State Aid Analysis of the Italian Capacity Market for TERNA

In 2017, the joint Compass Lexecon and FTI Consulting Energy team supported TERNA, the Italian TSO, in preparing for the State aid review of the Italian capacity market (CM) – a reliability option mechanism – by the European Commission.

We conducted an audit of TERNA's generation adequacy outlook and market modeling. We also performed a full screening of the mechanism against the criteria set out in the State aid guidelines, looking at alternative measures, the efficiency of the mechanism and possible further improvements to facilitate clearance by the European Commission. In addition, we conducted a study on the Value of Lost Load (VOLL) in the context of the Italian capacity market.

The team included Fabien Roques, Dmitri Perekhodtsev, Guillaume Duquesne, Albert Riera, Francesco Astolfi, Yves Le Thieis, Aleksandra Khimich, Anastasia Tseomashko, and Daniel George.