New rules for dispatching services

The recession that began in 2008 highlighted the problem of the high cost of electricity in Italy and its negative effects on the competitiveness of the Italian production system. Consequently, the rules of the electricity market were revised in order to adopt more efficient mechanisms.

In accordance with the directives issued by the government and the industry Authority, Terna contributed – after consultation with the stakeholders concerned – to establishing the new Dispatching Service Market (DSM), as well as carrying out in 2009 a number of actions aimed at reducing the quantity, and thus the supply costs, of the resources for electricity dispatching. With regard to the latter question, the Electricity and Gas Authority introduced a mechanism as an incentive for Terna to reduce the volume procured on the DSM with respect to the previous year, and thus the expense for the system. Terna has developed a program to reduce and optimise the volume of resources procured for the dispatching services. Specifically, the Company:

  • reduced congestion by setting up a defence system;
  • optimised the supply of the secondary reserve and introduced methods and instruments to support its use in real time;
  • supplied the tertiary reserve on an hourly basis;
  • managed and optimised the energy restrictions on the strategic production and pumping units;
  • optimised the procedures regarding unavailability and the termination of restrictions, including by work on the grid;
  • used optimal power flow in real time.

The effectiveness of these actions enabled the Company to reduce the quantity procured for DSM services by about 10 TWh with respect to the previous year. Because of this reduction, the system saved about €800 million, while Terna obtained as much as possible from the incentive plan, i.e. €40 million (see also the section on “Revenue structure and regulatory framework”).