Analysis and techno-economic evaluation of collective self-consumption of electricity considering a condominium case study

Politecnico di Milano

SCHOOL OF INDUSTRIAL AND INFORMATION ENGINEERING

Master of Science – Energy Engineering

Analysis and techno-economic evaluation

of collective self-consumption of

electricity considering a condominium

case study

Supervisor

Prof. Stefano Consonni

Co-Supervisor

Ing. Matteo Zatti Ing. Filippo Bovera Ing. Marco Gabba

Candidate

Federico Guermandi – 904842

ACKNOLEDGMENTS

Il ringraziamento più grande e più sentito è senza dubbio dedicato alla mia famiglia. Al di là

del sostegno, che non è mancato neanche per un centesimo di secondo in sei (anzi, in

venticinque) anni, è grazie a loro se ho avuto la possibilità di studiare. E non è poco.

Grazie al prof. Consonni, a Matteo, Filippo e Marco per la pazienza che hanno avuto in questi

mesi.

Alcuni ringraziamenti, poi, sono dovuti: grazie a Manu (come promesso) per le pronte risposte

che mi ha dato in ogni momento in cui avevo un dubbio; grazie ad Anna, Bia e Bino per aver

reso questo lavoro meno terribile. Ho parecchie birre da offrire in giro, ma non sono mai stato

tanto contento di doverlo fare.

Grazie agli amici che dal 2014 hanno condiviso con me giornate di studio incredibili in Pezzoli:

Enrico e Luca in primis. Grazie alle bibliotecarie che hanno chiuso un occhio quando rientravo

in aula studio col quel caffè che sulla Terra è il meno degno di tale nome.

Poi, grazie ai Freshi: Bia, Anna (aridaje, ma stava male saltarle), Giacomo, Niconico, Elletra,

Andre. Grazie a Luciano, a Pimone, a Checco, così, a prescindere. A Igor e Camilla che

conoscono i miei livelli di presamale. Grazie ai ragazzi della pallavolo e soprattutto al buon

Andre, che è proprio un buon Andre, ma anche ad Arianna, Giulia… tutti, insomma.

Grazie a Matte, a Gugu, ad Alice, a Manuel (non quello di prima), a tutti i ragazzi del corso di

Piacenza: io non ho mai incrociato, nella mia vita, una tale concentrazione di persone Belle, di

quelle che proprio vale la pena conoscere.

Grazie ai ragazzi/e che ho conosciuto in Svezia e con cui ancora sono in contatto: Gaia,

Assunta, Bino, Edo, Ale, e poi tutti gli stranieri. Sono persone che vorrei definire “in gamba”,

ma sarebbe riduttivo per descrivere quello che penso di loro.

ABSTRACT

In the next future, electricity prosumers who acts collectively and Energy Communities will play a crucial role for the spreading of RES-based technologies. Their development will occur along with an increasing electrification of several energy sectors for CO2 emission reduction. They will most likely

become an integral part of the electric system, which on the other hand has developed in accordance to a different paradigm based on passive users. Therefore, the activities that Energy Communities could engage, the higher ratio of RES energy and the decrease in electricity purchased have repercussion of regulatory, economic and technical nature on incumbent system players, on the system operation and on the grid. These new players’ features and the issues they give rise to have been investigated. In addition, the impact of electrification and collective-self consumption on a group of domestic users has been assessed. For this purpose, a MILP model has been developed. It optimizes the operation of a condominium in order to reduce the expenses for energy carriers, in face of electrification of the heating plant and transport system. Results show that self-consumption is in any case acknowledged as more economically convenient than electricity injection, and enhances the possibility of the condominium to manage the production. Electrification proves to be an appealing investment and allows a reduction of CO2 emissions.

SOMMARIO

Nel prossimo futuro, i prosumer elettrici che agiscono collettivamente e le Comunità dell’Energia avranno un ruolo fondamentale nella diffusione delle tecnologie rinnovabili per la produzione di energia. Esse si svilupperanno parallelamente alla crescente elettrificazione di vari settori energetici, al fine di ridurre le emissioni di CO2. Con tutta probabilità, diventeranno una parte integrante del sistema

elettrico, il quale, tuttavia, si è sviluppato seguendo un paradigma basato su clienti passivi. In virtù di questo le attività che le Comunità dell’Energia potrebbero intraprendere, la maggior quantità di energia da FER e la riduzione dell’elettricità acquistata hanno ripercussioni di natura normativa, economica e tecnica sugli attori esistenti del sistema elettrico, sul funzionamento del sistema e sulla rete fisica. Pertanto, sono state investigate le caratteristiche di questi nuovi partecipanti del sistema e i problemi che potrebbero causare. Inoltre, è stato valutato l’impatto dell’elettrificazione e dell’autoconsumo collettivo su un gruppo di utenti domestici. Per fare ciò, è stato sviluppato un modello MILP. Il modello ottimizza il funzionamento di un condominio al fine di minimizzare la spesa complessiva per i vettori energetici, di fronte ad una progressiva elettrificazione del riscaldamento e del parco auto. I risultati dimostrano che l’autoconsumo è, in ogni caso, più conveniente della vendita di energia in rete, e migliora la capacità del condominio di accomodare l’elettricità prodotta. Inoltre, l’elettrificazione risulta essere un investimento conveniente e permette la riduzione delle emissioni di CO2.

