The European Commission, in accordance with EU State aid regulations, has given its approval to a €17.7bn Italian initiative aimed at facilitating the establishment and functioning of a centralised electricity storage system. This initiative aligns with the goals of the European Green Deal and the ‘Fit for 55’ package, as it plays a crucial role in fostering the incorporation of renewable energy sources into the Italian electricity grid.

Italy’s proposed scheme involves supporting the development of electricity storage facilities, collectively possessing a capacity exceeding 9 GW/71 GWh. This initiative is slated to remain in effect until 31 December 2033.

The primary objective of this measure is to streamline the integration of renewable energy sources (RES) into the Italian electricity grid. Given that RES electricity generation may not always align with periods of peak demand, the implementation of electricity storage systems becomes crucial. These systems enable the storage of surplus electricity during times of overgeneration, making it available during periods of scarcity. Consequently, this approach helps mitigate RES curtailment and reduces the necessity for additional electricity production from programmable yet environmentally detrimental power plants, such as fossil fuel-fired facilities.

Within this scheme, financial assistance will be provided in the form of annual payments to cover both the investment and operating expenses incurred by electricity storage developers. The selection of beneficiaries will occur through a competitive, transparent, and non-discriminatory bidding process. In this process, electricity storage developers will vie for support by submitting offers based on the lowest requested aid per offered capacity volume.

This initiative is open to all technologies that meet the performance criteria established by the Italian Transmission System Operator (TSO) and endorsed by the Italian Energy Regulator. The roster of eligible electricity storage technologies will undergo a biennial review to incorporate advancements in technology. Presently, qualifying technologies include electrochemical lithium-ion storage and hydro pumped storage plants.

As an integral component of this initiative, the establishment of a novel “time-shifting trading platform” is envisioned. This platform will aggregate storage capacity, presenting it to external entities in the shape of standardized time-shifting products. Those benefiting from the measure will be mandated to contribute their storage assets to this platform. The Transmission System Operator (TSO) will subsequently allocate physical storage assets to fulfill standard time-shifting contracts, thereby optimizing the utilization of available storage resources. This innovative platform will empower renewable energy source (RES) producers to leverage the supported storage assets, enabling them to directly transition their electricity production from periods of surplus to periods of scarcity.

The Commission conducted an evaluation of the scheme in accordance with EU State aid regulations, specifically scrutinising Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU). This article allows Member States to provide support for the advancement of specific economic activities, subject to specific conditions. Additionally, the assessment considered the 2022 Guidelines on State aid for climate, environmental protection, and energy (CEEAG). These guidelines provide a framework for evaluating state aid measures in the context of climate, environmental protection, and energy objectives.

The Commission’s evaluation yielded the following findings:

  1. The measure effectively fosters the development of an economic activity, specifically in the realm of electricity storage plants. Moreover, the scheme is deemed essential and appropriate for expediting investments in electricity storage. Simultaneously, it aligns with the objectives of key EU policy initiatives, including the European Green Deal and the ‘Fit for 55’ package.
  2. The scheme is deemed proportionate, with the level of aid corresponding to the actual financing requirements. Adequate safeguards, such as a competitive bidding process for aid allocation, will be implemented to restrict aid to the minimum necessary.
  3. The aid exhibits an incentive effect, as the supported storage facilities would not be financially viable without public support.
  4. The positive effects resulting from the aid outweigh any potential distortions in competition and trade within the EU.

Based on these conclusions, the Commission has granted approval to the Italian scheme in accordance with EU State aid regulations.