Energy Management

As a producer of electricity, our portfolio of production sources is diversified in terms of the technologies we use and the geographical presence of our facilities. This diversification gives us a major role in Italy's path towards a greater use of renewable energy sources and in the heart of the nation's electricity grid.

With our production we actively contribute to the balance of Italy's energy system – not only are we producers, but we also contribute to the network services, thus becoming system operators.

While electricity is important for any kind of activity of our society, it is a resource that cannot be stored. Therefore, the amount of electricity fed into the system must always match the demand.

The operator of the Italian national grid, Terna, is responsible for keeping this balance, by interfacing with cooperating electricity producers that can adjust the production of their "programmable" power sources.

Managing Our Energy 

Our Energy Management department makes us possible to be a leading operator in the liberalised electricity market, with the main objective of maximising the Group's contribution margin.

Our Energy Management office handles about 12 TWh of electricity and can count on a broad, diversified, and balanced portfolio, that includes three different production sources: thermoelectric, hydroelectric, and wind power together with a diversified sale portfolio of wholesale customers. This unified and integrated management also helps us to perform a better control of risk.
The year 2017 was another year of going green, with over 60% of electricity generation from renewable sources (over a total of about 7.4 TWh) and the remainder produced from natural gas.

We also took another important step during the year towards technological diversification, entering the photovoltaic sector. The group's production facilities currently consist of:

• 39 wind farms for an installed capacity of approximately 1,100 MW in Italy;

• 46 wind farms for an installed capacity of approximately 720 MW in Europe;

• 19 hydroelectric power plants with an installed capacity of 527 MW in central Italy;

• 30 photovoltaic plants with an installed capacity of 89 MW distributed throughout Italy;

• a combined cycle plant fuelled by natural gas with an installed capacity of 480 MW in Sicily (Priolo).
Energy Management is the department assigned to ensure the economic sustainability of the generation portfolio.

In detail, Energy Management is responsible for daily maximisation of the contribution margin through the sale of electricity, optimisation of the procurement and production activities and hedging of the generation portfolio risk.

To reach said objectives and make integrated portfolio management more efficient, the function was structured into 3 main areas that work in close synergy to guarantee the analysis, planning, execution and control activities.
  • Front Office
    he Front Office area is assigned the Execution phase, implemented through the operational Trading and Bidding functions that operate on the forward and spot electricity markets, with the support of the Short-Term Analysis area.

    In particular, the Bidding function operates on all spot platforms to optimise the programmes of the Production and Consumption Units with regard to end customers with ERG contracts, applying the integrated supply strategy of the generation portfolio drawn up by the Short-Term function.

    Instead, the Trading function operates on the platforms of the forward market with the main objective of reducing generation risk on the contribution margin through transactions involving power and gas products.
  • Middle Office
    The Middle Office function is the "analytical" core of the Energy Management area and is responsible for the main planning activities.

    In particular, it is in charge of carrying out dynamic planning of the generation portfolio, optimising on the plant downtimes and target levels of the hydroelectric reservoirs, as well as drawing up the Multi-Year Production Plans and the mediumterm scenarios.

    The Middle Office's activities are therefore predominantly aimed at supporting the operating functions by drawing up price forecasts (Power, Gas and other Commodities) and market analyses to support the commercial transactions carried out by the Front Office.
  • Back Office
    The Back Office function performs the fundamental role of Control of the transactions carried out by the Front Office, through contract management, metering, settlement and liquidation of the contracts stipulated.

    Its main activity is ensuring the proper execution of contracts stipulated, respect of the regulatory provisions linked to the trades made and the preparation of adequate reports on the business activities.

Management of Environmental Certificates

Management of Environmental Certificates
The plants of the ERG Group, whether fuelled by renewable sources or natural gas, enjoy a number of benefits envisaged by the existing regulations for producers of energy with low environmental impact.

Specifically, plants fuelled by renewable sources are awarded Guarantees of Origin (GO): GOs are assigned by the National Grid Operator (GSE) on the basis of production (a guarantee is awarded for each MWh produced) and certify that the energy fed into the grid was produced with zero emissions. Thanks to its production, the ERG Group may request the recognition of approximately 3.5 TWh in GOs in the upcoming years.

GOs are a very important certificate, not only for the producer but also for customers: companies that make environmental awareness and reduction of climate impact key points in their strategies can affirm that their production does not generate indirect emissions (so-called Scope 2), qualifying their product as even more sustainable.

Conversely, the thermoelectric plant of Priolo, as a high-efficiency cogeneration power plant, enjoys the benefits of Energy Efficiency Certificates (TEE). The fact that the plant is able to obtain the simultaneous production of electricity and steam whilst generating high efficiency and significant energy savings is, in fact, a result of its configuration. The plant is therefore able to accrue these certificates for ten years from the start-up year of each module of the plant (up to 2019 in one case and 2020 in the other).

Linked to the production in a specific year, the Energy Efficiency Certificates are assigned by the GSE in the subsequent year, when they are added to the portfolio and are available for transfer to customers.
They are generally transferred through direct trades with institutional counterparts, while a part of production is traded on organised markets; their considerable value makes optimal management of this
asset particularly important.

Lastly, in order to guarantee compliance of the ERG Power plant with the European Union's Emissions Trading Directive, which implements worldwide emission reduction targets, CO2 emission quotas are purchased on the market. All those who emit CO2 into the atmosphere (the quantity of which is certified by an independent inspector) must "cancel" the emissions by purchasing an equivalent quantity of CO2 quotas.