By Francesca Landini and Giancarlo Navach
MILAN (Reuters) -Italy awarded all 10 gigawatt hours of the capacity it tendered in its first battery storage auction, recording an average price well below the cap set by the regulator, the CEO of grid operator Terna said on Wednesday.
The auction is a milestone in the country’s push to integrate more renewable energy into its grid.
Terna, which is managing the auction on behalf of the state, awarded more than half of the total storage capacity to five projects developed by Italy’s biggest utility Enel.
Plenitude, the retail and renewable unit of Eni, was awarded two projects worth 500 megawatt hours, the power grid operator said in a statement.
Under agreed terms, revenues to developers are fixed for a 15-year period as Italy tries to reduce investment risk and accelerate the deployment of batteries.
Storage developers will receive an average price of nearly 13,000 euros ($15,240) per megawatt hour per year for the storage capacity made available to Terna, well below a ceiling of 37,000 euros per MWh.
As its production of intermittent wind and solar grows, Italy needs to increase its storage capacity to make the grid more stable. It can also reduce the risk of renewable electricity prices falling to zero during periods of high supply and low consumption, which can stifle investment.
The awarded capacity, based on lithium-ion technology, will come online by 2028.
“Storage will make it possible to better integrate renewables,” Terna’s CEO Giuseppina Di Foggia said, speaking at the Energy Summit conference in Milan.
Di Foggia added the capacity awarded at Tuesday’s tender represented an investment of around 1 billion euros, adding further auctions would follow, including one specifically for hydroelectric storage infrastructure.
Developers of renewables had offered capacity four times higher than the maximum tendered.
($1 = 0.8530 euros)
(Reporting by Francesca Landini and Giancarlo Navach; writing by Francesca Landini, editing by Gavin Jones, Ed Osmond and Barbara Lewis)
