Renewables and Energy Communities

RENEWABLES AND ENERGY COMMUNITIES

Fully convinced that microgrids would be an effective solution to allow high penetration of distributed renewable sources, since its establishment DeMEPA has carried out studies and participated in projects aimed at developing microgrid design in order to identify the related potential benefits as well as the technical and regulatory issues necessary for their full deployment.

Taking into account the participation in European projects in which it was possible to exchange experiences and information on this innovative subject, DeMEPA :

• provided technical assistance to the Municipality of Potenza, partner of  the two projects RE-SEEties and ENVision (2012-2014), aimed to improve through integrated policy-making and strategic competences the  energy saving, the renewables sources and the sustainable mobility in South-East Europe countries,
• developed in the frame of the European project LIVE+FACTOR20 the basic design of a microgrid concerned  a small rural municipality with considerable availability of renewable sources  and supplied by a relatively weak distribution network (2013),
• was partner in the PEGASUS project (2017-2019) focused on functioning simulation functioning of microgrids in seven pilot areas of Mediterranean countries,
•  is currently partner  in the ALPGRIDS project (2019-2022) aimed to creating a transnational enabling environment to foster microgrid solutions supporting the implementation of local energy communities.

Detailed description of the activities carried out on renewable sources, microgrids and local energy communities can be seen in the Reference Section.

Regarding  these topics some highlights resulting from DeMEPA experience are explained in the following.

Distributed Energy Resources

Environmental concerns about greenhouse gas emissions and global warming, the liberalized electricity market and government incentives have led to a growing development of the renewable energy sector over the years. In 2019, the contribution of RES on electricity consumption worldwide was 26.4%, while in EU28 the electricity generation  from RES was 32.8%, of which 75% attributable to solar, wind and biomass  (the remaining share is due to hydroelectric plants). This significant increase in electricity generation based on RES surely relies on the continued fall in the capital cost of the plant: in 2019 year the Levelized Cost of Electricity  from PV plants is comparable with that of coal used in large centralized generators and  natural gas used in CCGT plant.

Open LCOE for different generation sources

Table 2 – LCOE for different generation sources

                Source: Fraunhofer ISE (2019)

Other growth-enhancing factors of the generation from renewable sources have been the priority in dispatching and the incentive policies adopted in almost all countries : green bonds, production-based incentives (feed-in tariffs, net metering, net billing) and investment-based incentives (tax credits, grants). 

It has to be mentioned that RES contributed to reducing wholesale prices of electricity, thanks to the peculiarity of producing at virtually zero marginal cost when compared with that of fossil fuels. About the amount of this reduction different evaluations are available, while it is commonly believed that it tends to decrease as the share of electricity generated from renewable energy sources increases. 

RES integrated a distribution level of the power system is named as Distributed Energy Resources (DER). The utility is concerned due to the high penetration level of intermittent RES in distribution systems as it may lead to stability, voltage regulation and power-quality issues, particularly in case of networks relatively weak. Therefore, DER are required to fulfil with strict technical and authoritarian frameworks to ensure safe, reliable and capable operation of overall network.

Furthermore it has to be mentioned that on the electricity generated from RES there are positions that tend to regulate their development according to more restrictive criteria than the current ones. For instance the Council of European Energy Regulators  proposed the following essential points for the future:

• incentives to renewable sources, where still necessary, must be market-oriented (for example by means of  competitive auctions),
• the dispatching priority must be eliminated,
• renewable energy producers must participate in the market by sharing risks / opportunities, at least beyond a certain threshold of installed power.

Anyway with the growing deployment of DER units the power systems can no longer be considered as passive networks designed for “top-down” operation, where the production of electricity is concentrated in large plants that send the power to the load centers according to a one-way flow. The entire architecture of the electrical power system must be redesigned in Active Networks supported by ICT in order to undertake the increasingly complex operations related to significant share of distributed generation. In this framework Microgrids enabling high penetration of distributed generation without requiring re-design of the distribution system may be an effective solution.

