The strategic role of municipalities in the transition to clean energy: an energy and environmental analysis of the municipality of Tito using the ETSAP-TIMES model generator.

The global transition toward clean and sustainable energy systems is driven by the challenges of climate change mitigation, rising greenhouse gas (GHG) emissions, and increasing threats to energy security. Energy systems account for approximately three-quarters of global GHG emissions, rising from energy production, distribution, and end-use consumption. Therefore, the decarbonization of energy systems stands as a point for achieving climate neutrality while improving environmental quality, public health, and socio-economic resilience. In Europe, these challenges have generated a legally binding policy framework through the European Green Deal, the European Climate Law, and the Fit for 55 package, which together establish a trajectory toward net-zero emissions by 2050 and a 55% reduction in GHG emissions by 2030 compared to 1990 levels. The Renewable Energy Directive (RED II and RED III), the Energy Efficiency Directive, and the REPowerEU frameworks explained the importance of renewable energy deployment, energy efficiency, electricity, and energy independence. The new Italian National Energy Strategy – PNIEC 2024 established the updated national objectives on energy and climate and the provisions by sector to achieve them. It anticipates an expansion of renewable energy, building renovations, and the electrification of final consumption (heat pumps). However, achieving these targets requires effective implementation at the local level, where energy consumption patterns, infrastructure constraints, and socio-economic conditions ultimately determine the feasibility and impact of the transition. Based on this context, municipalities translate national and European climate objectives into actions. Local governments are involved in promoting decentralized renewable energy production, enhancing energy efficiency, supporting citizen participation, and addressing social equity through place-based solutions. Renewable Energy Communities (RECs) represent an instrument to operationalize this local transition by integrating technical innovation, regulatory frameworks, and citizen engagement into a cohesive governance model. Despite their recognized potential, the deployment of RECs and the design of effective local energy transition strategies remain constrained by the lack of quantitative planning tools capable of capturing long-term energy, technology interactions, and policy impacts at the municipal scale. This study addresses this gap by applying a well-established energy system modeling framework, ETSAP-TIMES, to analyse a local energy system, demonstrating its suitability and replicability for municipal-level energy and climate planning. In this context, the study explores the following questions: - To what extent can modeling energy systems at the municipal level contribute to achieving national and European climate neutrality goals? - How will the integration of renewable energy communities influence energy transition pathways at the municipal level? - Which policies effectively manage the deployment of renewable energy at the municipal level to reduce greenhouse gas emissions while maintaining cost efficiency? The objective of this thesis is to apply the ETSAP-TIMES energy system model generator to conduct an energy and environmental analysis of the Municipality of Tito, Italy, examining the role of local governance in the transition toward a clean, secure, and sustainable energy system. The research investigates how small and medium municipalities can contribute to achieving national and European climate targets through integrated energy planning and the implementation of RECs. The work builds upon a modeling framework traditionally used at national and regional scales and adapts it to a municipal context, demonstrating its methodological robustness and practical relevance for local energy planning. The analysis covers the period 2020–2050, aligning with the time horizons of the European Green Deal and Italy’s NECP. The specific objectives of the thesis are to: 1. Represent and optimize the local energy system of the Municipality of Tito, including energy supply, local energy production, and end-use demand in the residential and tertiary sectors, and to define the data input for the frame model implementation. 2. Develop and analyze a Business-as-Usual (BaU) scenario to describe the long-term evolution of the local energy system in the absence of new policy interventions. 3. Assess alternative transition pathways in response to policy and market drivers, such as increasing natural gas prices. 4. Evaluate the role of electrification and renewable technologies, for example, photovoltaics and heat pumps, in decarbonising residential and tertiary sectors. 5. Implement a TIMES-Tito REC configuration to analyse the long-term impacts of Renewable Energy Communities on energy supply, electricity production, consumption patterns, and emissions. 6. Provide evidence-based insights to support local policymakers and stakeholders in designing energy transition strategies consistent with Italy’s NECP and European climate objectives. The methodological approach is rooted in the ETSAP-TIMES model generator developed under the International Energy Agency’s Energy Technology Systems Analysis Programme, which has been utilized to represent a local-scale energy system, including a Renewable Energy Community submodel. TIMES allows the users to build bottom-up, technology-rich optimization models based on linear programming, designed to identify least-cost energy system configurations over medium- to long-term horizons under specified technical, economic, environmental, and policy constraints. The objective function to be minimized is the total discounted system cost, including investment, operation, maintenance, and fuel costs, while satisfying energy service demands and policy constraints such as emission limits or renewable energy targets. It provides detailed outputs on technology capacity and investments, energy commodity prices, GHG emissions, and energy costs. TIMES has been widely applied at the supranational, national, and local scales thanks to its flexibility, allowing for adaptation to different contexts through careful definition of system boundaries, demand projections, technology, and scenarios characterization. A prerequisite for model development is the definition of a Reference Energy System (RES), which represents the energy system under investigation from primary resources to final energy demand. Technology characterization includes technical efficiency, availability, average lifetime, investment and operating costs, emission factors, enabling comparison of competing technologies and assessment of future energy-technology pathways. Final energy demand projections are usually derived using regression-based models based on historical factors and economic factors. The model is calibrated against a statistical base year to ensure consistency with observed energy balances. Following calibration, a set of scenarios is defined to explore alternative futures, including sensitivity analyses on energy prices and policy incentives, and scenarios for REC implementation. Scenario analysis is the key element for energy system analysis, allowing comparison between the Business