INDEX

ACKNOLEDGMENTS ... I ABSTRACT... III SOMMARIO ... V

1. INTRODUCTION ... 1

1.1 Fossil fuels: a critical dependence ... 1

1.2 Electrification for decarbonization ... 3

1.3 Prosumers and multi-energy systems for RES integration ... 5

1.3.1 Multi-energy systems: interaction between sectors ... 5

1.3.2 Prosumers and Energy Communities for decarbonization ... 7

1.4 Objectives ... 8

2. PROSUMERS AND ENERGY COMMUNITIES ... 9

2.1 Prosumers and Energy Communities: context and definitions ... 9

2.1.1 The “Clean Energy for all Europeans Package”: a European roadmap towards a sustainable energy system ... 9

2.1.2 Prosumers: the new energy players ... 11

2.1.3 RED II and EMD II directives: the milestones of the CEP ... 12

2.1.4 Definitions for Prosumers and Energy Communities ... 13

2.2 The Italian legislation ... 18

2.2.1 Self-consumption allowed configurations ... 18

2.2.2 Closed Distribution Systems ... 20

2.2.3 considerations and future perspectives ... 22

2.3 Prosumers and communities’ implementation ... 26

2.3.1 Current system design ... 26

2.3.2 Regulatory aspects...32

2.3.3 Economic aspects ... 40

2.3.4 Technical aspects ... 51

2.4 Examples of frameworks for collective self-consumption in Europe ... 57

2.4.1 Collective self-consumption in France... 57

2.4.2 Energy Communities law in Greece ... 58

2.5 Final remarks ... 60

3.1 Introduction to the problem ... 61

3.2 MILP modeling and general assumptions ... 63

3.2.1 MILP model ... 63

3.2.2 general assumptions ...65

3.3 Problem statement and solution approach ... 68

3.3.1 Mathematical expression of objective function and main constraints ... 68

4. CASE STUDY DESCRIPTION ...79

4.1 The building and its residents ... 79

4.2 Selection of typical days and profiles ... 80

4.2.1 typical days ... 80

4.2.2 electric profiles ... 81

4.2.3 space heating, DHW and cooling profiles ... 82

4.2.4 transport demand... 85

4.2.5 external parameters... 86

4.3 Technical, economic and environmental hypothesis ... 86

4.3.1 sizing of the machines ... 86

4.3.2 economic parameters ... 88

4.3.3 Environmental parameters ... 93

4.4 Scenarios ... 93

5. RESULTS... 95

5.1 A First Step Towards Electrification: Scenario A vs. Scenario B ... 95

5.2 electric vehicles and storage: scenarios C and D... 102

5.3 Overall comparisons ... 107

5.4 Conclusions ... 111

6. CONCLUSIONS AND FUTURE PERSPECTIVES ... 113

LIST OF FIGURES

Figure 1.1: breakdown of CO2 emission for the European Union (left) and Italy (right) [1]. ... 2

Figure 1.2: electricity and heat generation per source, in Italy ... 2

Figure 1.3: emissions for increasing iRES capacity [8]... 4

Figure 1.4: coupling of sectors, at infrastructure level [10]. ... 6

Figure 1.5: schematic illustration of the spatial subdivision of MESs [6]. ... 6

Figure 2.1: classification framework of the Sistemi semplici di produzione e consumo, according to the TISSPC [32].. ... 19

Figure 2.2: electric grids in Italy are divided between public and CDSs. ... 21

Figure 2.3: (a) a Closed Distribution System; (b) a Sistema Efficiente di Utenza; (c) a Sistema in Scambio sul Posto; (d) Scambio sul Posto Altrove ... 24

Figure 2.4: structure of the price for electric energy for a common domestic user in Italy [43]. Adapted from [42]. ... 28

Figure 2.5: schematic figure of exchanges between electric system actors ... 31

Figure 2.6: relationship between communities, BSPs and BRPs for the provision of flexibility services ... 32

Figure 2.7: communities and suppliers arrangements for support in supplying ... 36

Figure 2.8: schematic representation of meters disposition to allow proper virtual metering in a condominium in which some residents belong to Heidelberg Energiegenossenschaft eG cooperative [61]. ... 38

Figure 2.9: categories of plants that can benefit of Scambio sul Posto and Ritiro Dedicato [63]. .. 46

Figure 2.10: cash and energy flows in FIT (a) and FIP (b) incentives ... 46

Figure 2.11: demand-offer curve in absence and presence of a large RES share. ... 48

Figure 2.12: (a) harmonics that distort voltage wave; (b) voltage increase along the feeder due to distributed generation; (c) overvoltage. ... 53

Figure 2.13: nodal hosting capacity concept [42]... 54

Figure 2.14: modification of voltage profile in a bus until limit values and in adjacent buses due to the connection of DG [42]. ... 54

Figure 2.15: schematic representation of collective self-consumption in France. ... 58

Figure 3.1: schematization of the process followed for the assessment. ... 62

Figure 3.2: schematic representation of the algorithm with its basic elements. Adapted from [100]. ... 64

Figure 3.3: the condominium as a group of single users. Machines and costs for energy carriers are associated to users. In (a) individual balances; in (b) the condominium with centralized units: the machine is associated to the condominium users, but all the users can benefit of its output. ... 65

Figure 3.4: the flows that compose the electricity balance in the most general case. ... 70

Figure 4.1: typical days along the year ... 81

Figure 4.2: (a) the daily profiles of electricity demand of a working day in the four season as presented in [103]; (b) the profiles of the winter typical day for the three categories, resulted after the elaboration of (a). ... 82

Figure 4.3: details of the selected building and its net and gross energy need [105]. ... 83

Figure 4.4: cooling demand profiles for summer typical day. ... 84

Figure 4.5: temperature (left) and irradiation (right) profiles for the five typical days... 86

Figure 4.6: the thermal demand (space heating and DHW) during the most severe typical day, and the heat load duration curve throughout most of the yeard. ... 87

Figure 4.7: the curves extrapolated by the data collected from the catalogue, that will determine the price of the machines. ... 89

Figure 5.1: thermal balance profiles of winter days for the scenario B ... 96

Figure 5.2: electric balance profile during the extreme winter day... 97

Figure 5.3: electric balances on the perimeter of the entire condominium in the summer day of the four cases seen so far. ... 99

Figure 5.4: cumulative annualized cash flow throughout the investment time horizon (15 years) with (a) and without (b) deductions. ... 102

Figure 5.5: electric profile of the condominium POD related to the two scenarios considered for both single and EC behaviors during selected days. ... 103

Figure 5.6: (a) electricity bills and the percentage of reduction with respect to the "singles" for each scenario, and the average electricity price paid; (b) total expenses for energy carriers with the percentage of reduction w.r.t. the benchmark case. ... 109

LIST OF TABLES

Table 2.1: European and Italian targets for 2020 and 2030, as foreseen by CEP and the PNIEC [17].

... 11

Table 2.2: Definitions of Renewable Energy Community and Citizen Energy Community... 15

Table 2.3: summary table with main characteristics of SEU, SSP and CDSs. ... 22

Table 2.4: summary table of the components of the voices of the electricity bill [42].. ... 28

Table 2.5: costs and benefits a community could face, divided by category. ... 41

Table 2.6: summary of the change of role of parties involved in prosumers diffusion and of the effect of this new paradigm. Elaborated from [41] and [77]. ... 50

Table 4.1: main details of the three categories of users, which characterize their demand profiles. ...80

Table 4.2: annual consumption of the categories... 81

Table 4.3: assumption to apply eq. 4.1 to calculate the peak power for DHW ... 84

Table 4.4: type of car, distance travelled and EV substitution for the three categories of users. ... 85

Table 4.5: summary table with data employed to calculate costs related to technologies. Costs are expressed in €. ... 90

Table 4.6: assumptions for the economic considerations on vehicles. ... 91

Table 4.7: economic conditions of regime di maggior tutela for (a) gas (in condominiums) and (b) electricity for low-voltage users [122][123]. ... 92

Table 4.8: emission coefficients employed... 93

Table 4.9: summary table of the units considered in each case sudy. ... 94

Table 5.1: results of the simulations regarding main electricity flows and self-consumption ratio. ... 98

