRIC VEHICLES DISTRIBUTED GENERATION STORAGE SYSTEMS storage V-2-G SERVICES E-mobility DR & EE DEMAND RESPONSE MICRO GENERATION DEMAND AGGREGATION ENERGY EFFICIENCY SMART APPLIANCES AEEG DECISION 103/03 ERGEG Smart Grids Consultation Paper (Dec-2009) ELECTRONIC METERS smart metering AEEG DECISION 292/06 System evolution in Italy is mainly driven by Regulation Many Decisions by NRA (Regulatory Orders, RO) have been issued on several critical points

Smart grids demo projects (AEEG R.O. 39/10): lessons learned 18 Requirements Focus on MV networks: 75% of DG rated power Active grids: at least reverse power-flow for 1% of time Real time control system at MV level: the selected MV network has to be controlled (voltage limits / anti-islanding) Open grid: non-proprietary communication protocols only Lessons learned Existing public Internet infrastructure is fully compatible with the majority of SG applications (transfer trip; V/Q regulation; limitation/modulation of active power, even if no specific agreements with TLC providers are signed.

Storage operated by the TSO: energy intensive projects (AEEG R.O. 288/12, 66/13) 19 In some areas (as some regions in Southern Italy) the HV grid has no sufficient capacity to accept all the NP-RES 470 GWh of curtailed wind energy in 2010, progressively decreased until 2012 (again increasing in 2013 but for different reasons) The curtailed wind energy must be replaced by conventional production (and payed to the curtailed generators too) On a shorter term: well scaled and located energy storage systems could be a choice: 6 projects, total rated energy > 200 MWh

Storage operated by the TSO: 20 power intensive projects (AEEG R.O. 288/12 and 43/13) Power intensive storage systems can help overcoming some issues that jeopardize system security, like: reduced regulating capacity & inertia; variability & unpredictability of RES (wind); Industry Ministry approved 40 MW of Power Intensive Pilot projects by TERNA AEEG (res. 43/13/R/eel) approved two power intensive projects (total 16 MW), one in Sicily and one in Sardinia (these islands are weakly interconnected with the continental system). Based on the results of this first experiment, AEEG will define how to implement the remaining capacity.

The new role of DSOs: ancillary services from RES towards a local dispatch Dispatching can benefit from the development of network infrastructure. RES plants (big plants connected on HV and EHV transmission networks and DG connected to the MV and LV distribution networks) will participate in markets (DAM; ASM) and will provide dispatching resources (like conventional plants) 21 DSOs will provide market access to DG by acting as market facilitators: many ancillary services by DG will be enabled through smart grids: advanced information exchange (DSO / generation / consumption, provision of ancillary services at distributed level, advanced grid management. this new role by the DSOs could lead to different business models, presented in a recent Consultation Document of the National Regulator DCO 354/R/eel http://www.autorita.energia.it/allegati/docs/13/354-13all.pdf

Possible models for local dispatch: 2. Local Dispatch by the DSO 22 TSO Conventional plants connected to EHV/HV networks RES connected to EHV/HV networks Final customers connected to EHV/HV networks System resources (ASM) DSO System resources (ASM_D) Trader (DG with rated power 1 MW) DG connected to MV or LV networks Local resources (ASM_D or fixed price) (rated power > 1 MW) Trader (for MV and LV final customers) TSO: accepts bids/offers from conventional plants or DSOs in order to operate the power system: (solve residual congestions and create secondary and tertiary reserve at minimum costs) central dispatch. DSO: enters into purchase and sale contracts for the tradable resources by DG (like PV plants) (ASM_D, Ancillary Service Market for Distribution network) and provides system resources to the TSO; procures the resources necessary to operate the distribution networks, while respecting all constraints (ASM_D or fixed price)

23 THANKS! Maurizio Delfanti Department of Energy - Politecnico di Milano maurizio.delfanti@polimi.it http://www.energia.polimi.it