@article{,
   abstract = {European countries are expected to install around 600GW of wind and solar capacity by 2030, together with 70GW of battery storage, to decarbonize the EU power sector while protecting consumers from market price volatility and ensuring secure power system operations. Net-zero targets put pressure on Member States, pushing them to rely on more regulated strategies based on a centralized procurement of renewable and storage assets, potentially overlooking merchant solutions. A relevant role of public support in the decarbonization process poses challenges on the optimal design of tendering mechanisms and implies a different risk allocation between ratepayers and investors. This work assesses the economic viability of introducing state-backed hybrid portfolios as a policy tool alternative to centralized contracts-for-difference auctions. A quantitative analysis based on multi-objective portfolio optimization is conducted while handling market price and production forecast uncertainties through a Monte Carlo approach. Taking the case of Italy, hybrid portfolios result in a fully bankable solution even for risk-averse investors, thus being an effective reference for the provision of public guarantees to private investors. We refer to this solution as volatility-trend agreements and we advise for future policy making combining it with back-to-back utility power purchase agreements backed by last-resort state intervention. Keywords-energy storage, contract for difference, power purchase agreement, renewable energy support, risk management.},
   author = {Filippo Bovera and Lorenzo Zapparoli and Matteo Zatti},
   journal = {Preprint},
   title = {A new approach to long-term contracts to hit renewables and storage deployment targets while balancing private and public risks}
}

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