Table 5.2: main economic indexes related to the price of energy carriers in scenarios A and B, and important variations with respect to benchmark and "singles" cases. ... 100

Table 5.3: costs of technologies, order and maintenance costs and costs for the electricity carriers in the cases considered...101

Table 5.4: results of the simulations regarding main electricity flows and self-consumption ratio for scenarios C and D ... 105

Table 5.5: main economic indexes related to the price of energy carriers in scenarios C and D, and important variations with respect to benchmark and "singles" cases. ... 106

Table 5.6: main details about the electricity flow to and from the condominium, normalized with respect to the benchmark, for all scenarios and cases. ... 108

Table 5.7: economic indexes to evaluate the investments made, calculated on a 10 years an investment time horizon. ... 109

Chapter 1

1. INTRODUCTION

The increase of production from renewable energy sources (RES) and the electrification of energy sectors can help tackling the well-known problem of emissions of greenhouse gases and climate change. To fully unleash the potential of electrification and RES penetration, synergies between different energy fields and the involvement of final users are significantly beneficial. New players, namely prosumers and energy communities, will play a crucial role in RES diffusion, but at the same time poses a new challenge to the electric system.

1.1 Fossil fuels: a critical dependence

Nowadays, there is global concern around climate change due to the emissions of greenhouse gases (GHGs). The increase of compounds such as CO2 and CH4 in atmosphere alters the balance of

radiative flows of system Earth, since it holds a larger fraction of radiation reflected by the Earth’s surface in atmosphere, causing the average temperature to rise. Fossil fuels such as coal, oil and natural gas, on which the energy system greatly relies, are responsible for most of the emissions. This issue is even more relevant considering that the global energy demand is growing: over the period 1990-2017, the Total Primary Energy Supply (TPES) has increased by around the 60% worldwide, and it is foreseen to increase by more than 25% by 2040, still the fraction derived from fossil fuels is still high: the 81% of the energy comes from oil, natural gas and carbon, accounting for 11,346 out of 13,972 Mtoe (86% in 1990) [1]. To mitigate the emissions of greenhouse gases, and hence to tackle climate change, two pathways can be followed: the reduction in use of energy and the employment of renewable sources to produce it.

Carbon dioxide is the gas which has the most severe impact on the greenhouse effect, not so much for its harmfulness as for the magnitude of its emission [2]. This prompts the question as which are the sectors that contribute most to the emission of dioxide. Focusing on the data provided by the International Energy Agency, the breakdown is shown in Figure 1.1.

Figure 1.1: breakdown of CO2 emission for the European Union (left) and Italy (right). Total annual emissions are 3.202 Mton for Europe and 321 Mton for Italy. Data are referred to 2017 [1].

In both cases the electricity, the heat and the transport sectors take the lion’s share in the breakdown. Transports include domestic aviation and navigation, national railways and road transportation. A deeper analysis shows that in Europe, in 2018, nearly the 72% of this voice derives from road transport, the 44.3% more specifically from cars [3]. The share of means of transport based on renewable energy (bio-fuels and electricity, considering the RES-based fraction of this last one) is growing year after year, yet, the 93% of it is still dependent of fossil fuels [4]. The situation is slightly better in the case of electricity and heating, although the fraction of RES is still limited, especially in the heating case. Figure 1.2 shows the percentages of the sources for the two sectors for the Italian case.

Figure 1.2: electricity and heat generation per source, in Italy. Data are referred to 2017. In both the cases, the overall production has been stable in the last decade, with few fluctuations.

It can be seen how natural gas represent the main energy source. Extending the perspective to the European Union, the fractions are in the same magnitude. In the electricity case, a significant amount of electricity is provided by nuclear plants.

1.2 Electrification for decarbonization

It is in this scenario, characterized by a heavy reliance on fossil fuels, that Italy, Europe and the whole World are undertaking a process of energy transition towards the decarbonization of the energy system. Reduction in the use of fossil fuels, together with a better exploitation of primary sources, has become crucial to achieve a sustainable development.

Energy from RES plays an essential role in this shift, and in fact the interest around them is growing, as well as their economic accessibility: several countries has increased the investment on renewables, with China currently at the forefront and Europe who has been the leader for years in this [1], in addition, since 2008 the costs of solar panels and on-shore wind turbines has decreased by 80% and 60% respectively [5].

Within this context, electricity is the energy carrier that can acquire the role, more than any other, of enabler of the decarbonization process. Electricity is, in fact, the sector in which the fraction of RES is higher. The share of renewable energy in the electricity sector is growing significantly, and, in the European Union, it is the sector with the largest RES share (30,7% in 2018, heating and cooling 19,5%, transport 7,6%) [7]. Italy itself features one of the highest shares of installed renewable power in Europe, and this share is expected to rise [8]. In addition, as highlighted by Mancarella [6], it is easier to decarbonize with respect to heating, cooling and transport

The spread of electricity as main carrier occurs through electrification, which consists in turning the primary source of energy-consumptive devices to electricity. The report Electrify 2030 [5] points out five features that make it particularly suitable to pursue decarbonization, due also to the large number of primary sources. These are:

1. electricity generated by a balanced energy mix, that enable the correct operation of the system and include a large fraction of renewable, enables the reduction of pollutants emission and greenhouse gases, thus fighting climate change and improving air’s quality, especially in urban areas;

2. end-use electric technologies provide higher levels of energy efficiency. For example, heat pumps allow for up to a 50% reduction in energy use compared to other heating and cooling systems;

3. the electric carrier is versatile and increases the resilience of the energy system. By resilience it is intended the capability of the system to operate in an efficient way in spite of contingencies

depletion) or geopolitical (rifts of relationship with exporting countries). Storage plays a crucial role in this;

4. it can be easily integrated with digitalization, leading to more effective and controlled consumption management;

5. It allows for innovation industrial processes and lifestyle. The energy carrier can boost a virtuous process in which it fosters innovation in industry processes and in consumers’ habits, and in turn, these boost the adoption of electricity-driven technologies.

The heating and the transport sectors are by far those for mostly involved in electrification. In fact, on the one hand, as seen previously, they account for the highest share of energy consumption, on the other, several technologies are available to integrate in these sectors, such as electric vehicles (EV) and heat pumps (HP). Transport has the highest potential as regards reduction of GHG gases from electrification [5], and the development of electric mobility technologies are making EVs more and more appealing: between 2012 and 2018, the number of new EV bought each year in Europe has increased 13 times, and now the 2% of the vehicles purchased is electric.

