Techno-economic analysis of simple production and consumption system for hydro power plants. A case study

Over the last years, European policies aim to avoid indiscriminate incentives for the energy efficiency in building and the integration of renewables power plants. The recent directives subsidise the grow of new renewable power capacity, under the constraint to aggregate power plants and consumption unit within well-defined perimeters. In particular, Renewable Energy Directive II 2018/2001 (RED II) introduced new concepts and measures to promote self- consumption. Among these, Energy Communities are certainly the most popular innovation. The goal is to encourage local self- consumption and enable a more efficient energy management and distribution grids management, by limiting reverse power flows and cascade effects. Moreover, this approach aims to get citizens more involved in the energy transition, giving them more autonomy and responsibility. Despite these mechanisms are designed to boost consumer participation, in practice they are seeing limited uptake and a negligible effect on the power system. One of the main reason for this inefficiency is due to the fact that currently the players capable to influence the energy sector with the required capital are large investors, typically the energy production companies, rather than individual citizens or small consumers. Additionally, it is necessary to consider that innovations, such as Energy Communities, are tied exclusively to the new renewable capacity neglecting the existing one already in operation. However, the Legislative Decree 210/21, with which Italy implemented part of RED II, introduced a new definition for Simple Production and Consumption System (SSPC), which represent a concrete opportunity for the energy production companies. This new definition can enable physical self- consumption, ensuring economic sustainability for renewable power plants that are no longer supported by previous incentive schemes. Moreover, it offers benefits to distribution grids through a more efficient energy flows management and provides implicit incentives to both producers (owners of the renewable plants) and consumers. To evaluate the implementation of a Simple Production and Consumption system (SSPC) between a producer and an end-user, we conducted a technical-economic analysis on a specific case study. The first step is to evaluate the distance between the two units that have to be connected. This is a key factor because the cost of the connection infrastructure significantly affects the project economic viability and represents one of the main obstacles to its realization. Another essential step is to analyse the features of both the production and consumption units. For this purpose, historical production and consumption data from the past year were collected. These data were used to build the production and consumption curves and to assess their suitability to be coupled. Production and consumption curves showed a good match, so we proceeded to estimate monthly and annual self- consumption. These data represent the foundation to the economic analysis, which includes the assessment of the current tariff applied to the end user for the withdrawals from the grid. Based on the estimated physical self- consumption and on the economic tariff conditions, a supply tariff can be developed for the energy exchanged under the SSPC configuration. The goal is to ensure economic benefits for both producer and end-user. Finally, it is necessary to design the electrical connection and it should include all necessary measures, to ensure safe operation and accurate energy flows measurement within the system. The model used to implement the Simple Production and Consumption System (SSPC) allows assessing all the key aspects, ensuring both technical reliability and economic sustainability. Access to historical production and consumption data of both units and the analysis of the avoided costs related to additional components on the bill, allowed calculating accurately the savings resulting from SSPC configuration. These savings are redistributed between the consumer and the producer, owner of the power plant, to mitigate the impact of energy price fluctuations given by the current uncertainties in energy markets. From a technical point of view, the better electrical connection was identified. It allows safe system operation and it always ensures to inject into the grid the produced energy regardless of consumer needs. SSPCs are solutions to ensure the economic sustainability of renewable power plants and they are able to provide some benefits for all power system actors. Producers can improve the economic value of the energy produced through an implicit form of incentive, while consumers can save money by exploiting energy directly on-site. The grid itself improves its operational efficiency thanks to the SSPCs influence on the end-user behaviour. In fact, in order to maximize economic saving, end-users will tend to shift their consumption to times when local energy is available. This reduces energy flows to higher voltage grid levels helping to avoid additional costs for distribution grid upgrades. European governments should adopt strategies to promote the development of these systems and the aggregation of renewable power plant already in operation. Thanks to these configurations public support could be provided at a much lower cost due to the presence of an existing implicit form of incentive.