Dolce vita for PV in Italy?: New feed in tariff introduced for the Italian PV market
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A t last we are at a turning point. After too many years of PV financing through rebate programs, promoted by Regions and by the Ministry of Environment, the Italian feed-in law for PV was signed on July 28, 2005 by the Italian Ministry of Industry. The previous financing models were based on a 70% rebate on plant invest- ment cost. The new scheme for Italy, similar to the feed-in schemes currently operating in Germany and several other European countries, will provide the user with a tariff for the clean electricity produced by the PV system. The Application Law ("PV Law"), stating the conditions for this new incentive scheme, was officially published in the Italian Official Gazette on August 5, 2005. The final version of the Law, accepted by all Italian Regions, the Ministry of Industry and the Ministry of Environment, came after about one year of intense negotiating, which led to substantial changes in its structure. The last text, however, was happily celebrated by all stakeholders, espe- cially GIFI representatives (GIFI [Gruppo Imprese Fotovoltaiche Italiane] is the Italian Photovoltaic Industry Association). How it will work? The PV Law covers all grid connected PV systems between 1 and 1,000 kWp, with no constraints on PV module position. Therefore ground mounted PV plants could also benefit from the feed-in tariff. Unfortunately, the Law does not foresee any special tariff or additional incentive for build- ing integrated systems. The main focus of the PV Law is the tariff value. First of all, the tar- iff will be given to the whole amount of elec- tricity produced by the PV plant, whether used for self-consumption or for feeding into the grid. The tariff value will depend on plant capacity, as reported in Table 1, but anyway, as in most of the European feed-in schemes, will be much higher than the average end- user electricity cost. As shown in Table 1, Italy will have a "mixed" or "hybrid" scheme, so the feed-in tariff will not be the only opportunity for PV owners. The tariff will be added to the already existing net metering system for plants below 20 kWp, or to the gains for selling electricity to the grid for larger plants (from 20 to 1,000 kWp). The net metering system currently operating in Italy allows different annual sav- ings, since the cost of the kWh consumed depends above all on the contracted power with the utility. For instance, residential users with a contracted power between 3 and 6 kW face an electricity cost of about 0.10-0.15 Euro/kWh. For PV electricity measuring, an additional meter must be installed, with an annual cost to the user of about 30 Euros. The net metering conditions as well as the technical requirements for grid connection are currently under revision by AEEG (the Italian Authority for Electricity and Natural Gas) and the updated net metering scheme is likely to be ready in 2005. For plants larger than 20 kWp, additional gains will come from electricity sold to the grid. The recent Law 34/05 by AEEG states favourable prices for selling renewable elec- tricity to the grid, from 0.070 to 0.095 Euro/kWh. The guaranteed period of pay- ment for the feed-in tariff is 20 years and, at the end of this period, the PV owners will still benefit from the additional incentive (net metering or electricity sold to the grid). The tariff value will remain constant for the whole 20 year period of payment (except for annual changes due to the rate of inflation). For plants built after 2006, the amount will be decreased by 2% per year. In order to get the feed-in tariff, plants should have been put into operation after September 30, 2005. Official applications, which will also include the preliminary design of the PV plant, will be evaluated four times in a year and the first deadline will likely be at the end of 2005. For plants smaller than 50 kWp, applica- tions will be ranked based only on their date of receipt, while plants larger than 50 kWp will participate in a tender, where the high- est rankings will be given to those who accept lower tariffs. For plants above 50 1471 0846/05 © 2005 Elsevier Ltd. All rights reserved. September/October 2005 re FOCUS 23 A brand new scheme for a first Italian feed-in tariff to finance grid connected PV plants has recently been introduced in Italy. Riccardo Battisti assesses what impact the new law might have in aiding further uptake of the technology in the region. DOLCE VITA FOR PV IN ITALY? Solar PV New feed in tariff introduced for the Italian PV market Further information Riccardo Battisti, Dipartimento di Meccanica ed Aeronautica, Università "la Sapienza", Rome. Tel: +39 (0)6 44585271; e-mail: [email protected] Plant capacity (kWp) Tariff value (Euro/kWh) Additional incentive 1-20 0.445 Net metering 20-50 0.46 The electricity could be sold to the grid 50-1,000 0.49 (maximum value) The electricity could be sold to the grid Table 1: Feed-in tariff values
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Transcript of Dolce vita for PV in Italy?: New feed in tariff introduced for the Italian PV market
A t last we are at a turning point. Aftertoo many years of PV financingthrough rebate programs, promoted
by Regions and by the Ministry ofEnvironment, the Italian feed-in law for PV wassigned on July 28, 2005 by the Italian Ministryof Industry. The previous financing modelswere based on a 70% rebate on plant invest-ment cost. The new scheme for Italy, similar tothe feed-in schemes currently operating inGermany and several other European countries,will provide the user with a tariff for the cleanelectricity produced by the PV system.
The Application Law ("PV Law"), stating theconditions for this new incentive scheme, wasofficially published in the Italian OfficialGazette on August 5, 2005. The final version ofthe Law, accepted by all Italian Regions, theMinistry of Industry and the Ministry ofEnvironment, came after about one year ofintense negotiating, which led to substantialchanges in its structure. The last text, however,was happily celebrated by all stakeholders, espe-cially GIFI representatives (GIFI [GruppoImprese Fotovoltaiche Italiane] is the ItalianPhotovoltaic Industry Association).