Bellocchi et al. [8] performed simulations to assess the impact of a wide EV and HP spread in Italy, under a growing amount of electricity from intermittent renewable sources. Results, shown in Figure 1.3, highlight how the deployment of these technologies, together with larger shares of RES, leads to an abatement in CO2 emissions. The same paper points out that the replacement of fossil-fuelled

vehicles is more effective in emissions reduction, mainly because of the fact that most of the heating system is based on natural gas, less carbon-intensive than traditional fuels, and EVs can better match with the irregularity of most of RES technologies, hence its penetration can be larger.

Figure 1.3: emissions for increasing iRES capacity, where "i" stands for “intermittent”, namely solar and photovoltaic. The growth factor is the number by which the current capacity is multiplied [8].

1.3 Prosumers and multi-energy systems for RES

integration

The integration of significant shares of renewable energies raises, nevertheless, remarkable issues. Among them, there are: (a) due to the stochastic nature of most of the primary sources (e.g. solar radiation and wind), the electricity generation is irregular and might not match the usual consumption profiles; (b) being their specific initial cost still inconvenient with respect to traditional power generation, support policies are needed.

1.3.1 Multi-energy systems: interaction between sectors

Solutions to deal with intermittence exist, such as storage. Nonetheless, any solution becomes particularly effective when conceived under a Multi-Energy System (MES) perspective [8][9]. A Multi-energy system, referred also as Smart Energy System (SES), represents a “framework where various energy vectors interact with each other at various level” [10], and hence enables the systems to make the most from synergies among different sectors. Traditionally, in fact, the energy sectors were developed independently; their coupling add degrees of freedom to the system and hence open the doors to new flexibility opportunities for the integration of intermittent energy and a better exploitation of primary sources. This concept is shown in Figure 1.4: adoption of appropriate energy conversion and storage devices can let various energy sectors interact with each other.

With a focus on electrification, to make some examples, water heaters that converts electricity into thermal energy or the batteries of electric vehicles can act as distributed storage [11], heat pumps can absorb excess renewable power in some periods of the day and convert it [8], CHP plants can balance the electricity demand while providing energy for heating or cooling [9]. MESs, in short, enhance the response of the system to electricity fluctuation by letting this carrier exploiting flexible resources outside the electrical sector [11].

Mancarella [6] provided a categorization of MESs according to four criteria. The first one is the spatial one: MESs can be modelled at different extension levels, from a single building to a city and the whole country. At the building level, natural gas and electricity are usually the input to pieces of equipment that satisfy the demand of its inhabitants. Buildings can then coordinate with other buildings for an optimal exchange of energy: for example, excess electricity from a condominium PV plant can feed an heat pump that distribute heat in the district heating network. Such interactions are exemplified in Figure 1.5.

Due to their potential, there is great interest around them to fight climate change in the upcoming years.

Figure 1.4: coupling of sectors, at infrastructure level. The presence of energy conversion systems allow energy to change its form when there is an unbalance between an energy vector and the end-user demand

[10].

1.3.2

Prosumers

and

Energy

Communities

for

decarbonization

To support the spread of RES generation, given its inconvenience in the short term, political actions and methods of financial support have proven to be effective to make the investment more appealing to investors. However, in the recent period, the European Union’s policy relies also on the involvement of end-users to pursue decarbonization: they are called to acquire an active role in the energy transition. On the one hand, they are encouraged to adopt technologies and measures to decrease the energy consumption and increase energy efficiency. On the other, the EU aims at exploiting their potential in the diffusion of distributed RES power. End-users are encouraged to install small RES plants (e.g. photovoltaic panels) and become investors and producers [12]. They therefore turn into the real subject of this work: prosumers. The term “prosumer” derives from the union of two words: “producer” and “consumer”. It is a neologism widely used in literature to identify those consumers who also produce any kind of energy vector through assets they directly or indirectly own1.

The benefits of undertaking such role are mutual: prosumers will see their bill lowered, since their electricity import will decrease, and consequently will be pushed to couple the electric vector to other energy sectors; on the other hand, Europe will have its renewable shares increased, and it will reach its sustainability goals more easily. Prosumers are not a prerogative of the electric sector: for example, district heating systems can also host prosumers, but the focus of its work is only on electric ones.

The European Union, however, goes beyond this, and encourages collective action to facilitate the investment of private citizens. When gathered, a group of end-users is orientated towards the purchase of larger plants, thus benefitting of economy of scale, and can divide the initial investment among a larger number of people [13]. Further users’ involvement in the energy transition is recalls another figure, introduced in the Clean Energy Package between 2018 and 2019: Energy Communities (EC). Peculiarities of these subjects are analyzed more in detail in paragraph 2.1.4. They represent group of users collected into a legally recognized structure, and involved in collective production and consumption of energy; yet, their activity can go beyond this and involve the provision of energy services on electricity markets, the performance of commercial services to its members and the collective performance of energy management and efficiency measures.

However, the spread of prosumers and communities raises several issues that need to find a solution to enable their complete integration. First of all, these new figures have to be included in national legislations and regulated. The legislation should specify which activities they are allowed to perform, how and at which conditions. Regulation should be accurate and consider the current structure of

the electric sector. Indeed, the existing system is built around a centralized conception of electric system, and this conception has shaped, throughout the years, the actors of the system, their activity, the market structure, the economic flows and, last but not least, the physical grid, which has not been projected to host a large amount of distributed generation.

Prosumers and communities have therefore to enter in such a system, and will inevitably alter its equilibrium, while at the same time shaping themselves to coexist with it. Hence, a careful evaluation of all the aspects that their entrance implies is needed, in order to, one the one hand, encourage their diffusion, on the other, avoid that this happen at the expense of the existing players and the proper functioning of the system.

Furthermore, such initiatives will likely to be successful only if they are capable to raise the interest of final end-users. The ecologic driver might not be enough, an economic assessment is necessary to see if turning into prosumer, together with electrification of consumption, is economically convenient, and to what extent. A further analysis should focus on the sustainability of economic support schemes to promote their diffusion, but it will not be treated in this work.

Both Multi-Energy Systems and Energy Communities can be regarded as new concepts to conceive energy systems. With respect to the latter, the former represents a paradigm rather than a real legal entity. Furthermore, while energy communities can arise from personal initiative, MESs are likely to require a re-design of the energy sectors and infrastructures. However, both of them are characterized by (i) having prosumers at their core and by (ii) coupling multiple energy sectors to enhance the flexibility of the system. We can think of energy communities, then, as a subset of MESs formed by private entities where sector coupling is based on electricity, or as the basis for MES development (limited to a district level), and of prosumers, especially when acting collectively, as the new player of this innovative energy paradigm.

1.4 Objectives

The protagonists of this work are electricity prosumers acting collectively and Energy Communities. In the view of their promotion and their diffusion in the electric system, the aim is to answer to two question: what are the aspects that their spread arises? Does turning into them make electrification economically appealing for a group of common private citizens?

