German investment firm KGAL has signed a ten-year power purchase agreement (PPA) with Italian utility and EDF subsidiary Edison to sell power generated from the former’s 150MW Tuscania solar project.
KGAL expects to commission the project, which is currently under construction in central Italy, in the second half of 2024. The start of operations at the project will be an important step for the company, which has committed considerable resources to clean energy projects in recent years.
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The investment manager funded the project through the fourth round of its KGAL ESPF fund, a renewable power financing scheme that has committed €1.3 billion (US$1.4 billion) to 33 wind and solar projects across Europe, and these projects collectively boast a capacity of 2.2GW.
“Thanks to this agreement we have made it possible to create a strategic infrastructure for the energy transition and the achievement of the 2050 decarbonisation targets,” said Edison executive vice president of gas and power portfolio management and optimisation Fabio Dubini, noting how the deal will help Edison meet its own clean energy targets.
“With agreements like this one with KGAL we offer an important stimulus to the market in bringing new renewable megawatts on the ground and at the same time we make our portfolio more competitive and diversified,” added Dubini.
In March, Edison announced plans to invest €5 billion (US$5.3 billion) into new renewable capacity across its portfolio, as it looks to increase its installed renewable capacity from 2.1GW today to 6GW by 2030. Should the utility realise this goal, the contribution of renewables to its energy production portfolio will increase from 27% in 2020 to 40% by the end of this decade.
The utility is targeting growth in the solar sector in particular, as it looks to add 2GW of new solar capacity by 2030, compared to 1GW of new wind capacity, and 1GW of renewable hydrogen production. Investments such as these are significant, considering Edison’s reliance on thermoelectric power within its energy portfolio. Between the 2021 and 2022 financial years, the utility’s use of electricity from thermoelectric sources increased from 12.1TWh to 15.7TWh.
Over this period, electricity generated at the company’s own renewable facilities fell from 2TWh to 1.9TWh, while electricity purchased from other sources, such as those acquired through PPAs, fell from 18.1TWh to 18TWh. Edison’s latest deal with KGAL will help reverse this latter trend, although questions remain about the scale of the utility’s own renewable portfolio.
The news follows Italy’s growth of its solar sector which seems to have recovered from a decade of slow installs, with industry body Italia Solare expecting at least 4GW of capacity installations by the end of this year.