How it will work?The PV Law covers all grid connected PVsystems between 1 and 1,000 kWp, with no
constraints on PV module position.Therefore ground mounted PV plants couldalso benefit from the feed-in tariff.Unfortunately, the Law does not foresee anyspecial tariff or additional incentive for build-ing integrated systems. The main focus of thePV Law is the tariff value. First of all, the tar-iff will be given to the whole amount of elec-tricity produced by the PV plant, whetherused for self-consumption or for feeding intothe grid. The tariff value will depend on plantcapacity, as reported in Table 1, but anyway,as in most of the European feed-in schemes,will be much higher than the average end-user electricity cost.
As shown in Table 1, Italy will have a"mixed" or "hybrid" scheme, so the feed-intariff will not be the only opportunity for PVowners. The tariff will be added to the alreadyexisting net metering system for plants below20 kWp, or to the gains for selling electricityto the grid for larger plants (from 20 to 1,000kWp). The net metering system currentlyoperating in Italy allows different annual sav-ings, since the cost of the kWh consumeddepends above all on the contracted powerwith the utility. For instance, residential userswith a contracted power between 3 and 6 kWface an electricity cost of about 0.10-0.15Euro/kWh. For PV electricity measuring, an
additional meter must be installed, with anannual cost to the user of about 30 Euros.The net metering conditions as well as thetechnical requirements for grid connectionare currently under revision by AEEG (theItalian Authority for Electricity and NaturalGas) and the updated net metering scheme islikely to be ready in 2005.
For plants larger than 20 kWp, additionalgains will come from electricity sold to thegrid. The recent Law 34/05 by AEEG statesfavourable prices for selling renewable elec-tricity to the grid, from 0.070 to 0.095Euro/kWh. The guaranteed period of pay-ment for the feed-in tariff is 20 years and, atthe end of this period, the PV owners will stillbenefit from the additional incentive (netmetering or electricity sold to the grid). Thetariff value will remain constant for the whole20 year period of payment (except for annualchanges due to the rate of inflation). Forplants built after 2006, the amount will bedecreased by 2% per year. In order to get thefeed-in tariff, plants should have been putinto operation after September 30, 2005.Official applications, which will also includethe preliminary design of the PV plant, willbe evaluated four times in a year and the firstdeadline will likely be at the end of 2005.
For plants smaller than 50 kWp, applica-tions will be ranked based only on their dateof receipt, while plants larger than 50 kWpwill participate in a tender, where the high-est rankings will be given to those whoaccept lower tariffs. For plants above 50
1471 0846/05 © 2005 Elsevier Ltd. All rights reserved. September/October 2005 reFOCUS 23
A brand new scheme for a first Italian feed-in tariff to financegrid connected PV plants has recently been introduced in Italy.Riccardo Battisti assesses what impact the new law might havein aiding further uptake of the technology in the region.
DOLCE VITA FORPV IN ITALY?
Solar PV
New feed in tariff introduced for the Italian PV market
Further information Riccardo Battisti, Dipartimento diMeccanica ed Aeronautica, Università"la Sapienza", Rome. Tel: +39 (0)644585271; e-mail:[email protected]
Plant capacity (kWp) Tariff value (Euro/kWh) Additional incentive1-20 0.445 Net metering20-50 0.46 The electricity could be sold to the grid50-1,000 0.49 (maximum value) The electricity could be sold to the grid
Table 1: Feed-in tariff values
24 reFOCUS September/October 2005 www.re-focus.net
Solar PV
kWp, a security of 1,500 Euro/kWp mustbe provided in case the owner cannot com-plete the building of the plant. A relevantissue is the possibility of combination of thefeed-in incentive with other subsidyschemes. For instance, the tariff could becombined with the 36% tax reduction avail-able for PV plant construction, but the feed-in tariff value would be reduced by 30% inthese instances. There is no possibility ofcombining the tariff with Green Certificatesor with regional or national rebates higherthan 20%. This means that PV plants builtin Italy thanks to the "PV Roofs" Programwill not get any financing through the feed-in law. However, there is the chance, for oldplants, to get the tariff for the expected
additional production in case of plantrepowering. In order to assess the applica-tion potential of the PV Law, Table 2 com-pares two different plant sizes: a residentialplant (3 kWp) and a larger one (40 kWp).
Too low a cap?Italy has now got its own feed-in law for PV atlast. Under this new scheme, both the PVindustry and end user awareness could growconstantly in the next few years. Anotherexpected benefit of the feed-in system is theinvolvement in the PV market place of thehighest consuming end-users (e.g. industry orlarge commercial buildings) which, facingextremely low costs for electricity consump-tion, did not find the existing net metering
system a good saving opportunity. The down-side is that the PV Law has now put a cap oncumulative PV power that could be installed inItaly through the feed-in tariff: 100 MWp upto 2012. Of this cap, 60 MWp are for plantsbelow 50 kWp and 40 MWp for larger plants.Looking at the figures in other European PVmarkets, this really does not look too ambi-tious, or even a satisfactory target.
Overall, the additional cost that shall befaced by electricity distributors to cover thefeed-in tariffs will be paid by all customers,with a very small charge on the bill of about0.0014 Euro/kWh. For the average Italianresidential house, this would mean about 4Euro/year…a "sacrifice" that many wouldargue is worthwhile making.
Residential PV plant Larger PV plantPlant capacity [kWp] 3 40Expected electricity production in Central Italy [kWh/kWp] 1,400 1,400Investment cost [Euro] 21,000 240,000Feed-in tariff [Euro/kWh] 0.445 0.46Additional savings [Euro/kWh] 0.15 (net metering) 0.095 (electricity selling)Expected total savings [Euro/kWh] 0.595 0.555Simple pay back time (years) 8.4 7.7
Table 2: Economic assessment of two PV plants under the new Italian PV Law