This work is therefore divided into two parts. The first one investigates the peculiarities of prosumers and energy communities, as defined in the Clean Energy Package. The regulatory, economic and technical aspect of the prosumers’ diffusion are pointed out, including the interaction with existing players, economic implications of their activity and the issues related to a large amount of distributed generation. The second part evaluates the economic convenience, for a group of users located in a condominium and with given energy demands, of turning into prosumers and progressively electrify their needs. The users are considered both as a collection of singles and as a group capable to exchange energy within its boundaries, to simulate the behavior of an energy community.

Chapter 2

2.

PROSUMERS AND ENERGY

COMMUNITIES

The energy transition that the European Union is willing to undertake, in order to meet the objectives stated in the Paris Agreement, foresees the active involvement of end-users. In fact, they can play a pivotal role in the spread of distributed generation, and self-consumption would be beneficial for its integration into the grid. In order to exploit this potential, consumers should be put in the best conditions from the regulatory, economic and technical point of view. In particular, the aggregation of users is expected to be a fundamental requirement. Hence, in the Clean Energy Package (CEP), European Union promotes the roles of prosumers and introduces new collective energy system players: “Citizen Energy Communities” (CECs) and “Renewable Energy Communities” (RECs). These are not new concepts, but while literature already treated them only CEP has formalized their definition. Nevertheless, such new actors have to enter a system which has been developed in their absence; hence the performance of their core activities should meet regulatory and technical constraints. Also, their economic feasibility has to be carefully evaluated, since convenience is a key factor for their attractiveness.

The purposes of this chapter are to: (i) isolate the key features of single prosumers, CECs and RECs; (ii) analyze the conditions at which they can be put into practice in the scope of the Italian legislation; (iii) collect regulatory, economic and technical aspects of such new players, with a focus on the effects on current system and actors; (iv) provide examples of existing frameworks for collective.

2.1 Prosumers and Energy Communities: context and

definitions

The European Union- due to its sensitivity to environmental politics - plays a pivotal role in the stimulation towards environmental policies. In the recent decades, member states have taken collective decisions to undertake this transition together. Recently, a new cycle of initiatives has been launched by means of the Clean Energy Package.

2.1.1 The “Clean Energy for all Europeans Package”: a European

roadmap towards a sustainable energy system

things, through a reduction of the employment of carbon-based energy resources [15]. CEP represents the response of the European Union to this agreement: its purpose is to drive European Union towards a complete de-carbonization within 2050 and lead the Union to the creation of a large, integrated energy system [14][16].

This ambitious goal involves not only the electricity sector, but also the heating and cooling sector, transports and building industry. Also, CEP considers all levels of economy and society: from large industries and producers to domestic end-users.

The core principles of CEP are 5. Briefly:

o Europe puts great emphasis on a better employment of primary energy through enhancement of efficiency in all energy-consuming sectors, especially the building one, being it responsible for the 40% of final energy consumption and 36% of greenhouse gas emissions nowadays in the European Union.

o Establishing itself as leader by means of ambitious energetic goals, Europe wants to show the World the way forward and strengthen its energetic alliances with energetic partners, such as the United States, Japan and China.

o A clear definition of energetic goals and strategy can help member states’ coordination toward the common goals.

o Consumer rights should never be lacking, and protection should be given to those who are in energy poverty condition, that is the insufficient supply of essential services related to energy such as adequate warmth, cooling and electricity to power appliances.

o Finally, an integration of the different energy markets towards a continental unique trade can enhance the security of energetic supply and help the integration of RES.

As it can be seen in Table 2.1, CEP also updates the energetic objectives for 2030: the Climate and Energy Package of 2009 set the so-called “20-20-20” energy targets, which were meant to be met by 2020 [38]. Actually, data referred to 2017 shows that the European Union is on its way to meet the targets, having already achieved the reduction in greenhouse gases planned by 2009 directive [39]. CEP, hence, defines the 2050 goals: a further step towards the sustainability of energy systems. Each Member State has to develop its own national plan and energetic targets for the period 2021-2030, plus a 30-year strategy to follow until 2050. Each national plan is then to be evaluated by the European Commission in order to ensure that EU can collectively meet its Paris Agreement commitments. Italian targets can be found in Piano Nazionale Integrato per l’Energia e il Clima (PNIEC, [17]), a document developed by the Ministry for Economic Development. Such targets are reported in Table 2.1, together with the Europeans ones. Percentages are referred to 1990 values, unless differently indicated.

Table 2.1: European and Italian targets for 2020 and 2030, as foreseen by CEP and the PNIEC. Some of the national targets are ambitious, e.g. to have a 30% of gross energy consumption RES-based, and make a change

of paradigm necessary. Adapted from [17].

2020 targets 2030 targets

UE Italy UE Italy

ENERGY FROM RENEWABLE ENERGY SOURCES (RES)

Quota of energy from RES on gross energy

consumption 20% 17% 32% 30%

Quota of energy from RES on gross energy

consumption (transport sector) 10% 10% 14% 21,6%

Quota of energy from RES on gross energy

consumption (heating and cooling sector) (annually) + 1,3% (annually) + 1,3%

ENERGY EFFICIENCY

Reduction on primary energy consumptions

(wrt PRIMES 2007 scenario) -20% -24% -32,5% -43%

Energy savings through mandatory legal

regimes of energy efficiency (annually) - 1,5%

- 1,5%

(annually) (annually) - 0,8% (annually) - 0,8%

GREENHOUSE GASES EMISSIONS

Reduction of GHGs for all plants included in

normative ETS (wrt 2005 levels) -21% -43%

Reduction of GHGs for all plants not

included in normative ETS (wrt 2005 levels) -10% -13% -40% -33%

Overall reduction of GHGs wrt 1990 levels -20% -40%

2.1.2 Prosumers: the new energy players

First of all, two features of the CEP must be highlighted, that makes it compliant with the energy transition mentioned in the introduction to the chapter:

1. CEP strongly promotes the diffusion of Renewable Energy Sources (RES) and distributed generation. The aim is not only to decarbonize the economy, but also to reduce the dependence on fossil fuels coming from foreign countries and enhance system security through a reduction of the dependence on few large plants. Of course, this promotion will require: investments on the electric grids strengthening the interconnections among EU areas, a regulatory framework to promote efficiency and equity in economic development and a EU integrated, transparent and green energy market [14].

2. CEP puts consumers at the very center of the energetic transition. On the one hand, emphasis is put on the protection of their rights, under the form of information supply, flexibility in

From these two points, it can be inferred that there is great interest and expectations in the direct involvement of end-users; indeed, several measures are provided to promote the evolution of consumers into prosumers. As highlighted by Leal-Arcas et al. [12] and by the European Parliament in its briefing [20], benefits are mutual: prosumers bring benefits to society as they collaborate to the energy transition, while they take advantage of bills reduction and self-sufficiency. Hence, there is convenience for consumers to change their role. In addition, energy prosumers’ potential does not lay only in the capability to install, manage and run RES assets, but also in further positive effects on the whole system: e.g. the storage they install can increase the RES share and self-consumption can potentially levy the burden of a high RES penetration on the grid.

