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Terna’s investment plans: Focus on sustainable energy transition [free access]

April 18, 2019

Italy has been focusing on decarbonisation of the energy sector particularly through scaling up of renewable capacity and progressive decommissioning of conventional plants. Under the draft integrated national energy and climate plan 2030, presented by Italy’s Ministry of Economic Development in January 2019, the country aims to cover 30 per cent of its final energy demand from renewables, which is likely to necessitate ramping up the installed solar capacity to 50 GW (from 20 GW) and wind capacity to 18.4 GW (from 10 GW).

 

The country’s transmission operator (TSO), Terna, is making supporting investments to secure its grid from the vulnerabilities of the changing generation mix. The TSO is also investing in strengthening inter-zonal connections and cross-border interconnections with its European neighbours, besides digitisation 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 as well as growing attention to security, resiliency and quality of service. The plan envisages an investment of EUR6.2 billion in Italy’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.

 

In the long term, Terna plans to invest over EUR13 billion during the next decade. In December 2018, Terna’s Piano di Sviluppo della Rete 2018 [or Network Development Plan (NDP)] for a 10-year period was approved by Italy’s energy regulatory authority, Autorità di Regolazione per Energia Reti e Ambiente (ARERA or Regulatory Authority for Energy, Networks and Environment). The key drivers for projects included in this plan are decarbonisation, market efficiency, security of supply and sustainability.

 

Global Transmission Research presents the highlights of Terna’s investment plans over the next few years.

 

Strategic Plan 2019-23


Regulated activities: Of the planned investment, about EUR3.3 billion will be invested in grid development, EUR2.2 billion in asset renewal and efficiency measures, while the remaining will be spent on grid security or defence plan.

 

The projects included under the grid development segment focus on strengthening connections among the different market zones to remove bottlenecks in critical areas, rationalisation of major metropolitan areas, and increasing interconnections.

 

The key projects to enhance the interconnection capacity among the Italian market zones include the Colunga–Calenzano (between Tuscany and Emilia-Romagna) and Gissi–Foggia (between Abruzzo and Apulia) transmission lines. The rationalisation of the networks in the main metropolitan areas such as Milan, Rome and Naples will mostly involve replacing old infrastructure with new, sustainable, high-technology lines.

 

Terna will commence works on the new SA.CO.I.3 project, which will strengthen the interconnection between the Italian mainland and the islands of Sardinia and Corsica (France). The project will be operational by 2024. In addition, the plan envisages the operationalisation of the new cross-border interconnections with Montenegro and France, due to come into operation in 2019 and 2020, respectively. These interconnectors involve investments by Terna worth EUR180 million and EUR356 million, respectively. The details of the two projects are as follows:

 

 

Besides these two projects, Terna is studying 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 lines planned for commissioning over the next five years will be ‘invisible’, being underground or submarine cables.

 

The asset renewal efficiency measures include enhancing quality of service and digitisation of the grid. Activities under the defence plan include dispatching process improvements as well as installation of devices such as synchronous compensators and grid stabilisation devices at the most critical points to manage energy flows.

 

Non-regulated activities: Terna also plans to consolidate its role as an energy solutions provider and upgrade its dark fibre infrastructure to pursue opportunities in the field of connectivity. These activities aim to support the country’s energy transition consistent with its core activities.  

 

Leadership in digitisation and innovation: Over the next five years, Terna plans to spend EUR700 million on innovation and digitisation across the three categories of investments mentioned in the regulated activities. Particularly, it is 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. For instance, 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 (IOT) 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 evolution.

 

International operations: Terna is also 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 in south-eastern Brazil. This will be strategic for integrating renewable sources in the southern part of the country. Further, it will complete 350 km of 500 kV line 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. During the 2019-23 period, it plans to identify projects involving investments of less than EUR300 million in international markets.

 

ARERA’s evaluation of Terna’s 2018 NDP: In December 2018, ARERA published its evaluation of Terna’s NDP prepared in 2018. The regulator criticised some of the planned electricity interconnectors between Italy and its neighbouring countries, mainly due to delays in construction making them less beneficial for the country’s grid system. This includes the Italy to Tunisia, Italy to Montenegro and SACOI3 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 the end of 2019) must be subject to the future development of the energy markets and the Balkan States’ power grids. In addition, it mentioned that the benefit of the second cable in terms of reducing balancing service costs and grid losses would not justify the project cost.

