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www.gsel.i t ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia - 27 de maio de 2008 Prof. Carlo Andrea Bollino Prof. Carlo Andrea Bollino
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Page 1: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

www.gsel.it

ENERGY SECURITY OR ENERGY INDEPENDENCE?

RENEWABLE ENERGY SOURCES IN ITALY

1° Encontro Latino-Americano de Economia de Energia

Salvador Bahia - 27 de maio de 2008

Prof. Carlo Andrea BollinoProf. Carlo Andrea Bollino

Page 2: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

2 CONTENTSCONTENTS

From the:From the:

Energy Independence and Security Act of 2007Energy Independence and Security Act of 2007

… …..Incentive Program with the following features:..Incentive Program with the following features:

1. The incentive should be carbon-weighted to make lower 1. The incentive should be carbon-weighted to make lower emission power sources less expensive relative to higher emission power sources less expensive relative to higher emissions sources, and it should take into account our Nation's emissions sources, and it should take into account our Nation's energy security needs.  energy security needs. 

2. The incentive should be technology-neutral because the 2. The incentive should be technology-neutral because the government should not be picking winners and losers in this government should not be picking winners and losers in this emerging market.  emerging market. 

  3. The incentive should be long-lasting – it should provide a 3. The incentive should be long-lasting – it should provide a positive and reliable market signal not only for the investment positive and reliable market signal not only for the investment in a technology, but also for the investments in domestic in a technology, but also for the investments in domestic manufacturing capacity and infrastructure that will help lower manufacturing capacity and infrastructure that will help lower costs and increase availability.  costs and increase availability. 

Page 3: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

3 CONTENTSCONTENTS

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

Renewables targets UE and Italy Renewables targets UE and Italy

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Situation of Green Certificates Situation of Green Certificates

Release of Guarantee of Origin Release of Guarantee of Origin

PV incentive schemePV incentive scheme

Co-generationCo-generation

CIP-6 electricityCIP-6 electricity

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4

GESTORE MERCATOELETTRICO (GME)

Ownership100%

Ministry of Economic Development, also

in consultation with Ministry of Environment and

Land Protection

ACQUIRENTEUNICO (AU)

MINISTRY OFMINISTRY OFECONOMYECONOMY

AEEG AEEG

(Electricity & Gas (Electricity & Gas Regulator)Regulator)

Electricity MarketEnvironmental Markets

( Green Certificates -White Certificates -CO2 Allowances)

Electricity MarketEnvironmental Markets

( Green Certificates -White Certificates -CO2 Allowances)

Purchase electricity for captive customersPurchase electricity

for captive customers

Incentives to Renewables

Management of incentives to CIP-6/92 plants

Certification of co-generation for energy savings

Incentives to Renewables

Management of incentives to CIP-6/92 plants

Certification of co-generation for energy savings

Gestore dei Servizi Elettrici

(GSE)

DecisionsDecisionsGuidelinesGuidelines

100%100%

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

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5

GSE’s responsibilities

Certifies and issues Green Certificates to power plants fed by renewables (IAFR-certified plants) and by other eligible sources

Releases Guarantee of Origin (GO) and RECS (Renewable Energy Certificate System) certificates to plants fed by Renewables

Incentives photovoltaic (PV) solar plants through the “conto energia” (feed-in tariff)

Incentives plants fed by Renewables and so-called “assimilated” sources as per Decree no. 6/92 of Interministerial Committee on Prices (CIP 6/92)

Certifies co-generation plants

Managing the support scheme provided to electricity production from Renewables and other eligible energy sources

Managing the support scheme provided to electricity production from Renewables and other eligible energy sources

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

Page 6: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

6

Tools actually used

Feed-in tariffQuota System -

Green CertificatesOthers

• System based on a transfer of a guaranteed price to the electricity fed into the grid

• Responsible body: GSE

that has the duty to buy the electricity from the supported power plants and to pay it to a predefined price for a defined period

• Producer and importer obligation to feed into the grid a % of RES electricity

• Green certificates are the compliance tool

• In case of not compliance, a penalty is applied

• Investment support (at regional level)

• Fiscal exemption (ex.: VAT reduction)

• Access to financing at sensible rate (managed locally)

Italian RES Support SchemesItalian RES Support Schemes

Page 7: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

7 CONTENTSCONTENTS

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

Renewables targets UE and ItalyRenewables targets UE and Italy

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Situation of Green Certificates Situation of Green Certificates

