Integrating renewable energy into the Italian electricity market is no straightforward undertaking. Expansion requires infrastructure capable of managing fluctuating and geographically distributed power flows. Yet the existing grid does not offer sufficient flexibility in all areas.

Differing generation volumes across bidding zones, complex pricing mechanisms, dependence on foreign markets and lengthy permitting processes are all holding back progress, explains Filippo Beltrami, researcher at the Institute for Renewable Energy at Eurac Research. Adding to this is the weather-dependent nature of wind and solar energy, which makes it increasingly difficult to reliably predict prices and capacity requirements. Furthermore, geopolitical tensions can also place energy prices under additional strain. 

Forecasting electricity prices 

Against this backdrop, a collaboration between Eurac Research and Alperia Trading was established as part of the Fusion Grant initiative, with the objective of better managing the growing complexity of energy markets and integrating renewable energy into the electricity system more effectively. The team initially developed an AI tool to forecast demand, trading volumes and prices; the focus later shifted to day-ahead electricity prices. Drawing on data provided by Alperia, FlexPowerAI was created. A tool that processes large volumes of data, including demand, prices, renewable energy production, weather data, as well as import and export flows. These data sets form the basis for predictive models. "This is where AI comes in," Beltrami explains. "The system uses advanced machine learning and deep learning models that 'learn' from historical data, making it possible to translate large quantities of heterogeneous information into reliable day-ahead price forecasts." 

Economic benefits 

The research team brings expertise in econometric modelling, AI and deep learning, and is responsible for developing and scientifically validating the models, while Alperia Trading provides market knowledge, high-quality data and a deep understanding of operational requirements. The collaboration thus unites scientific innovation with practical experience, and the local economy also stands to benefit through enhanced competitiveness, more efficient strategies and greater resilience to market fluctuations. "Moreover, better integration of renewable energy supports the reduction of fossil fuel dependence, strengthens energy autonomy and may contribute to greater price stability in the long term," says Beltrami. 

From testing to practical application 

The project is currently in its final stages of development: FlexPowerAI has been validated in a test environment and is now being integrated into Alperia Trading's operational systems. Although it is not yet possible to measure concrete outcomes, these will be assessed once the tool is fully operational. Looking ahead, the system is intended to expand to cover intraday and balancing markets and to be tested in other countries. Further enhancements to price forecasting are also planned, as are scenario models tracking market and demand developments – with the overarching goal of creating a more stable and sustainable electricity market. 

Fusion Grant is an initiative of the Stiftung Südtiroler Sparkasse (the South Tyrolean Savings Bank Foundation) in cooperation with NOI Techpark, the South Tyrolean Business Association and the business network Rete Economia-Wirtschaftsnetz. It actively promotes collaboration between South Tyrolean companies and research institutions, and offers researchers under the age of 40 a pathway into practice-oriented projects. In its current third edition, ten projects were selected, funded by €500,000 in foundation grants and more than €100,000 in contributions from participating companies. The programme’s success speaks for itself: across three rounds, 29 projects have already been realised in partnership with 35 South Tyrolean companies and 36 researchers, at a combined total value of over €1.8 million.