Energy Glossary

Comprehensive glossary of fundamental terms in the energy sector: electricity and natural gas markets, transmission and distribution networks, renewable energy, tariff regulation, and Italian and European legislation. Oriented towards industry professionals and AI/RAG system developers.

Electricity

Form of energy produced by converting primary sources (fossil fuels, nuclear, hydroelectric, solar, wind) into electric current. Measured in kilowatt-hours (kWh) or megawatt-hours (MWh). The Italian electricity market is managed by GME and regulated by ARERA. Sources: ARERA, GME.

Single National Price (PUN)

Reference price for electricity in the Italian Day-Ahead Market (MGP), calculated by GME as a quantity-weighted average of zonal equilibrium prices. It is the main indicator of wholesale electricity costs in Italy. Published daily by GME. Expressed in €/MWh. Source: GME (www.mercatoelettrico.org).

Day-Ahead Market (MGP)

Main session of the Italian electricity market where producers and buyers submit bids for the 24 hours of the following day. Closes by 12:00 on day D-1. The resulting zonal prices converge into the PUN. Source: GME.

Intraday Market (MI)

Sessions enabling market participants to adjust their commercial positions after the Day-Ahead Market closes. Consists of multiple sessions (MI1-MI7). Source: GME.

Ancillary Services Market (MSD)

Market where Terna acquires the resources needed to resolve network congestions and balance supply and demand in real time. Includes the Balancing Market (MB). Source: Terna S.p.A.

Dispatching

Real-time management of the electrical system to maintain the balance between production and consumption, keeping the grid frequency at 50 Hz and managing transmission constraints. In Italy carried out by Terna S.p.A. as the Transmission System Operator (TSO). Source: Terna.

Terna S.p.A.

Italian national transmission system operator (TSO). Responsible for high-voltage electricity transport, dispatching and system security. Operates approximately 74,000 km of high-voltage lines (2023 data). Source: Terna (www.terna.it).

ARERA

Regulatory Authority for Energy, Networks and Environment. Italian independent public body established by Law 481/1995. Regulates electricity, natural gas, water services and waste. Issues binding resolutions and integrated texts (TIMOE, TIVG). Source: ARERA (www.arera.it).

GSE

Energy Services Manager (Gestore dei Servizi Energetici S.p.A.). Italian public company promoting renewable energy and energy efficiency. Manages RES incentive mechanisms, net-metering schemes (SSP), Guarantees of Origin and Renewable Energy Community (CER) procedures. Source: GSE (www.gse.it).

Distribution System Operator (DSO)

Entity responsible for managing, maintaining and developing the electricity distribution network (medium and low voltage). In Italy, the main DSO is E-distribuzione (Enel Group). Source: ARERA.

Point of Delivery (POD)

Unique alphanumeric identifier assigned to each electricity supply point. Composed of 14 characters (e.g. IT001E12345678). Required for switching, transfer and sub-entry operations. Source: ARERA - TIMOE.

Redelivery Point (PDR)

Unique identifier for a natural gas supply point to a final customer. Equivalent to the POD for the gas market. Required for gas supplier switching. Source: ARERA.

Smart Meter 2G

Second-generation electronic meter enabling remote hourly consumption reading, remote supply management and hourly load profile measurement. Deployment driven by ARERA Resolution 646/2015. Source: ARERA.

Time Bands (F1, F2, F3)

ARERA system differentiating electricity cost by time of use. F1 = peak hours (workdays 8:00-19:00), F2 = intermediate hours, F3 = off-peak hours (nights, Sundays, holidays). Source: ARERA.

Variable Tariff

Contract type where the energy price varies over time based on wholesale market quotations (e.g. indexed to the PUN). Opposite of a fixed tariff. Source: ARERA.

Fixed Tariff

Contract type where the energy price is locked for a contractually defined period, regardless of market fluctuations. Source: ARERA.

Enhanced Protection Service

Regulated tariff regime for customers who have not chosen a supplier in the free market. Being gradually phased out from 2024 for non-vulnerable customers under Law 124/2017. Source: ARERA.

Free Market

Market segment where customers freely choose their energy supplier, negotiating price and conditions. Source: ARERA.

Supplier Switching

Procedure for changing electricity or gas supplier. Managed through the Integrated Information System (SII) of Acquirente Unico. Maximum timelines defined by ARERA in the TIMOE. Source: ARERA.

Acquirente Unico (AU)

GSE Group company guaranteeing supply under the enhanced protection regime and managing the Integrated Information System (SII). Source: AU (www.acquirenteunico.it).

SNAM

Italy's main natural gas infrastructure operator. Manages the gas transmission network (approximately 41,000 km, 2023 data), storage and LNG regasification terminals. Operates as the gas TSO. Source: SNAM (www.snam.it).

