Italian TSO publishes stress hours for 2024 capacity

Italian transmission system operator (TSO) Terna expects the country's supply-demand balance to be stressed in around 6pc of total hours in 2024, when the capacity market will be implemented.

Terna has published the final calculations on the number of peak hours with the highest probability of system inadequacy for the 2024 delivery year, forecasting a total of 500 hours when the national system will most likely experience adequacy issues.

The most critical month will be July, when the TSO predicts that the Italian supply-demand balance could be strained for a total of 188 peak hours, followed by January and February with 86 and 80 hours, respectively. July is the month when Italian power demand usually peaks as cooling demand increases.

Terna awarded 34.15GW of contracts for existing capacity for 2024, 1.5GW for new authorised capacity, 2.27GW for new unauthorised capacity and 3.61GW for virtual foreign capacity. The total capacity awarded was 1.5GW lower than in the previous round for 2023.

The scheme is based on reliability options, with plant operators receiving a premium for each MW of capacity. Successful bidders are still able to participate in the wholesale market, but have to pay back the difference when market prices exceed an agreed strike price, which national energy regulator Arera calculates on the basis of the variable costs for open-cycle gas turbine units with a capacity of 50-150MW — selected as the reference technology.

The premium for existing capacity allocated for 2024 remained steady at €33,000/MW/yr, while the premium for new authorised capacity was lowered to €70,000/MW/yr from €75,000/MW/yr the previous year following an Arera ruling in October 2021.

Terna also estimated the de-rating factors for each technology participating in the market to calculate the probable available capacity (CDP) in the auctions. It set the de-rating factor for existing thermal and geothermal plants at around 21pc and 22pc, respectively, while new facilities for both technologies are expected to have a de-rating factor of 10pc. The de-rating factor for hydropower plants will be in a range of 41-44pc, while those for wind and solar plants were estimated at 84pc and 88pc, respectively.

Terna uses the capacity market to ensure sufficient dispatchable capacity is available to balance the power grid in case of supply shortages.

By Timothy Santonastaso