A Probabilistic Approach to Wind Energy Generation Costs in Italy

This work undertakes a probabilistic analysis of the current private LUEC - Levelized Unit Energy Cost of electricity produced by large offshore and onshore wind power plants in Italy. The calculations of the implemented LUEC model use factors whose data was collected throughout relevant existing literature on the subject. The assumptions on the probability distributions of these factors are defined trough a best-fitting procedure executed on the collected data. The calculations are performed using the Monte Carlo method with a number of trials dependent upon the achievement of desired confidence and precision levels for selected statistics of the resulting LUECs’ probability distributions curves. From the results of the simulation it can be concluded that in Italy the mean (and median) private wind LUEC is 0,1404 Euro/kWh (0,1147 Euro/kWh) in the onshore case and 0,1074 Euro/kWh (0,1036 Euro/kWh) in the offshore case (figures expressed in 2010 Euro). By means of a sensitivity analysis, the dissection of these results points to a major influence of the territorial factor in the onshore energy cost and to a combination of territorial and technological factors in the offshore one. The work also analyses the impacts of the cost necessary to upgrade the electric grid in order to accommodate increasing levels of wind power and of the negative externalities produced by this source on, respectively, the public and the social costs of wind electricity. In addition, the actual and future states of the incentives assigned by the Italian government to wind energy are discussed in light of these results.