Italy to decide on renewable electricity imbalance charges in months

11 April 2014 17:43 Source:ICIS

The Italian power market is expecting a decision from the Italian state council in the next few months on how renewable energy producers will pay for their imbalance charges.

Renewable energy producers previously had a total exemption on imbalance charges, but have had to pay for imbalances larger than 20% since the start of 2013.

“We are in favour of [renewables paying an unbalancing charge], as it exposes them to the market, making renewable energy management possible, otherwise renewables would tend to stay in the GME’s protected mechanism,” a source from an Italian utility said.

He added that some renewable sources, especially electricity from wind generation, are often not balanced, as “they are really hard to forecast”.

A source close to the matter told ICIS that the verdict should be published between mid-April and mid-June. The state council was unable to confirm the exact date of the judgement.

Renewable imbalance fees changed

In 2012, energy regulator AEEG ruled that renewable energy producers had to start participating to the system’s balancing ( see EDEM 9 July 2012 ). Renewable producers were charged on any imbalances greater than 20% of programmed output from 1 January 2013, with this threshold falling to 10% from 1 July, and disappearing altogether from the start of this year.

However, some renewables producers had said that the legislation was illegal, as it was discriminated against them in the market.

In June, Italy’s Regional Administrative Tribunal of Milan (TAR) ruled that imposing charges on wind power producers for imbalances was “discriminatory”, as generation from wind farms is too difficult to forecast.

The tribunal cancelled AEEG’s resolution 821, which required renewable plants to pay a significant charge to the Italian fund for renewable energy for failing to forecast their generation properly ( see EDEM 25 June 2013 ).

“TAR did not disagree with the principle that renewables need to pay imbalance charges, but with the value of the payment, as the AEEG mechanism does not take into account sufficiently the particularity of renewable sorces,” the source from the utility said.

Following the ruling from TAR, AEEG asked the state council for a judgement, which held a hearing in March. Meanwhile, renewable producers are only charged for imbalances of greater than 20%.

System-wide imbalance changes

AEEG is revising imbalance charges for all the other energy sources. Last August, the regulator launched a consultation on a proposal to change imbalance charges from the current zonal system to a nodal system ( see EDEM 12 August 2013 ). However, operators wanted to see the potential impact on the market of the proposed mechanism.

AEEG then told Terna to make the detailed rules and put them under consultation, while running simulations. However, AEEG and Terna are waiting to propose a new mechanism to test it together with new products for the dispatch system.

A proposal on this topic is expected by the end of the year, one source said. Matilde Mereghetti

By Matilde Mereghetti