 

Furthermore, the regulator has asked for further cost-benefit analysis of the planned interconnector between Italy and Tunisia as significant delays in implementing the project may have resulted in reduced benefits for Europe as a whole. The analysis must also include the benefits that will accrue to each European country involved, which will help in allocation of costs accordingly. It has also mentioned the need for inputs from France’s Electricite de France (EDF) concerning the SACOI 3 connection. ARERA points to the risk of the grid not having sufficient capacity to manage increased renewable generation in the mid-term if further delays take place in implementing domestic projects pertaining to north-south, central-north and central-south connections.

 

Besides the negatives in its evaluation report, ARERA praised the additions to the TSO’s NDP, such as the implementation of a new methodology to assess costs and benefits, and the inclusion of some social welfare indicators such as reduction in the CO2 emissions and system resilience.

 

Terna initiates consultation for NDP2019: Terna has initiated the process for NDP2019. 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 EUR171 million to be commissioned either in 2027 or 2028. The key driver for almost all the projects is security of supply followed by sustainability. Only three projects pertain either to decarbonisation or market efficiency.

 

Conclusion: 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 the challenge of delays in permitting processes and project construction. Nonetheless, it is focused on creating sustainable and technologically-adept future networks, which will help enable the development of renewables and energy transition.

 

Figure 1: Terna’s key projects

Source: Terna’s presentations; Global Transmission Research

 

Table 1: Terna’s key projects under Strategic Plan 2023

Key approved projects under implementation

Key projects under authorisation

  • HVDC Italy–Montenegro interconnector
  • HVDC Italy–France interconnector
  • Sorrento peninsula rationalisation
  • Agnosine substation retrofit
  • 380 kV Paternò–Pantano–Priolo line
  • New 380/150 kV substation at Vizzini 
  • HVDC SACOI 3 project
  • 380 kV Foggia–Gissi line
  • 380 kV Colunga– Calenzano line
  • 132 kV Elba–Continent line
  • 220 kV Italy–Austria Nauders–Glorenza line
  • Covara–Laion line
  • Zuel–Somprade line
  • Ariano Irpino substation
  • 380 kV Deliceto–Bisaccia
  • Capri–Sorrento line
  • Vittoria–Camerina–Scicli line

Source: Terna’s presentations; Global Transmission Research

 

Table 2 Terna’s key projects as per NDP 2018

Project 

Voltage

Estimated investment (EUR million)

Expected commissioning year

Villanova (Italy)−Lastva (Montenegro) interconnector

±500 HVDC

180/1,150

2019/2026

Foggia−Benevento transmission line

380 kV

143

2019

Stazzona−Verderio transmission line

132 kV

18

2019

Grand Ile (France)–Piossasco (Italy) interconnector

±320 HVDC

356

2020

Interconnection to Campane Islands

150 kV

155

2020

Reorganisation of Palermo metropolitan area

NA

81

2021

Rationalisation in Valle Sabbia

220/132 kV

59

2021

Nauders (Austria)–Glorenza (Italy) line to increase interconnection capacity with Austria

220 kV

85

2022

Mila–Brescia transmission line

380 kV

61

2022

France–Italy interconnector (SA.CO.I.3 Project)

HVDC

664

2023

Okroglo (Slovenia)–Udine (Italy) interconnector

400 kV

168

2022

Prati di Vizze (Italy)–Steinach (Austria) interconnector

132/110 kV

31

2023

Foggia−Villanova transmission line

380 kV

397

2023/long-term

Reorganisation of the 380 kV and 132 kV area of Lucca

380 kV and 132 kV

63

2024

Interventions in the Florence metropolitan network

NA

43

2024

San Giacomo (All'Acqua) (Switzerland)–Pallanzeno (Italy)–Baggio (Italy) interconnector

400 kV

1,000

2025

Sorgente–Rizziconi transmission line

380 kV

836

2025

Elba–Continent transmission line

132

143

2025

Removal of centre-south-north section limitations

NA

71

2026

Teresa–Budduso transmission line

150 kV

81

2026

Chiaramonte Gulfi−Ciminna transmission line

380 kV

534

2026/long-term

ELMED Project (Tunisia−Italy interconnector)

±400 HVDC

300

2027

Reinforcement of network in the area between Foggia and Benevento and 380/150 kV substations for connection to renewable sources

380/150 kV

194

2027

Reorganisation of northern Calabria network

NA

186

2027

Paternò–Pantano–Priolo transmission line

380 kV

273

2028

Reorganisation of Teramo–Pescara

NA

63

2028

Interventions in the high voltage network in the Ragusa area

NA

54

2028

Rationalisation of the Reggio Emilia area

132

29

2028

Cardano substation

220 kV

35

2019

Magenta substation

380 kV

32

2022

Glorenza station

220 kV

38

2024

Mese substation

380 kV

35

2025

Notes: HVDC – high voltage direct current; NA – not available

Source: Terna; Global Transmission Research