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Italy to give €17.7 billion to central energy storage projects

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Italy will begin providing 17.7 billion euros in state aid to build a centralized energy storage system. The scheme aims to ensure that developers of eligible projects receive annual payments for investment and operating costs for the next 10 years.

The European Commission has approved a €17.7 billion plan to help Italy build and operate a centralized energy storage system under the European Union’s state aid rules. The measure is envisaged to contribute to the goals of the European Green Deal and the Fit-for-55 package by enabling the integration of renewable energy sources.

The approval in Brussels allows Italy to select companies to develop energy storage projects that will be eligible for subsidies. This mechanism is set up to cover investment and operating costs through annual payments.

The plan is to support energy storage facilities with a total operating power of 9GW and a total capacity of 71GWh by the end of 2033.

Beneficiaries will be selected through competitive bidding.

The production of electricity from renewable energy sources relies on solar, wind, and hydropower, and the electricity demand curves are different. By storing excess power during times of overproduction, electricity can be made available during times of power shortages, thereby reducing renewable energy use and the need to produce power in programmable but polluting power plants. , the committee members pointed out.

Italy is obliged to select beneficiaries through a competitive, transparent and non-discriminatory bidding process. Specifically, developers compete based on offers related to the minimum amount of assistance requested for each capacity provided.

The scheme, which facilitates the construction of centralized energy storage systems, is open to all technologies that meet the performance requirements set by the country’s transmission system operator (TSO) Terna and approved by regulators. This list is revised every two years to reflect technological developments. Currently, eligible technologies include electrochemical lithium-ion systems and pumped storage power plants.

Italy launches platform to match available capacity with demand

A new time-shifted trading platform is planned as part of the plan. Storage capacity is pooled and provided to third parties in the form of standardized time-shifting products. Therefore, beneficiaries must make their assets available on the platform.

TSO then allocates physical storage assets to perform standard time-shifting contracts, optimizing the use of available capacity.

The European Commission has determined that this support has an incentive effect, as supported storage facilities would not be financially viable without public support. Furthermore, it argued that this mechanism would have positive effects that outweigh potential distortions of competition and trade within the EU.

The scheme will cover a total of 9GW, 71GWh of storage capacity.

Following the announcement of the European Green Deal in 2019, the Commission set a target of net-zero greenhouse gas emissions by 2050. It was subsequently enshrined in the European Climate Act, which came into force from July 2021. The law also introduced interim targets to reduce net emissions. Reduce greenhouse gas emissions by at least 55% by 2030.

The announcement added that through the adoption of the “Fit-for-55” proposal, the EU has set legally binding climate targets covering all major sectors of the economy.

Furthermore, in March 2023, the Commission adopted a list of recommendations to ensure the further deployment of energy storage.

“Centralized electricity storage provides flexibility and facilitates the adoption of renewable energy sources. This innovative scheme can help accelerate the green transition while minimizing potential distortions to competition. ” said European Commission Vice-President Margrethe Vestager. She is in charge of competition policy.

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