Role of Smart Grids in the Italian Energy Policy Strategy Marcello Capra General Directorate for Electricity Market, Renewables, Energy Efficiency and Nuclear Power SIF - Rome, 24 September 2015

The situation in Italy: the weaknesses

The situation in Italy: the strengths

A rapid growth in RES integration

A new National Energy Strategy The National Energy Strategy is based on clear objectives and consistent with the need for growth of the Country, taking into account our natural strengths and weaknesses: - Energy more competitive in terms of cost, to the benefit of households and firms - Greater security and independence of supply - Sustainable economic growth through the development of the energy sector - Maintenance of high environmental standards and quality of service Smart Grids core elements of priorities: - Energy Efficiency - Sustainable development of renewable energy - Infrastructure development and reform of the electricity market

Italy’s present situation on Smart Grids Distribution operators among the most advanced worldwide – 36 Million smart meters and wide system automation; Medium and small size industry developing and proposing advanced or breakthrough technologies: power electronics, DMS, small storage, DG control, ICT solutions; Funds for R&D and demo projects on smart grids Regulator Authority allowing for incentives for smart grids pilot investments of DSOs on MV active distribution networks with RES/storage; Public research centers and universities very active in house and internationally Italian chairmanship of IEA initiative ISGAN – International Smart Grids Action Network

Smart Grids European investments 7

Public funding initiatives Renewable integration Scenario analysis PlanningOperation System management Component technologies innovation ICT Power electronics Storage Electric vehicles PQEnvironment 8

Fund for R&D in the Electricity System M€/y dedicated to smart grids R&D Scenarios for the development of the Italian network; Active networks: costs and benefits; Control systems and tools of active networks; Interconnections with neigbouring countries; Security of the infrastructures; Power quality issues; Technologies and components: power electronics, ICT and protocols, HTS applications, metering; E-mobility

Smart Grids infrastructures (POI Program) The Inter Regional Operative Program – POI was approved by the EC in December 2007 with the aim to: “Increase the ratio of load supplied by RES and the energy efficiency, promoting the local development opportunities in four Italian Southern regions: Campania, Puglia, Calabria, Sicilia.” ENEL Distribuzione signed an agreement with the Ministry of Economic Development (25/1/2010) for the development of intelligent MV networks Two projects are active today: –POI 1 – 77 M€ –POI 2 – 123 M€

EU NER 300- New Entrants Reserve (Project awarded funding by EIB – 2 nd Call) 11 ENEL’s Project selected :Puglia Active Networks Technology: better demand-response, supply quality control, reduction of losses, electric mobility (batteries) Project relevant costs: € 170,000,000 NER 300 funding: € 85,000,000.

Green-Me Project proposal (France, Italy) 12

Increasing the RES hosting capacity 8 projects awarded in different Regions Projects started January 2011 – 3 years demonstration Total 16.5 M€ (higher ROI rate) Transformation of portions of HV/MV substations and medium voltage network already experiencing reverse energy flux Management of DG (dispatching, protection, supervision, automation, voltage regulation, communication); Pre-requisite: high replicability

Electric storage: Regulator’s initiatives Up to 3 pilot projects (based on CBA) on transmission network, using electrochemical storage technologies Incentives: WACC+2% for 12 years Size sufficient to demonstrate real increase of large scale VRES integration including dynamic network control systems Benefits calculated on: –Reduction of production curtailment –Efficiency of charging/discharging cycles –Costs of energy – based on benchmarks Costs include –CAPEX, OPEX including dynamic rating evaluation systems Widespread dissemination of results

Conclusions The rapid growth of renewables, together with the energy efficiency measures and the load flexibility require intelligent solutions for the Italian network modernization. Stakeholders are joining forces to facilitate this transformation and to leverage national capabilities. Pilot and demonstration activities are necessary in this phase for the development of smart grids technologies, thanks to national R&D programs, operators investments and regulatory initiatives. Clear regulatory and legislative rules should be also set at European level for full roll-out and replication of demonstration projects. European guidelines on key performance indicators to define a methodology for the smart meter implementation plans of Member States and for their cost-benefit analysis are also necessary. Italy wants to remain at the forefront of the smart grids developments and applications and will actively participate in all European and worldwide smart grids collaborative efforts.

Marcello Capra Ministry of Economic Development