CEP further recognizes the potential that prosumers can have by acting in groups. A collective action, as mentioned lets consumers benefit of economy of scale, but also overcome some problems regarding access to land or roofs and help the inclusion of vulnerable client, e.g. those facing energy poverty. Moreover, the coordination between many small loads can make collective demand-response valuable both for the system and for the market. In short, it can enable a larger amount of people to take on prosumers’ features and amplify the advantages [13].

2.1.3 RED II and EMD II directives: the milestones of the CEP

CEP is composed of four regulations and four directives. While regulations are legal acts that becomes immediately enforceable in all member states simultaneously (hence are self-executing), directives’ content must be transposed into the law of Member States within a designated time limit, but it is up to Member States how to do it.

The relevant directives, when it comes to prosumers, are:

Recast of Renewable Energy Directive (Directive 2018/2001/EC, often referred as RED II, [21]):

edited on December 11th, 2018, this directive is the recast of Renewable Energy Directive

(Directive 2009/28/EC [40]) and it is focused on the promotion of renewable energy sources. It involves electricity, heating, cooling and biofuels. It contains measures to support and safeguard RES spread, remove all the unjustified regulatory barriers, ensure their financial viability and their market integration. It further establishes the aforementioned targets regarding RES for 2030 [19][23].

Electricity Market Directive (Directive 2019/944/EC, often referred as EMD II, [22]): EMD II is mainly focused on electricity markets. According to the directive, electricity markets shall be competitive, consumer-centered, flexible and non-discriminatory. It aims to create an integrated market with equal opportunities for all the participants in order to exploit the benefits of competition. Furthermore, it stresses the importance of the respect of consumers rights, included the case they produce electricity and intend to sell it. For example, it underlines the right for users to decide their own suppliers [23].

Such directives play a pivotal role from the legislative point of view since they provide formal definitions for active costumers (i.e. prosumers), including their collective action, and point out the activities they

should be entitled to perform and the rights they should have. In addition, directives require that such actors are implemented in Italian legislation (within 2021).

Nevertheless, as recognized by the interregional cooperation program “Interreg Europe” in its policy brief [27], definitions are flexible and leave each member state free to infer from directives the legal model to adopt nationally. Briefly, Member States are called to provide an enabling framework that can ensure the development of entities with peculiarities, rights and duties that are properly described in the next paragraph.

2.1.4 Definitions for Prosumers and Energy Communities

Both the directives, among the other topics, focus on prosumers and energy communities. They contain definitions to individuates their prerogatives and, in their articles, state their rights, duties and treatments they should be subject to.

Prosumers

As concerns prosumers, relevant definitions contained in the directives are the following:

Renewable self-consumer “means a final customer operating within its premises located within confined boundaries or, where permitted by a Member State, within other premises, who generates renewable electricity for its own consumption, and who may store or sell self-generated renewable electricity, provided that, for a non-household renewables self-consumer, those activities do not constitute its primary commercial or professional activity” (RED II, Art. 2(14), [21]);

Jointly acting renewables self-consumers “means a group of at least two jointly acting renewables self-consumers in accordance with point (14) who are located in the same building or multi-apartment block” (RED II, Art. 2(15), [21]);

Active customer “means a final customer, or a group of jointly acting final customers, who consumes or stores electricity generated within its premises located within confined boundaries or, where permitted by a Member State, within other premises, or who sells self-generated electricity or participates in flexibility or energy efficiency schemes, provided that those activities do not constitute its primary commercial or professional activity” (EMD II, Art. 2(8), [22]).

All three definitions state that, under the listed circumstances (which has to do mainly with the location and the ownership of the assets), final costumers can generate, self-consume and sell electricity. Nevertheless, there seem to be some differences, according to the different nature of the two directives: renewable self-consumers are limited to the production of renewable energy, whereas active customers are not. In addition, while renewable self-consumers are also entitled to store, storage is not mentioned

renewable self-consumers) must occur within condominiums or similar. An important common point is that none of these activities should represent the main commercial or professional activity: these players cannot make production of electricity their job.

RED II further explicit the role of jointly active renewable self-consumers, i.e. the union of more than one renewable self-consumer. The definition of active costumers, on the other hand, is not limited to single costumers, hence entails no aggregation limits.

It would be of interest to assess the advantages (and disadvantages) from the energy, environmental and economic points of view of the three different configurations described so far. In particular, it is presumable that adequate software and hardware tools must be designed in order to fulfill the abovementioned requirements.

Energy Communities

As mentioned in section 2.1.2 Prosumers: the new energy players, the CEP acknowledges that the collective action is beneficial to overcome barriers that hinder the transition from passive consumers to prosumers. Therefore, it introduces a new opportunity for users who intend to gather: Energy Communities (EC). These figures have prerogatives that extend beyond these typical of prosumers. Not only they are beneficial for involved users, but for the electric system as a whole. As recognized by a study conducted by Politecnico di Milano [96], which focused on the potential they have in Italy, they are helpful for the integration and diffusion of distributed generation, they reduce network losses, they enhance the acceptance of RES technologies and are positive for the local economy. The same study claims that, if the national potential of ECs' diffusion is fully exploited, pollutant emissions could be reduced of up to 220 MtCO2 (that means, a reduction of almost the 50% of those released by the

electricity sector), and energy import could decrease of 60 MTEP (one third of the 2014 value). Furthermore, thanks to the benefit brought to the electric system in terms of enhancement of the capacity to host distributed generation, reduction of losses and services provided for electricity regulation, up to 3 billion € could be saved.

In this regard, CEP contains two definitions, reported in Table 2.2: Renewable Energy Community (REC) and Citizen Energy Community (CEC). The reason of the presence of two definitions lies in the different nature of the two directives (as previously discussed in Section 2.1.3 RED II and EMD II directives: the milestones of the CEP). As pointed out by Frieden et al. in [25], both definitions describe a way to organize collective cooperation of an energy related activity around specific ownership, governance and non-commercial purpose. The authors, moreover, in claim that RECs can be seen as a subset of CECs, with more stringent prerogatives (e.g. energy source must be renewable), but, at the same time, they are not restricted to the electricity sector only.

From the definitions and what stated further in article 22 of RED II and 16 of EMD II, it is possible to isolate activities they should be allowed to perform, rights and duties they have.

First of all, four core principles, valid for both RECs and CECs, should be pursued in their implementation and determine their characteristics [26]:

Table 2.2: Definitions of Renewable Energy Community and Citizen Energy Community.