Release of Guarantee of OriginRelease of Guarantee of Origin

PV incentive schemePV incentive scheme

Co-generationCo-generation

CIP-6 electricityCIP-6 electricity

Dedicated withdrawal of the electric power Dedicated withdrawal of the electric power

Page 8: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

8 Renewables in ItalyRenewables in Italy

Electricity generation in Italy from 1900 to 2006

After 47 yearsAfter 47 years

0

20.000

40.000

60.000

80.000

100.000

120.000

140.000

160.000

180.000

200.000

220.000

240.000

260.000

280.000

300.000

320.000

340.000

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Hydro

Total

Renewables Hydro

30.000

35.000

40.000

45.000

50.000

55.000

1960 1970 1980 1990 2000

Year 1960Year 1960

HydroHydro = 46,1 TWh= 46,1 TWh

Renewables HydroRenewables Hydro = 45,8 TWh= 45,8 TWh

TotalTotal = 56,2 TWh= 56,2 TWh

HydroHydro/total/total = 82%= 82%

Year 2006Year 2006

HydroHydro = 39,0 TWh= 39,0 TWh

Renewables HydroRenewables Hydro = 33,4 TWh= 33,4 TWh

TotalTotal = 339,8 TWh= 339,8 TWh

Renewables HydroRenewables Hydro/total/total = = 9,8%9,8%

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9 Renewables in ItalyRenewables in Italy

Gross generation from renewables in Italy from 1997 to 2007 (GWh)

* preliminary data (Terna, GSE)

GWh46.457 46.902 52.001 51.390 55.099 49.027 47.984 55.286 49.921 52.272 50423 *

41.600

3.90511882014

41.214

4.2142321.229

15

45.358

4.403

4031.822

15

44.199

4.705

5631.906

16

46.810

4.507

1.1792.587

17

39.519

4.662

1.404

3.423

19

36.670

5.341

1.458

4.493

23

42.338

5.437

1.847

5.637

27

36.067

5.325

2.343

6.155

31

36.994

5.527

2.971

6.745

35

33.469

5.570

4.144

7.200

40

0

10.000

20.000

30.000

40.000

50.000

60.000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Hydro Geothermal WindBiomass and waste Solar

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1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

269.403

278.907

281.813

290.294

300.518

307.667

320.976

327.372

335.920

344.833

348.956

352.826

359.075360.283

48.378

41.626 46.448 46.457 46.902 52.001 51.390 55.09949.027 47.984

55.286 49.920 52.27250.423

Renewables in ItalyRenewables in Italygross electricity consumption vs. generation from

renewablesfrom 1994 to 2007 (GWh)

Generation from renewablesGeneration from renewables

Gross Electricity Consumption Gross Electricity Consumption

Generation from Renewables

Gross Electricity Consumption Generation from Renewables

Gross Electricity Consumption Years REN / G.E.C.

1994 18,0

1995 14,9

1996 16,5

1997 16,0

1998 15,6

1999 16,9

2000 16,0

2001 16,8

2002 14,6

2003 13,9

2004 15,8

2005 14,1

2006 14,6

2007 14,0

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EU Targets: more an more ambitious

RES

Energy Total Consumption

RES

Energy Total Consumption 12 %12 %

E-RES

Electricity Tot. Consumption

E-RES

Electricity Tot. Consumption22 %22 %

EU Directive 2001/77/EC concerning the promotion of RES: target up to 2010 not binding

EU Directive 2001/77/EC concerning the promotion of RES: target up to 2010 not binding

New energy package approved by the Spring 2007 Council: binding target up to 2020

New energy package approved by the Spring 2007 Council: binding target up to 2020

20 %20 %

30-35% *30-35% *

* First assessment for Italy* First assessment for Italy

Renewables in ItalyRenewables in Italy

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12

Assessment of the italian potential in the production from RES to cope with the new EU RES target (Sept. 2007)

Power Energy Power EnergyMW TWh MW TWh

Hydro 17.325 36,00 20.200 43,15Wind 1.718 2,35 12.000 22,60Solar 34 0,04 9.500 13,20Geothermal 711 5,32 1.300 9,73Biomass, Landfill gas and Biological purification 1.201 6,16 2.415 14,50Wave and tidal 0 0,00 800 1,00