as Usual development (BaU scenario) and alternative possible futures (policy scenarios), enabling the identification of cost-optimal technology roadmaps that balance economic effectiveness, energy and technology availability with environmental performance. The Business-as-Usual scenario serves as a benchmark for assessing the effectiveness of alternative transition pathways. BaU scenario evolves according to current trends in energy consumption, technologies adopted, and energy mix, without the introduction of additional measures. A Sensitivity analysis is then carried out to examine the system’s response to changes in external market conditions. It explores variations in natural gas prices combined with incentives for the deployment of heat pumps, allowing an assessment of the system's resilience to energy market volatility and analysing the effects of end-use electrification. The REC scenarios evaluate the impacts of implementing a REC through different configurations of photovoltaic systems, varying in installed capacity and the presence or absence of capital grants. The modeling issues encountered in the case study are related to the limited availability of local data (end use energy demands and energy consumption), projection demand that involves efficiency improvements and technology substitution. The main results show that under the BaU scenario, total final energy consumption in the Municipality of Tito decreases by 15% by 2050, driven by the replacement of biomass technologies with more efficient natural gas technologies. Biomass, LPG, and diesel are phased out, with biomass fully replaced by natural gas in the residential sector by 2040. Electricity production from photovoltaics increases by 99% over the analysis period, illustrating a shift towards renewable energy. Solar thermal energy also exhibits strong relative growth by 187%, although its absolute contribution remains limited. Despite these developments, natural gas remains the dominant energy source throughout the time horizon, largely due to regional economic conditions that mitigate gas prices. In the residential sector, overall energy consumption decreases by 30% by 2050, but this reduction does not translate into a proportional decrease in emissions due to continued reliance on natural gas for space heating and cooking. Electrification remains limited, and integration with renewable sources is insufficient to achieve deep decarbonization. The tertiary sector exhibits a contrasting trend, with energy consumption increasing by 30%, driven by growth in healthcare and accommodation subsectors. In 2050, an increase in the Healthcare and Accommodation subsectors is expected (190% and 78% respectively), Food shows a 30% increase in the time horizon, while Schools and Public Buildings will reduce their consumption (37% and 12% respectively). Natural gas continues to dominate the energy mix, while electricity consumption grows moderately. As a result, CO₂ emissions increase by 28% by 2050, peaking around 2045, with the residential sector accounting for 61% of total emissions. These findings indicate that, under BaU conditions, the municipality cannot achieve a trajectory compatible with climate neutrality. Sensitivity analysis demonstrates the impact of economic signals on technology adoption and emissions outcomes. A 30% increase in natural gas prices leads to a significant reduction in gas consumption and a corresponding 66% decrease in CO₂ emissions by 2050 compared to the BaU scenario. Substitution occurs through increased electrification and the use of biomass. When higher gas prices are combined with non-repayable grants for heat pump deployment, the transition accelerates further. The GASCOST+20%_50_HP case, involving a 20% gas price increase combined with a 50% subsidy for electric heat pumps, achieves a 69% reduction in CO₂ emissions in 2050 compared to the case without capital grants (GASCOST+20% case), while also reducing total system costs relative to BaU. This result highlights the effectiveness of coordinated pricing and incentive policies in driving cost-efficient decarbonization. REC scenarios assess the impact of shared renewable electricity generation on local energy systems. REC implementation leads to an increase in photovoltaic capacity, particularly in larger configurations (10 MW). Electricity imports from the national grid decrease, with reductions of 31–32% by 2050 in the 10 MW REC scenarios, demonstrating enhanced local energy autonomy and resilience. Electricity consumption increases by 5.4%, while natural gas consumption decreases by 6%, reflecting fuel substitution driven by shared renewable generation. CO₂ emissions decrease by approximately 10% relative to BaU, confirming the contribution of RECs to decarbonization objectives aligned with the EU Green Deal and Fit for 55 targets. From an economic perspective, REC scenarios generate higher revenues through a combination of energy sales and incentives, particularly in configurations without capital grants, where installed capacity is the main driver of economic performance. At the same time, energy sharing increases distributed energy consumption, reducing electricity grid losses and stabilizing the grid. The novelty of this study consists in the adaptation of the ETSAP-TIMES framework to a small municipal energy system in Italy, integrating a REC to analyse configurations and financial incentives, highlighting its usefulness and value addition for local energy planning. The thesis highlights the following original contributions: 1. Demonstration of the applicability of the ETSAP-TIMES modeling framework at the municipal scale, extending its traditional use. 2. Development of a replicable, data-consistent modeling methodology for local energy system analysis and scenario-based policy evaluation. 3. Modeling and assessing the role of REC in reducing emissions, enhancing energy security, and improving local system economics. 4. Evidence-based evaluation of combined policy instruments (energy pricing and investment incentives) in driving cost-effective decarbonization. 5. Provision of actionable insights to support municipal decision-making aligned with national and European climate strategies. The results demonstrate the strategic importance of municipalities in achieving climate neutrality and highlight the need to adopt an integrated and systemic planning approach. REC emerges as an effective tool for combining decarbonization and energy security, particularly when supported by incentive policies and enabling regulatory frameworks. To conclude, energy system modeling provides a critical scientific basis for evaluating alternative transition pathways, identifying least-cost solutions, and aligning local actions with higher-level policy objectives. The TIMES-Tito model demonstrates how quantitative tools can support evidence-based policymaking and reduce uncertainty in long-term planning, also at the local scale. Due to the specific topic and the aim of the study, the analysis focused on residential and tertiary sectors and does not explicitly model transport or industrial activities. Future research will extend the model to include transport electrification, industrial activities, energy storage technologies, grid flexibility options, and behavioral dynamics. Further work will also explore reductions in local air pollutants and the integration of consumer behavior into energy system modeling.