Renewable Energy Community (REC)

article 2(16) of RED II [21]

Citizen Energy Community (REC)

article 2(11) of RED II [21]

renewable energy community means a legal entity:

(a) which, in accordance with the applicable national law, is based on open and voluntary participation, is autonomous, and is effectively controlled by shareholders or members that are located in the proximity of the renewable energy projects that are owned and developed by that legal entity;

(b) the shareholders or members of which are natural persons, SMEs or local authorities, including municipalities;

(c) the primary purpose of which is to provide environmental, economic or social community benefits for its shareholders or members or for the local areas where it operates, rather than financial profits;

citizen energy community means a legal entity that:

(a) is based on voluntary and open participation and is effectively controlled by members or shareholders that are natural persons, local authorities, including municipalities, or small enterprises;

(b) has for its primary purpose to provide environmental, economic or social community benefits to its members or shareholders or to the local areas where it operates rather than to generate financial profits; and

(c) may engage in generation, including from renewable sources, distribution, supply, consumption, aggregation, energy storage, energy efficiency services or charging services for electric vehicles or provide other energy services to its members or shareholders;

RECs and CECs are entities that are set up as a legal person, which means that such figures should be foreseen in national law and have the right, for example, to own assets.

Their shareholders or members should effectively exercise control: for example, decisions should be made collectively; clearly, a scheme for its collective governance should be set. Their primary objective is to provide environmental, economic and social community benefits rather than financial profits, meaning that the corporate purpose is the generation of services and not incomes.

Members’ participation must be voluntary and open, which means that nobody can be forced or obliged to enter a community, nor can be excluded for subjective reasons.

The activities that Energy Communities should have the right to perform are [25]:

own and run generation assets: the property could be either of one (or more) members, or of the energy community;

aggregate, that is combining multiple customer loads or generators for electricity sale, purchase or participation in electricity markets (e.g. demand-response);

distribute, that is transport energy through owned (or given under concession) lines;

perform energy services and promote energy efficiency measures to their members portfolio. this last feature deserves a special mention: following its missions to “provide environmental, economic or social community benefits for its shareholders” [21], their range of activities can go beyond these strictly related to the provision of energy vectors and enter the field of energy management. This represents a high level of members’ involvement and commitment. For example, through proper technologies, communities could provide advices about adopting efficient behaviours, promote initiatives to increase energy awareness, manage the consumption profile to increase the self-consumption ratio, provide energy diagnosis for users and energy self-consumption monitoring, and provide funds and support for generation assets installation [58]. In Belgium, for example, the Energie ID cooperative offers its members the possibility to monitor their consumption in real-time through a specially developed virtual platform, and provides advice on convenient behaviours. Energy communities could also become a facilitator for collective investment in efficiency measures.

The definitions and the articles of the directives do not contain any topological specification about the dimension and the scale of a community. As mention in the introduction, it is likely that they will range from a building to a district scale, where more buildings, not necessarily of the same nature, interacts with each other; larger boundaries can anyway be reached, that would allow higher investments. Condominiums are interested in communities as well: this innovative structure give residents access to a greater possibility to electrify, and can boost collective energy-related actions which would be less effective, or even impossible, if performed alone, while give their maximum at a building level: for instance, if the heating is centralized, they could exploit the possibility to install a production plant to electrify it and add a storage system capable to maximize production’s exploitation, and contextually adopt measures to enhance the insulation of the whole building.

Some of this activity imply require a significant amount of skills and means to be carried out. For example, supplying (i.e. selling) energy to the members has several legal and regulatory implications. Therefore, it is most likely that the larger the community will be, the more the investment capacity, the more activities the community can undertake.

Furthermore, article 16 of EMD II and articles 22 of RED II state which rights, respectively, CECs and RECs should have and which principles should be pursued regarding their implementation in the system [12][19], which are listed below:

ECs should not face unfair charges for the energy they self-produce;

ECs should be entitled to access all appropriate energy markets directly or through a third party, without any kind of discrimination;

ECs should have access to appropriate remuneration schemes: in case they produce renewable energy, support schemes should be granted;

ECs should be protected against discriminatory behaviors from institution and other parties that could discourage or penalize involvement in renewables; moreover, clear information should be provided to citizens who intend to engage ECs and registration procedures should be transparent;

ECs should be remunerated properly in case they offer commercial energy services;

ECs activities should be entitled to conclude agreements with system operators, who have to facilitate energy transfers;

ECs should be entitled to own and run a distribution network. At the same time, they have some duties [12][19]:

ECs should not act in a discriminatory way towards its members, especially towards the most vulnerable ones;

ECs should be subject to fair, proportionate and cost-reflective network charges;

ECs should grant the rights of its members as costumer, including the freedom in supplier selection;

ECs who own a distribution network should protect connected consumers and be subject to fair charges at the connection point.

ECs are financially responsible for the imbalances they cause in the electric system; Finally, sharing and supply of energy among members can occur in two ways:

Virtually: the electricity shared flows on the public grid; this happens, for example, in France. Physically: the electricity shared flows on a grid owned (or, at least, managed) by the entity itself.

With reference to this last option, both directives underline the possibility for communities to run a distribution grid. This activity elevates energy communities to the role of local Distribution System Operators (DSO), with the implications treated in section 2.3.2 Regulatory aspects. The management of a grid is appealing to ECs, since it creates a sort of autonomous island within the electric system, which gives them full control on energy flows allowing more freedom in their operations – in the face of significant costs and adequate charges at the point of connection to the public grid. EMD II explicitly mention that it is choice of the Member State to grant or not this possibility.

In the present work, besides the definition of active costumers, indicated as prosumers, there will be no differentiation between RECs and CECs. Energy communities will be considered as a unique entity with the features, rights and duties mentioned above. In fact, it is unlikely that two separate bodies will be created for CECs and RECs, since this would mean a double regulatory effort and the differences are not such to justify it. Instead, it is likely that RECs will be a subset of CECs, for which the same treatment

2.2 The Italian legislation

Users who intend to produce electricity should adopt configurations pre-established in the national legislation and regulated by the Authority. The same holds true for the management of a private grid. Reference texts of the Italian legislation are the Testo Integrato dei Sistemi Semplici di Produzione e Consumo (TISSPC) for what concerns self-consumption allowed configurations and Testo Integrato dei Sistemi di Distribuzione Chiusi (TISDC) for privately owned distribution grids. They both define roles, limits, prerogatives and regulatory implications of such systems.

In this paragraph, the characteristics of currently allowed possibilities will be analyzed, together with the clarification of the shortcomings with respect to what stated in directives. It is in fact likely that they will be starting point for the regulation of collective self-consumption schemes, included communities.