Total 20.989 49,87 46.215 104,18

ELECTRICITY2005 2020

Renewables in ItalyRenewables in Italy

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13

Confermed the 2020 target

Use of bio-fuels for transport = 10% (per each member state)Use of RES out of primary energy = 20% (to be shared at national level)

Main parameters for theMain parameters for the Nationa National targettarget:

• Gross Internal Production (penalty for countries with GIP > European average)

• RES Deployment over the past few years (penalty for countries less actives)

For Italy total target =Italy total target = 17% (2005 national figure = 5,2%)

Main parameters for theMain parameters for the Nationa National targettarget:

• Gross Internal Production (penalty for countries with GIP > European average)

• RES Deployment over the past few years (penalty for countries less actives)

For Italy total target =Italy total target = 17% (2005 national figure = 5,2%)

Global target and energy review (new EU framework)Global target and energy review (new EU framework)

EU Targets: Commission new RES directive proposal (23.01.2008)

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14

National Binding Target

• not already foreseen administrative penalties

• needed compliance with ad interim targets

• not already foreseen administrative penalties

• needed compliance with ad interim targets

Final ConsumptionCalculation

• RES final consumption = e.e. consumption + RES heat and cooling consumption + RES consumption in transport

• RES e.e. consumption = RES national production +/- GO imported/exported

• RES final consumption = e.e. consumption + RES heat and cooling consumption + RES consumption in transport

• RES e.e. consumption = RES national production +/- GO imported/exported

Guarantee of Origin (GO) for Electricity and heat and cooling

• Electronic format, to be redeemed after the use

• Mutual recognition of GO

• Possible trading of GO between EU countries but, limitation to the use of imported GO

• Electronic format, to be redeemed after the use

• Mutual recognition of GO

• Possible trading of GO between EU countries but, limitation to the use of imported GO

Global target and energy review (new EU framework)Global target and energy review (new EU framework)

EU Targets: Commission new RES directive proposal (23.01.2008)

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15

Authorization regimes

• Better and simplified procedures

• Role of the mediator to solve disputes between authorisation authorities and producers

• Better and simplified procedures

• Role of the mediator to solve disputes between authorisation authorities and producers

Grid Connection

• Necessary infrastructure improvement

• RES priority dispatching

• Connection costs sharing between producer and grid operator

• Necessary infrastructure improvement

• RES priority dispatching

• Connection costs sharing between producer and grid operator

Support schemes

• EU Commission assessment of national mechanisms to propose an harmonised system

• EU Commission assessment of national mechanisms to propose an harmonised system

Sustainable criteria

• Foreseen sustainability assessment for bio-fuels

• Foreseen sustainability assessment for bio-fuels

Global target and energy review (new EU framework)Global target and energy review (new EU framework)

EU Targets: Commission new RES directive proposal (23.01.2008)

Page 16: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

16CONTENTSCONTENTS

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

Renewables in ItalyRenewables in Italy

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Situation of Green Certificates Situation of Green Certificates

Release of Guarantee of OriginRelease of Guarantee of Origin

PV incentive schemePV incentive scheme

Co-generationCo-generation

CIP-6 electricityCIP-6 electricity

Dedicated withdrawal of the electric power Dedicated withdrawal of the electric power

Page 17: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

17

Producers and importers must feed in the electric grid an amount of renewable source energy equal to the x% of not renewable energy produced or imported the year before (only for the amount exceeding 100 GWh)

In 2007 the x% was equal to 3,05 % of the electricity from conventional sources generated and/or imported in 2006

Producers and importers can fulfil the obligation by means of green certificates issued in favour of their own renewable energy production or of other productions

RES power plant, only after technical qualification by GSE, can receive green certificates

Every green certificate has a size of 1 MWh and is valid for the relevant reference year and the following two

Certification for issuing Green Certificates Certification for issuing Green Certificates

Green Certificate scheme:Green Certificate scheme:

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18

1 MW1 MW BIG POWER PLANTSBIG POWER PLANTSSMALL POWER PLANTSSMALL POWER PLANTSNew Green Certificates SystemNew Green Certificates SystemFeed-in tariff mechansimFeed-in tariff mechansim

Differentiation by sourceDifferentiation by sourceDifferentiation by sourceDifferentiation by source

