EU approves Italy’s €17.7 billion state aid for large-scale energy storage rollout

Brussels: The European Union (EU) Commission has approved a state aid scheme aiming to fund the rollout of over 9GW/71GWh of energy storage in Italy.

The scheme totalling €17.7 billion (US$19.5 billion) will provide annual payments covering investment and operating costs for those developing, building and operating large-scale energy storage in Italy. It will be alloted via a competitive bidding process where developers with the lowest offer win out.

Transmission system operator (TSO) Terna estimates Italy will need 9GW/71GWh of new energy storage to integrate its growing renewables pipeline, an average duration of just under 8 hours.

That duration will be split between battery energy storage system (BESS) and select pumped hydro energy storage (PHES) projects, though even on the BESS side developers have been touting portfolios with durations up to 8 hours.

Eligible technologies Terna has outlined are primarily lithum-ion, PHES, compressed air energy storage (CAES), non-lithium electrochemical storage (other types of batteries etc), power-to-gas-to power storage (green hydrogen etc), electrostatic or magnetic storage and electromechanical flywheel storage. However, other technologies which meet its technical requirements are eligible, and the list will be updated every two years, it has said.

Terna and its regulators have been busy updating the electricity market in Italy to facilitate the rollout of energy storage and developers and operators have been announcing gigawatt-scale pipelines of projects throughout 2023. The latest was UK-based Octopus, announcing a 1.5GW BESS development partnership with local developer Nexta Capital a week ago.

On of the most important reforms is the creation of a new ‘time-shifting trading platform’ where energy storage capacity will be pooled into standardised time-shifting products to be offered to those who need to shift renewable production to periods of lower generation. Storage asset owners will make their physical asset available on the platform, and Terna will assign those assets to execute the time-shifting contracts.

The grid-scale market in Italy was the subject of a deep-dive in a recent edition of Solar Media’s quarterly journal PV Tech Power.

The state aid package is in line with the objectives of the EU’s European Green Deal and ‘Fit for 55’ package, alluding to the EU’s aim to reduce greenhouse gas emissions by 55% by 2030. It is similar in structure to one in Greece which started earlier this year.