2.2.1 Self-consumption allowed configurations

Italian regulation concerning self-consumption is quite complex, as its development followed an irregular path characterized by many stratifications and complexities [31]. Allowed configurations are called Sistemi Semplici di Produzione e Consumo (SSPCs). By definition, they are “systems connected to the public grid, either directly or indirectly2, characterized by the presence of at least one electricity

production unit and one consumption unit, and within which the transport of electrical energy for the delivery to the consumption units that are part of them is not categorized as transmission and/or distribution3, but as self-consumption” [33][34]. A fundamental prerequisite is the presence of one final

client and one producer, who might coincide.

For each SSPC, the TISSPC specifies the number of producers, production units4 and their typology, the

number of consumers and consumption units5 and other characteristics. These requirements must be

met in order to obtain the qualification and be cataloged in the relevant register. Gestore dei Servizi

2direct connection to the public grid means a connection to the public grid without the interposition of a privately

owned portion of grid. If a self-consumption scheme, instead, is connected to a privately-owned grid, in turn connected to the public grid, the connection is indirect.

3 such specification is needed to exempt users of SSPCs systems to undertake the role of system operators, which

have several implications, reported in section 2.3.2, the most important of which is that they do not fall under regulated regime for operators and cannot connect third party users.

4a production unit is defined in TISSPC and TISDC as “the set containing one or more power-generating modules

connected to the public grid […] such that the electricity injections can be measured autonomously”

5a consumption unit is defined in TISSPC and TISDC as “the set of systems for the consumption of electricity

connected to a grid, included the case connection occurs through private grids, such that the withdrawn of electricity associated with the mentioned set is employed for one and one only purpose or functional purpose”. A consumption unit has one only point of connection to the public grid (unless there is an emergency connection point). It includes the case of one or more entire real estates provided they are at full disposal of the same natural or legal person.

Energetici (GSE) is the body in charge to control whether the prerequisites are met and release qualifications, which are important because:

1. they are necessary to individuate involved subjects and attribute the different tariff treatments to different private configurations;

2. in article 4 clause 4.4 ARERA points out that “new plant configurations, characterized by the simultaneous presence of one or more production units6 and one or more consumption units7,

that are not part of the category of electric grid, nor in any of the categories that constitute SSPCs, are not admissible and hence must not be connected to the electric grid” [32].

.

Figure 2.1: classification framework of the Sistemi semplici di produzione e consumo, according to the TISSPC [32]. The boxes with a thicker border are the 11 recognized categories of SSPC.

Furthermore, TISSPC provides a classification of SSPCs, that is included in Figure 2.1 for information purposes. There is a total of 11 configurations. However, nowadays, the configurations that can be realized today are only three: ASAP, SEU and SSP [32]. Only SEU and SSP will be investigated, which account for most of the SSPCs: out of 786,000 self-consumptions configurations present in Italy in 2018 (for an installed power 17,6 GW and a consumption of 22,4 TWh), 134,000 are SEU (for a rated power of 4.8 GW) and 648,000 are SSPs (5.5 GW) [31]. Their characteristics are here listed [33]:

owner (regardless it coincides with the consumer), are directly connected to the single consumption unit of one and one only final costumer (physical or legal person) by means of a private connection. The excess energy remains in the hands of the producers, who can decide whether and how to sell it. Units shall be located within a surface free of interruptions (excluding the presence of streets, railways, rivers, lakes) and such arrangement interface the grid in one only point of connection (Figure 2.3b).

SSP (Sistemi in Scambio sul Posto): it is a system in which there are one or more production units from renewable sources or high-efficiency cogeneration, all of them managed by the same owner, who coincides with the owner (physical or legal person) of one or more consumption units. This possessor is the holder of a contract for Scambio Sul Posto, which is a commercial arrangement for the energy put on the network, explained in section 2.3.3 Economic aspects (Figure 2.3c). Direct connection through a private line is not necessary: if the owner adopt the Scambio sul Posto Altrove method, there can be one or more production units and one or more consumption units connected to the public grid, at point of connection, provided the owner is the holder of the contract, and belong to the same SSP (Figure 2.3d).

2.2.2 Closed Distribution Systems

The so-called Sistemi di Distribuzione Chiusi are system classified, pursuant to Article 28 of Directive 2009/72/EC, as Closed Distribution Systems (CDS). They are private grids that distribute electricity within defined boundaries. They are managed by a natural or legal person different from any distribution operator, even if they connect users’ generation and consumption units in the same fashion. According to the TISDC, CDSs are a family of electric grids (see Figure 2.2). Currently, in They are divided into Reti Interne d’Utenza (RIUs), i.e. CDSs with specific prerequisites, and Altri Sistemi di Distribuzione Chiusi (ASDCs), i.e. all the CDSs already in operation by august 15th, 2009 that do not

meet the prerequisite of RIUs as defined in [37]. Example of CDSs are the grids in the FCA industrial site Torino Mirafiori (RIU) and Fiumicino and Ciampino airports (ASDC).

CDSs should not be intended as a configuration for self-consumption, but rather as microgrids that in practical terms enable it at a collective level. Their interest lies in the fact that they could represent the framework to regulate the private network managed by hypothetical communities. In truth, through deliberation 788/2016/R/eel [36], the authority stated that the owner of SDC who would like to obtain the qualification as RIU should make request before June 30th, 2016. Beyond this date, no more SDCs

can enter the register of RIUs, that means, no more closed distribution systems can be realized. In any case, the opportunities that such systems open up raised the interest on them.

Figure 2.2: electric grids in Italy are divided between public and CDSs. Public grids are, as explained in section 2.3.1 Current system design, managed by system operators, whose activity is regulated and that must guarantee certain technical parameters. CDSs are grids that do not belong to the domain of public grids,

although physically interface them.

The peculiarities of CDSs, as specified in Testo integrato dei Sistemi di Distribuzione Chiusi [35], are listed below:

presence of a unique grid manager: as specified in the prerequisites of CDSs, the system is handled by an owner that is legally considered as distribution system operator with less than 5,000 connected users. Hence, it is responsible of regulating services of connection, metering, transport within its boundaries and sending data of injected energy to Terna for its connected users. Furthermore, the owner defines and charges connected users of transmission and distribution fees;

no limitations on the number of production and consumption units connected;

limitation on user typology and connectable users: CDSs can deliver electricity only within an industrial or commercial site and not to household costumers, and in turn only users who belong to these categories can be connected;

limited geographical extent: CDSs have precise boundaries that might be boundary walls or fencings;

free grid access: users who are located in an area covered by a CDS might have to be connected to it, but, if they require to, they must be formally recognized and treated as users of the public grid indirectly connected. In they will be charged with regulated fees for distribution;

connection point with public grid and private line: an SDC interfaces with the public grid by means of one or more connection point.