RSE
A A
Login
login name
password
login
GSE
ITA english
 Media  /  News
08/01/2015
stampa pdf print send email

Another Tough Year for Thermoelectric Power Generation

Another Tough Year for Thermoelectric Power Generation

A crisis meeting chaired by former Italian vice minister of Economic Development Claudio De Vincenti outlines the industry's main stumbling blocks. RSE submitted a study with a view to European goals for 2030


The continuing crisis of the thermoelectric power plant fleet will definitely be one of the major challenges for the Italian energy system in 2015. Professionals in the field are well aware of the sector's difficulties, a snapshot of which was provided by the crisis meeting chaired by former Italian vice minister of Economic Development Claudio De Vincenti in Rome on the 18th of December, last. At the meeting RSE submitted a study outlining the sector's current criticalities and future prospects.

Low Economic Margins for Combined Cycle Plants

“Amongst the topics highlighted – says Massimo Gallanti – is the progressive reduction of the amount of working hours for combined cycle plants that are not subject to priority dispatch, currently amounting to less than 1,500 yearly hour equivalents. Such difficult juncture also becomes apparent in the analysis of their economic margins (revenue minus variable costs). Non-CoGen energy production facilities located on mainland Italy (thus excluding those based in Sicily) feature positive margins on the Day-Ahead Market only in the time slots from 9 to 11 AM and 7 to 11 PM. As for the rest of the day, revenues do not even cover variable costs.
The dispatching services (MSD and MB) markets are doing better, with the mainland's combined cycle plants achieving mean margins that are three times higher than those earned in the energy markets.

Only Flexibility Pays Off

“This provides a confirmation of the fact – adds Gallanti – that markets nowadays reward flexibility alone. On the whole, with the exception of plants located in the Central-Southern regions, Sicily and Priolo, the average margins earned from non CoGen combined cycle plants on all the markets cannot cover their fixed costs. On top of that, the plants for which amortization is not over yet do not even manage to cover their capital cost”.
 
What can we expect, then, for the upcoming months? “With a stagnating demand, high rates of generation from RES and the availability of low-cost import energy, things just won't change. The considerable overcapacity of our plant fleet will keep causing oversupply on the electricity stock exchange (especially the Day-Ahead Market) thus depressing prices as well as the margins from combined cycle plants”.

Short and Long-term Changes

“A rationalization of the current fleet has, therefore, to be envisaged, which by the way had been set out right in the National Energy Strategy and confirmed by a number of major energy operators like Enel and A2A that announced their intention to put some of their plants on hold or even shut them down”.

The study also includes a possible scenario for the electrical system to 2030, in line with the goals of the European Commission's 2030 climate and energy package. In Italy, generation from RES will reach 54% of the entire electrical production, further squeezing the share of fossil fuel, especially gas. Non CoGen combined cycle plants and storage systems alike will have to intensify their current capability to guarantee a flexible energy system and a power generation fleet that is really fit for its purpose.

RSE Ready to Give its Contribution

“The present electrical energy market rests on an Energy Stock Exchange that sets a price for energy - says Gallanti in conclusion - such a system needs to be strongly revised to ensure that development is in line with the goals set for 2030 and foster integration into our neighboring countries' markets, according to the European Standard Model. RSE is ready to give its contribution by studying the effect of new regulations by means of its market and network simulators”.