Microgrids

There are several definition of microgrid. Adopting the one formulated by U.S. Department of Energy Microgrid Exchange Group : “microgrid  is a group of interconnected loads and distributed energy resources (DER) with clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid and can operated in both grid-connected or island mode.”

A simplified utility-connected microgrid

In a simplified scheme, an utility-connected microgrid, including distributed generation sources and loads, with an option of energy storage system, interfaces with distribution network via a Common Coupling Point (PCC) through which pass the bidirectional electricity flows with the public grid. This microgrid operates in parallel to the public network: electricity is  withdrawn from the grid when the local sources is not enough for the load demand and vice versa electricity locally generated exceeding the local demand is fed into the grid. 

All local sources and loads of the microgrid are controlled by an Energy management System mainly addressed to ensure the continuous balancing  between power and energy demand  with  generation,  being the voltage control and frequency performed by the public network. The Energy management System can also be used for peak levelling (by an appropriate energy storage system or ensuring only sensitive loads) or even to optimize the cost of the electricity service within the microgrid by varying the mix between locally generated energy and that purchased by producers.

The power generator in the microgrid are RES, such as wind, photovoltaic (PV), micro hydro, biomass, as well as heat and power cogenerating units (CHP) in presence of local use of heat, or clean power generation technologies, such as fuel cells (FCs) and micro turbines (MTs).

It should be noted that the local uses of the power generation within the microgrid reduces the power density in the upstream transmission and distribution networks with the consequent advantages of:

• less losses on power lines,
• investment deferring, or avoiding,  in connection with  a growing demand for electricity or in presence of weak network.

In addition to the parallel mode, the microgrid can operate in island condition: in this case the microgrids must have the ability to separate and isolate itself in the event of faults, voltage collapses, black-outs of the public grid or when the quality of power from the grid falls below certain standards. Microgrid can be reconnected to the public grid  without any interruption once that this is recovered. The possibility of operating in island mode has favored the development of microgrid  in military installations, institutional power systems, remote villages electrification and  in presence of weak distribution network with frequent shutdown.

A microgrid able to operate in island mode is based on different scheme of the grid connected ones and  has to provide specific additional functions:

• voltage and frequency management  by means one or more primary sources, 
• an improved balancing between supply and demand: in the event the connected loads exceeds the available local generation and the energy storage capability, demand side management has to be implemented (for instance assuring the supply of the sensitive loads only or acting on flexible loads that can be temporarily curtailed), 
• power quality control by means an adequate supply of reactive power and the ability to supply the harmonics required by nonlinear loads,
• taking into account the intermittency of renewable sources appropriate energy storage system or dispatchable generation units (such as microturbine, fuel cells) have to considered,
• a very performant energy storage units with power electronic interface are to be considered in order to quickly respond to the changes in power flow level: this function is provided by the public grid making use of the large generator inertia that is absent in RES sources or very low in microturbine or fuel cells. 

In the light of the above, the optimal configuration of the microgrid  is strongly related to the context in which it operates. In the presence of an efficient power system both in terms of continuity and quality of service, a microgrid working only in grid connected mode seems the more convenient solution. The possibility to exchange electricity with the public network, in output and in input, solves problems related to the intermittent renewable sources and allows a smoother balancing between generation and demand. The benefits acquired through incentives related to the use of renewable sources and the avoided transportation and distribution costs for the locally generated electricity can allow real reduced billing for the involved loads.

When the distribution network to which the microgrids is connected does not have sufficient reliability or quality of service, it may be advantageous to provide the microgrid capable of island mode operations. In this case, the achievable benefits must be compared to the additional  investments required by the microgrid to improve power security and quality . 

Although several research activities, demonstration pilots and concrete implementation of microgrids have been carried out worldwide there are still many technical challenges to be solved and regulatory barriers to overcome. On the basis of the many advantages that can be obtained: energy saving, reduction of emissions, improvement of reliability, microgrids are increasingly attractive to consumers and as such in the future, a large number of them will be installed at the consumer sites and will therefore become an integral feature of future power systems.

Energy Communities

Collective organizations whose main purpose, but often not unique, is the generation  and sale of electricity to its members, there are in Europe for more than a century.