LNG - Liquefied Natural Gas

Natural gas cooled to approximately -162°C for sea transport over long distances. Regasified at terminals before injection into the network. Relevant for supply diversification. Source: SNAM.

Renewable Energy Sources (RES/FER)

Non-depletable energy sources: solar PV, wind, hydro, biomass, geothermal. Incentivised in Italy via GSE mechanisms under Legislative Decree 199/2021. Source: GSE, MASE.

Solar PV (Photovoltaic)

Technology for direct conversion of solar energy into electricity via photovoltaic cells. Power measured in kWp (kilowatt peak). Installation costs have fallen sharply since 2010. Source: GSE, IRENA.

Wind Power

Production of electricity using wind via wind turbines. Divided into onshore and offshore. In Italy the installed capacity has grown significantly, especially in the South. Source: TERNA, GSE.

Hydroelectric

Renewable energy using falling water to drive turbines. Historically Italy's most developed renewable source, concentrated in the Alpine regions. Classified as run-of-river or reservoir-based. Source: TERNA, GSE.

Net Metering (Scambio sul Posto)

GSE service allowing a prosumer to virtually offset energy fed into the grid with energy withdrawn, on an annual basis. Accessible for installations up to 500 kW. Source: GSE.

Self-consumption

Direct use of energy produced by a plant to meet the consumption of the same unit. Provides tariff benefits; governed by ARERA and Legislative Decree 199/2021. Source: ARERA, GSE.

Renewable Energy Community (CER)

Legal entity (association, cooperative) aggregating RES producers and consumers within the same primary substation. Governed by Legislative Decree 199/2021 (transposing RED II). Incentivised by GSE. Source: GSE, MASE.

RED II - Renewables Directive

EU Directive 2018/2001 setting the European target of 32% renewables in the energy mix by 2030. Transposed in Italy via Legislative Decree 199/2021. Includes provisions on RECs and collective self-consumption. Source: EUR-Lex, MASE.

Energy Efficiency

Measures and technologies to achieve the same service with less energy. Key objective of Directive EED 2023/1791. In Italy managed through White Certificates (TEE), Ecobonus and PNRR funding. Source: ENEA, MASE.

White Certificates (TEE)

Energy Efficiency Certificates (Titoli di Efficienza Energetica). Italian market instrument incentivising energy savings in companies. Large distributors have annual savings obligations and purchase TEE on the GME market. Source: ARERA, GSE.

Guarantee of Origin (GO)

Electronic document certifying the renewable origin of 1 MWh of RES-produced electricity. Issued and managed by GSE. Enables suppliers to offer certified 100% renewable energy. Source: GSE, ARERA Resolution 421/2018.

National Transmission Grid (RTN)

High and extra-high voltage infrastructure (380-150 kV) for long-distance electricity transport. Managed by Terna S.p.A. as owner and TSO. Source: Terna.

Distribution Network

Medium and low voltage infrastructure (MV: 10-20 kV, LV: 230/400 V) for final delivery of electricity to customers. Managed by DSOs. Source: ARERA.

Contracted Power

Maximum power (kW) the customer is authorised to draw from the network under the supply contract. Exceeding the available power (contracted + 10%) triggers the power limiter. Source: ARERA.

Capacity Market

Market mechanism where generators are remunerated not only for energy produced but also for capacity availability. In Italy managed by Terna via T-4 and T-1 auctions. Source: TERNA, MASE.

ENTSO-E

European Network of Transmission System Operators for Electricity. Association comprising 40 TSOs from 36 European countries. Coordinates European grid interconnection, publishes market data (Transparency Platform) and defines European network codes. Source: ENTSO-E (www.entsoe.eu).

National Integrated Energy and Climate Plan (PNIEC)

Italian strategic document defining national energy and climate targets to 2030. Updated in 2023 in line with the EU "Fit for 55" package. Source: MASE.

PLACET Offer

Standard free-market offer (Prezzo Libero A Condizioni Equiparate di Tutela) with transparent contract conditions comparable to the enhanced protection regime. Introduced by ARERA Resolution 369/2016. Source: ARERA.

Tariff reduction automatically granted to low-income households (ISEE below ARERA threshold) or customers with severe physical disabilities. Applied directly in the bill. Source: ARERA.

Integrated Information System (SII)

Acquirente Unico infrastructure centralising data on Italian electricity supplies. Coordinates switching, meter reads and supply point information. Source: AU, ARERA.

Forward Market (MTE)

GME segment for trading standardised forward contracts for future electricity delivery. Enables price risk hedging. Source: GME.

Carbon Pricing - EU ETS

European Emission Trading System. Energy companies buy and sell CO2 emission permits (EUA). The carbon price indirectly influences the cost of thermal electricity generation. Source: European Commission, EUR-Lex.

Dispatchability

Characteristic of a generation plant that can modulate its output on request from the grid operator (Terna). Variable renewable plants (solar, wind) are not fully dispatchable. Source: Terna.