italian power system Dario Lucarella*, Massimo Gallanti*, Michele Benini*, Maurizio Delfanti** Andrea Silvestri** 31st IAEE International Conference Istanbul, 18-21 Giugno 2008 PRESENTAZIONE POWER POINT * CESI RICERCA ** POLITECNICO DI MILANO The “20-20-20” objectives set by the European Union for year 2020 (achieve a 20% share of renewable energies in overall energy consumption, save 20% of energy consumption compared to projections, as estimated by the Commission in its Green Paper on Energy Efficiency, achieve at least a 20% reduction of greenhouse gas emissions compared to 1990) are strongly pushing renewable energy sources (RES) and combined heat and power (CHP) technologies for electric energy production. Such generation technologies have a significant potential for small-scale applications, thus fostering the new paradigm of Distributed Generation (DG), as opposed to conventional bulk power plants. In principle, DG can provide several benefits, such as contributing to the achievement of the aforementioned “20-20-20” objectives and increasing security of supply. If properly sited, DG can also reduce network losses, allow for deferral of network expansion investments and increase the availability of power to final users. On the other hand, DG is characterized by high investment costs, therefore in most cases it requires adequate incentives to become economically competitive. Moreover, it implies also costs at system level, such as the need for more reserve to face the intermittent nature of DG based on RES and the need to improve distribution networks (as far as protection, automation and communication systems are concerned) to enable their transition from “passive” to “active”, in parallel with the increasing penetration of DG. Although this subject is recognized as a central point for power system development, only specific issues have been approached and only a few efforts have been devoted to develop a general methodology for a comprehensive evaluation of the economic impact of DG. Within this context, aim of this paper is to provide an assessment of costs and benefits consequent to a significant development of Distributed Generation in the Italian power system. The evaluation has been carried out along the following two lines: • a system-wide analysis on the development of the Italian power generation set till 2030, where different scenarios, entailing different levels of penetration of DG, are modelled, on the basis of different incentivizing policies; the analysis compares the considered scenarios mainly in terms of system costs related to investment and O&M for generation technologies, fuel consumptions, subsidies, CO 2 emissions and related allowances / credits costs; • a specific analysis on the impact of the levels of penetration of DG, determined in the system-wide analysis, on Medium Voltage (MV) distribution networks; the analysis has been carried out by modelling the installation of small generators along “typical” distribution lines, from the High Voltage / Medium Voltage interface to final users, in order to get some general conclusions starting from specific test cases; on one side, the benefits taken into account consist in the increase of availability of power supplied to final users (possibility of self-healing islands at MV level) and in reduction of losses; on the other side, investments in new network protection, automation and communication devices (i.e. additional costs) are considered.