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Italy: Enel starts building 1.6GW of battery storage for 2024 COD as market hits inflection point


Enel Green Power will start building 1.6GW of battery storage projects in Italy this quarter, with the country’s utility-scale market expected to soar in the next three years.

The renewables arm of multinational energy firm Enel said construction will begin between April and June this year. The projects are spread across the country, located in 10 out of Italy’s 20 regions, but half of them will be on the island of Sardinia.

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Construction will take around 12 months and the systems are expected to be reach commercial operation date (COD) in 2024. Most are located at decommissioned or under-decommissioning thermal power plants. Sardinia is moving away from coal as its main source of electricity generation, opening up the avenue for renewables and storage.

The projects will use lithium-ion battery technology. Enel said that special attention is being paid to the end-of-life for those cells, highlighting its recent commissioning of a 4MW/1.7MWh second life system using EV batteries on the north coast of Africa.

The grid-scale energy storage market in Italy was described as one of the five most attractive in Europe by Aurora Energy Research last week while fellow research firm LCP Delta recently estimated utility-scale deployments will jump to around 800MW a year in 2023 and 2024, from a negligible amount prior.

This is due to a combination of growing renewable energy as it seeks 72% renewables by 2030 and several other factors. Changes in the past few years to permitting and the electricity balancing market have made large-scale projects more viable, while a broader familiarity with the technology amongst developers and financiers has meant more companies entering the sector.

While developers has spoken to have said that discharge durations for projects are still be decided, the market looks likely to move to longer durations much quicker than the UK and Germany did.

Energy trading and capacity market revenues will become part of the stack much more quickly in Italy than those two countries, where ancillary services are still the bulk of revenues today after several years of significant grid-scale deployments.

Enel for example won 2024 capacity market contracts for around 1GW of battery storage in auctions in early 2022.

It hasn’t revealed the BESS technology provider or system integrator for those projects, but used Fluence for previous Italy projects for which it was awarded ancillary service contracts.

Last week, UK battery storage developer Field announced it would enter Italy, while Innovo Group and Aquila Capital made similar moves last year.

The residential energy storage market in Italy is already very strong, with the second-highest (321MWh) deployments in 2022 after Germany according to figures from trade body SolarPower Europe. This is partially down to the country’s Superbonus 110% tax credit for home renovations which increase energy efficiency, including residential energy storage, brought in as part of Italy’s recovery from the Covid-19 pandemic.

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