Five questions to CEO Ernst Gostner about the project, economics of geothermal energy, Fri-El’s plans for Italy and wind power, photovoltaics and pumping, and permitting issues

The Bolzano-based company Fri-El, which until now has mainly developed onshore wind power plants in Italy, has decided to focus on medium-enthalpy, zero-emission geothermal energy with its new Pangea project. The first 240 MW demonstration plant will start in 2025 in Ostellato in the province of Ferrara and will heat Fri-El’s hydroponic greenhouses. But the company aims to build 22 more similar plants, 15 of which are in the Po Valley alone, to feed district heating networks in winter and produce electricity in summer. The Relay asked Fri-El CEO Ernst Gostner a few questions to better understand the economics of this new technology, which is among the “innovative renewables” funded by the Fer 2 decree, but also Fri-El’s plans on wind, photovoltaic, and hydro pumping in Italy, as well as the regulatory framework for renewables. Below we publish a short interview in which Ad Gostner addresses all these issues.

What does the Pangea project consist of?

Pangea is a medium-enthalpy, zero-emission geothermal project because geothermal fluids are fully re-injected back into the ground. The project is specifically designed to feed district heating networks in large cities, and Fri-El is already discussing this with utilities. During the summer, the thermal energy produced will be converted into electricity to be fed into the national grid, using a process called organic ranking cicle, which has an electrical yield of 13 percent of the thermal energy used. Using surveys made over the years by oil and gas companies in the Italian territory, Fri-El identified 100 possible installations. Of these, it will implement 22 throughout Italy over the next decade, 15 of which will be in the Po Valley. Each installation will have a capacity between 150 and 250 MW thermal. In Ostellato, in the province of Ferrara, Italy’s first zero-emission geothermal plant is under construction, which will power hydroponic greenhouses also owned by Fri-El. This is a demonstration plant that will be operational in 2025. The project involves drilling for several thousand meters, which will be done using technology already developed by oil and gas companies.

Is the 200 euro per MWh electricity incentive in the latest draft of the Fer 2 decree (see Staffetta 04/08/22) enough to support zero-emission geothermal energy?

In the course of interlocutions with the ministry, we called for raising the tariff to 225 euros per MWh of electricity. In Germany, where this type of geothermal is widespread and growing steadily, the incentive is 250 euros per MWh. The sustainability of the investment, however, depends mainly on financing for the thermal energy produced. We have asked the ministry for a separate tariff, which should come in another decree. In fact, the wells of the Pangea project are expected to produce heat for about 3,000 hours a year that will feed the city’s district heating networks, and, for the remaining hours, in summer, electricity. The initial cost of the Ostellato plant-which has a capacity of 240 MW thermal-is 140 million euros for the four pairs of wells, 60 million euros for the system to convert thermal energy into electricity, plus about 10 or 15 million euros for connection to the district heating network. In contrast, the operating costs of a geothermal plant are very small: for Ostellato they are around 6 million euros per year. The lifetime of the geothermal source is almost unlimited, as in the case of hydropower.

Broadening the look, how many renewable plants does Fri-El have and what business model does it carry out in Italy?

Fri-El has about 1,300 MW of renewable plants in operation in Italy. These are mainly onshore wind farms, but also biogas, bioliquids, biomass, hydropower and photovoltaics. We also have about 1,200 MW onshore wind and 800 MW photovoltaic in development. Total sales in 2022 were 623 million euros with a gross operating margin of 286 million euros. For the time being, we do not have any floating wind projects at sea because we want to wait a moment, as it is still an immature technology. The business model is to develop in-house, license and then produce electricity from the installed systems. We want to continue to invest mainly in onshore wind but, at the same time, we have identified a need for decarbonized thermal energy, so we have set our sights on Pangea’s zero-emission geothermal.

In recent years, Fri-El has presented some projects for hydroelectric pumping. While instead it has very few photovoltaic systems installed in Italy. Why?

We believe that hydropower pumping is a key technology to support the integration of renewable and intermittent sources such as wind and photovoltaics into the power grid. With all these renewable projects, there can only be an increase in pumping projects, especially in southern Italy, and we are sure that a remuneration system will also come soon. To date Fri-El has 4 pumping projects of about 500 MW each, all in the South. As for photovoltaics, we got off to a late start and therefore do not have many systems installed in Italy. We had some doubts about the Energy Account mechanism-a lot of money in a short time-and we did not invest at that time. But now we are doing it.

What is missing in the regulatory framework for renewables?

We would hope that Italy would adapt to the timeframe prescribed by European regulations. Permit processes are still lengthy and continue to be blocked by landscape authorities. We have 15 wind projects already hinged at the Ministry of Environment whose outcome we are awaiting. For repowering, the regulations are more streamlined and allow for a range of changes without having to start over with the permitting process. Next, with regard to thermal renewables, I would hope that the government would provide some sort of “dispatch priority” for district heating networks fueled by both gas and geothermal resource, giving precedence to this over fossil fuels.

31/03/23, 11:08 a.m. – Print | Daily Relay

https://www.staffettaonline.com/Stampa.aspx?id=375046