One characteristic of every power system is the need to guarantee continuously a real-time balance between electricity consumed (e.g. demand from households and businesses) and electricity supplied (e.g. by power plants).
Terna guarantees this balance using a highly technological control system, and by running a dedicated market where the “services” required to constantly ensure the continuity and security of the electricity supply are purchased. Today, the main suppliers of these flexibility services are large fossil-fuel power plants. With progressive decarbonisation of production facilities, in future, new, flexible resources will also be required (e.g. industrial production plants, residential water heaters and electric vehicles) to guarantee the adequacy and security of an increasingly heterogenous electricity system, far more complex than the current one. Two years ago, Terna launched “pilot projects” to start this process and to test functioning of the new resources. It’s time to take stock.
The success of the pilot projects can be measured with the power of new resources enabled in the services market during these two years: we started from June 2017 with around 100MW of power enabled up to June 2019 at the peak of 830 MW, of which more than 83% qualified with a fixed-term contract that remunerates the availability of the risosrsa. In fact, the economic regulation of the pilot projects differs from that for the large power plants, since it also provides for the remuneration of resource availability (fixed price, €/MW). Terna procures this "possibility of use" through lower bid auctions, starting at 30,000 €/MW/year.
The decision to remunerate availability is motivated by the fact that the participants on the consumer side are mainly industrial production facilities, willing to reduce their energy costs. These parties, to provide flexibility in the services market, must incur fixed investment costs to install and set up the equipment necessary to develop the service and annual operating management costs (eg providing energy management rooms). Therefore, the mere remuneration of activated energy, which is affected by the volatility of the market price, is generally not sufficient to cover these costs. Experience to date confirms that (at least at this stage) a remuneration of availability represents an indispensable incentive for the participation of new resources in the services market.
These first results of the pilot projects are very encouraging when compared with other European countries. From the smartEn study on the use of new resources in European services markets, it emerges that Italy was the European country that made the most important progress coming to qualify as a major power of France or Finland, considered among the "best" experiences practice ".
In view of the promising results achieved, Terna's intention is to continue implementing other pilot projects with the objectives of encouraging competition and experimenting with the participation of resources in additional services (frequency / power regulation, voltage regulation), progressively trying to include consumers in the tertiary and / or domestic sectors.
In fact, Terna's strong will is to continue decisively with this experimentation because of the importance it has in the energy transition. These pilot projects allow Terna to test the performance of the new resources and at the same time allow to involve and incentivize the operators, from the electric world and not, to seek innovative solutions for the provision of services.
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