Italy has been focusing on decarbonising its energy sector, particularly through renewable energy capacity expansion and the progressive decommissioning of conventional power plants. According to the draft Integrated National Energy and Climate Plan 2030, presented by the Ministry of Economic Development in January 2019, the country aims to meet 30 per cent of its final energy demand from renewables. This is likely to necessitate the ramping up of solar capacity to 50 GW (from 20 GW) and wind capacity to 18.4 GW (from 10 GW).
The country’s transmission system operator (TSO), Terna, is making investments to secure its grid from the vulnerabilities of the changing energy generation mix. It is investing in strengthening the inter-zonal connections and cross-border interconnections with its European neighbours, besides undertaking initiatives to promote digitalisation and innovation. In March 2019, Terna announced its strategic plan for the 2019-23 period with a strong focus on sustainability and regional development requirements. The plan is also aimed at increasing the security and resilience of the grid. The plan involves an investment of Euro 6.2 billion in the country’s electricity grid. Terna’s mission under its new strategic plan is to play a leading role in sustainable energy transition, leveraging innovation, skills and distinctive technologies to generate value for all stakeholders.
Terna plans to invest over Euro 13 billion during the next decade. In December 2018, Italy’s energy regulatory authority, Autorità di Regolazione per Energia Reti e Ambiente (ARERA or the Regulatory Authority for Energy, Networks and Environment), approved the 10-year network development plan (NDP) Piano di Sviluppo della Rete 2018. The plan laid emphasis on decarbonisation, market efficiency, security of supply and sustainability to encourage projects. Renewable Watch highlights Terna’s investment plans over the next few years.
Strategic Plan 2019-23
Regulated activities: Of the planned investments, about Euro 3.3 billion will be invested in grid development, Euro 2.2 billion in asset renewal and efficiency measures, while the remaining will be spent on grid security or the defence plan.
The projects included under grid development focus on strengthening the connections among different market zones to remove bottlenecks in critical areas, increasing interconnections, and the rationalisation of major metropolitan areas.
The key projects to enhance the interconnection capacity among market zones include the Colunga-Calenzano (between Tuscany and Emilia-Romagna) and Gissi-Foggia (between Abruzzo and Apulia) transmission lines. The rationalisation of networks in the main metropolitan areas such as Milan, Rome and Naples will mostly involve replacing old infrastructure with new, sustainable, high technology transmission lines.
Terna will commence work on the new SA.CO.I.3 project, which will strengthen interconnections between the Italian mainland and the islands of Sardinia and Corsica (France). The project will start running by 2024. It will also envisage the operationalisation of new cross-border interconnections with Montenegro and France, which are due to come into operation in 2019 and 2020 respectively. These interconnections will involve investments of Euro 180 million and Euro 356 million, respectively, by Terna. The details of the two projects are as follows:
- Grande Ile (France)-Piossasco (Italy) underground high voltage direct current (HVDC) interconnector: The project aims to increase the electricity transmission capacity across Italy’s northern border with France. This is a 190 km long, ±320 kV underground cable link with converter stations at both ends (two poles, each with a maximum capacity of 600 MW). A consortium of seven companies, led by Italy’s Prysmian Group, is constructing the underground link.
- MONITA interconnection project or Villanova (Italy)-Lastva (Montenegro) undersea HVDC interconnector: This is a 475 km long, ±500 kV HVDC undersea interconnection between Italy and Montenegro. It will have a capacity of 600 MW with converter stations at both ends. In December 2018, Nexans completed the installation and testing of a 445 km submarine section for the power interconnection project. Besides these two projects, Terna is studying the possibility of new electricity interconnection projects with Switzerland, Slovenia and Tunisia, as well as enhancing the capacity of the Italy-Austria interconnector. Significantly, over 60 per cent of the new power transmission lines planned for commissioning over the next five years will be underground or comprise submarine cables, and, therefore, be “invisible”. Asset renewal and efficiency measures include enhancing the quality of service and digitalisation of the grid. Activities under the defence plan include dispatching process improvements as well as installing devices such as synchronous compensators and grid stabilisation devices at the most critical points to manage energy flow.
- Non-regulated activities: Terna also plans to consolidate its role as an energy solutions provider and upgrade its dark fibre infrastructure to explore opportunities in the field of connectivity. These activities aim to support the country’s energy transition in line with its core activities.
- Leadership in digitalisation and innovation: Over the next five years, Terna plans to spend Euro 700 million on innovations and digitalisation across its regulated activities. It is, particularly, going to invest in new digital systems for network infrastructure control and diagnostics; drones, robots and satellites for the remote monitoring of lines and substations; and new optic fibre installation. It also plans to explore advanced materials (including anti-icing and carbon fibre conductors) as well as storage solutions. In April 2019, Terna inaugurated the first of the eight planned innovation hubs in the country at Turin. This will be dedicated to drones, advanced sensors, internet of things and satellites. In order to inculcate a culture of innovation at the organisational level, Terna is ensuring that its employees are adequately trained to keep pace with the digital revolution.
- International operations: Terna is leveraging its core skills in international geographies, both in Europe as well as in Latin America. For instance, in Brazil, Terna completed transmission lines aggregating 158 km at 230 kV in Rio Grande do Sul. This will be strategic for integrating renewable energy sources in the southern part of the country. Further, it will complete 350 km of 500 kV lines in Mato Grosso in central Brazil during 2019. In Uruguay and Peru, it has concessions for over 200 km and 130 km of lines respectively.
- ARERA’s evaluation of Terna’s 2018 NDP: In December 2018, ARERA published its evaluation of Terna’s NDP prepared in 2018. In the evaluation report, the regulator criticised some of the planned electricity interconnectors between Italy and its neighbouring countries, mainly due to delays in construction, which made them less beneficial for the country’s grid system. This includes Italy to Tunisia, Italy to Montenegro and SA.CO.I.3 links. According to the regulator, the scheduled date for bringing a second cable on the Italy-Montenegro link online in 2026 (the first, at 600 MW, is due to start power flow by end 2019) must be subject to the future development of the energy markets and the Balkan States’ power grids. In addition, it noted that the benefit of the second cable, in terms of reducing balancing service costs and grid losses, would not justify the project cost. The regulator has asked for a further cost-benefit analysis of the planned interconnector between Italy and Tunisia as significant delays in implementing the project might result in reduced benefits for Europe as a whole. The analysis must also include the benefits that will accrue to each European country involved, as this will help in the allocation of costs accordingly. The regulator has mentioned the need for inputs from France’s Electricite de France (EDF) concerning the SA.CO.I.3 connection. ARERA has pointed out the risk of the grid not having sufficient capacity to integrate increased renewable energy generation in the medium term if further delays take place in implementing domestic projects pertaining to north-south, central-north and central-south connections. However, ARERA has praised Terna’s initiatives such as the implementation of a new methodology to assess costs and benefits, and the inclusion of some social welfare indicators such as the reduction in CO2 emissions and system resilience.
- Terna initiates consultation for NDP 2019: Terna has initiated the process for NDP 2019. It has aligned the plan with the Integrated National Energy and Climate Plan. In this edition, Terna has introduced 19 new projects involving an aggregate investment of Euro 171 million to be commissioned between 2027 and 2028. The key driver for the projects is the security of supply followed by sustainability.
Terna has been pursuing various investment projects to help achieve the country’s overall energy targets, which are, in turn, aligned with the European Union’s energy objectives. However, like its counterparts in other European countries, Terna has been facing challenges such as permit delays and project construction delays. Nonetheless, it is focused on creating sustainable and technologically advanced future networks, which would help the development of renewables and accelerate the energy transition.