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 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. By means of a sensitivity analysis, the dissection of the results of this work 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 cost of wind electricity. The incentives systems used by the Italian government to support wind energy are then discussed in light of the results.