Unareti, the company of A2A Group acting as electricity distributor system operator in the metropolitan area of Milan and in other areas and provinces in Lombardy, is exposed to the above-mentioned risks.
In detail, one of the most critical concurrences can be found in the metropolitan areas, where the high electricity loads, constantly increasing, are combined with the summer phenomenon of the heat waves which puts the networks under stress.
During this season, many malfunctions happening at the same time may result in prolonged black-out for citizens waiting for the reactivation of the service.
Therefore, there may be reputational impacts for Unareti and the Group due to the outage and economic-financial consequences given by the potential increase in the penalties related to service quality - also because the Energy Authority (ARERA) has set more binding targets for the next years.
Unareti is constantly monitoring average annual minutes of outage per customer and the average number of interruptions per customers (annual basis) - parameters sets by ARERA. As an example, in 2020 the average annual minutes of outage of Milan is 29.24 min/user, in line with the North of Italy average, compared to the national average of 41 min/user.
As for the resilience, the Authority also monitors the number of users impacted for more than 8 consecutive hours of outage.
Significant investments are ongoing in order to develop and modernise the electricity networks to guarantee service efficiency - even in a context characterized by the accelerating electrification of consumption for the heating of buildings (i.e., heat pumps) and for electric mobility.
Unareti has in fact launched a three-year plan, updated every year, aimed at increasing the resilience of its networks. The Plan was proposed on a voluntary basis to fulfil a specific programme by ARERA.
In particular, the Company has completed an extraordinary plan of substitution of the malfunctioning components (network joints) on the Milan network (the territory most exposed to this issue) to increase the resilience to heat waves. Moreover, A2A in cooperation with Politecnico di Milano, is experimenting alternative solutions to optimize the network through the adoption of machine learning algorithms – first company to apply this technology at Italian level.
All the interventions on resilience are subject to a mechanism of awards and penalties: a model for the calculation of the business case is applied to each intervention, in order to assess its eligibility based on cost-benefits criteria defined by ARERA. If the score is higher than a benchmark value, a part of the obtained benefit is shared with the distributor (Unareti), thus producing a positive effect at EBITDA level.
In 2020 this benefit was equal to around 100 k€ and 1.2 €M in 2021, while for the next years the Company plans interventions with benefits higher than 1 €M.
The investments in the network resiliency plan presented to ARERA, forming part of the Unareti development plan, amount to around 20 €M.
Checked or substituted network joints in 2020
Efficiency benefit awarded by ARERA in 2021
Investment plan for the resilience of electricity networks
We are investing in network development and renewal that will allow us to improve meshing and thus reduce re-supply times, digitalize information and signals, and automate the forecasting of potential malfunctions and the location of faults.
Between 2021 and 2030, we have foreseen investments amounting to around two billion euros in electricity networks, 13 new primary and 1,000 new secondary substations, 2,000 km of new electricity network.
These interventions will allow to extract benefits on a structural basis and to mitigate the probability and the negative impacts from accidental interruptions in the electricity distribution service. Besides the reduction of potential penalties from ARERA, the investments on electricity networks will generate a benefit on the quality of the service provided to citizens, supporting at the same the time the increase in the renewable capacity connections to the grid (increase in hosting capacity).