EU, through the Directives 2018/2001 and 2019/944, to be transposed by each Member States into their legislation, have introduced two very significant  innovations regarding local energy communities and renewable sources. More precisely:

•   the first one is related to the  ‘Renewable Energy Communities’ in which the energy produced and self-consumed by the members of a community has be considered shared;
• the second one, that is part of the Electricity Market Directive introduces the ‘Citizen Energy Community’ that may be engaged 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.

Both these directives have in common the objective to offer to the members of the local community, or to the territory in which they operate, environmental, economic or social benefits.

Making reference to the Renewable Energy Communities the following principles apply (see Art. 21 and 22 of the Directive):

• the proximity between generation  and consumption as a substantial principle and not regarding the  contiguity,
• communities can be participated by citizens, local authorities,  small and medium-sized enterprises: large enterprises and those whose main business is in the electricity sector are therefore excluded,
• the goal of the community should be to give benefits to the local community and not to create financial profits,
• members of the local community must maintain their rights as individual consumers and therefore their bills and the possibility to choose their own energy supplier,
• the local community receive remuneration, including, where applicable, through support schemes, for the self-generated renewable electricity that they feed into the grid, which reflects the market value of that electricity,
• renewable energy communities, despite their limited and particular size, must have the possibility of accessing all markets and incentive schemes.

Member States shall put in place an enabling framework to promote and facilitate the development of renewables self-consumption based on an assessment of the existing unjustified barriers to renewables self-consumption in their territories.

It is clear from the above that the two directives favour the development of renewable sources and microgrid. It can indeed be said that the microgrid  find in the two directives their organizational at the legal level.

The Renewable Energy Community Directive has benn transposed in Italy by  the Art.42 bis of the Law n. 8  dated 28/2/2020. This law allows a collective self-consumption of the electricity generated by renewable source: the consumers can joint to become a collective prosumer together.

According to this Law:

• the community has no more than 200 kW of renewable sources,
• the withdrawal points of the consumers as  well as the connecting points of the renewable plants are to be located on low voltage electricity distribution  grids underlying the same medium voltage / low voltage substation,
• all the generated electricity from renewable sources has to be fed into the existing distribution network and acquired by GSE, the national company appointed to promote the sustainable development in Italy. 

While each member of the community pays the same bill for the consumed electricity and committed power (all levies, charges and taxes), the community receives the following benefits for each kWh of the ‘Shared Electricity’ : 

• the ‘zonal price’ of the electricity increased by 2,6 % ( around 55 €/MWh on average in 2019 year  in Northern Italy ); the increase of 2,6% takes into account the avoided technical losses in transmission and distribution networks  due to local generation,
• the rate for electricity transportation and distribution (equal to 0.822 €/MWh in 2020 year),

being the ‘Shared Electricity’ the minimum between the electricity generated by the renewable sources and the overall electricity withdrawn by all the members of the community.

These benefits are additional to the ones related to the existing ones mainly consisting in fiscal benefits related to the investment for the RES installation (mainly consisting in fiscal benefits).

In compliance with Art. 21 of the Directives 2018/2001 concerning the renewables self-consumers located in the same building, including multi-apartment blocks, the Italian law sets they are permitted to arrange sharing of renewable energy that is produced on their site or sites between themselves, without prejudice to the network charges and other relevant charges, fees, levies and taxes applicable to each renewables self-consumer.

Download PDF – BENEFICI DERIVANTI DALL’INSTALLAZIONE DI UN IMPIANTO FOTOVOLTAICO CONDOMINIALE

According to the Energy@home report drawn up by Elemens, in Italy there are 2.6 million of multi-apartment blocks potentially interested in the installation of PV systems for energy communities with about 6-9 GW photovoltaic installations for self-consumption by 2025. 

ARERA, the Italian national Authority for energy, is currently in advanced preparation of the implementing regulations for renewable energy communities making use of  new renewable sources and will subsequently also issue those relating to renewable energy communities having  pre-existing RESs, in order to replace the previous  ‘Scambio sul posto’ regulation.