Special provisions for “local” biomassSpecial provisions for “local” biomass

Duration 15 yearsDuration 15 years

GC value (€/MWh) = 180 – average market GC value (€/MWh) = 180 – average market

price (defined by the Energy Regulator)price (defined by the Energy Regulator)

GC size = 1 MWhGC size = 1 MWh

Increase of the obligation = 0,75% on Increase of the obligation = 0,75% on

yearly basis (2007-2012)yearly basis (2007-2012)

All comprehensive tariffAll comprehensive tariff

From 2009 uniqueness of support schemeFrom 2009 uniqueness of support scheme

Financial Law 2008 and Law n. 222/2007 Financial Law 2008 and Law n. 222/2007

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Page 19: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

19

All comprehensive tariff

Size </= 1 MW (200 kW for wind generation)

The electricity – fed into the grid - is supported for 15 years

The tariffs are differentiated by source, according to the following table:

Fontetariffe

onnicomprensive(€c/kWh)

Eolica per impianti di taglia non superiore a 200 kW 30

Geotermica 20

Moto ondoso e maremotrice 34

Idraulica diversa da quella del punto precedente 22

Rifiuti biodegradabili, biomasse diverse da quelle di cui al punto successivo

22

Biomasse e biogas derivanti da prodotti agricoli, di allevamento e forestali, ottenuti nell'ambito di intese di filiera o contratti quadro oppure di filiere corte (entro un raggio di 70 km).

30

Gas di discarica e gas residuati dai processi di depurazione e biogas diversi da quelli del punto precedente

18

Table 3 - Law 24/12/2007 n.244 (as modified by Law 29/11/2007 n.222)

Certification for issuing Green CertificatesCertification for issuing Green Certificates

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20

art. 2, para. 1, Legislative Decree no. 387 of 29 Dec. 2003

Hydro Geothermal Solar

Biomass

Biogas and gas from purification

The biodegradable fraction of products, waste and residues from agriculture (including vegetal and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste.

The biodegradable fraction of products, waste and residues from agriculture (including vegetal and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste.

Wind

RENEWABLESRENEWABLES

Non-Fossil Energy Sources

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Waves andtides

Page 21: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

21 Certification for issuing Green Certificates Certification for issuing Green Certificates

Date

No

. o

f ce

rtif

ied

pla

nts

120

325

545

781

1.061

1.469

2.296

1.335

418

961

73

196

358

545

797

1.051

47129

187236

264

-

500

1.000

1.500

2.000

2.500

2001 2002 2003 2004 2005 2006 2007

Total

Operational

Planned

1.320

980

2.300

Plants certified from 2001 to 2007Plants certified from 2001 to 2007

Page 22: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

22CONTENTSCONTENTS

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

Renewables in ItalyRenewables in Italy

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Situation of Green Certificates Situation of Green Certificates

Release of Guarantee of OriginRelease of Guarantee of Origin

PV incentive schemePV incentive scheme

Co-generationCo-generation

CIP-6 electricityCIP-6 electricity

Dedicated withdrawal of the electric power Dedicated withdrawal of the electric power

Page 23: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

23 Situation of Green CertificatesSituation of Green Certificates

Green Certificates issued in 2006by energy source

6 TWh = 6 thousand million of kWh

Fonte Numero CV

HYDRO 45.639

WIND 42.484

GEOTHERMAL 16.340

BIOGAS 8.699

BIOMASS 6.154

WASTE 2.399

SOLAR 31

TOTAL 121.746

38%

35%

13%7% 5% 2% 0% HYDRO

WIND

GEOTHERMAL

BIOGAS

BIOMASS

WASTE

SOLAR

Page 24: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

24CONTENTSCONTENTS

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

Renewables in ItalyRenewables in Italy

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Situation of Green CertificatesSituation of Green Certificates

Release of Guarantee of OriginRelease of Guarantee of Origin

PV incentive schemePV incentive scheme

Co-generationCo-generation

CIP-6 electricityCIP-6 electricity

Page 25: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

25

Certification introduced by EU directive 2001/77

GO Certifies that the electricity produced has been actually generated from renewable sources

GO is a tool that facilitate cross border trade of electricity from renewable within UE

GO is used to inform customers about the source of generation jointly to the energy supplied

Guarantee of Origin (GO) to RES Electricity Guarantee of Origin (GO) to RES Electricity

Results of 2006Results of 2006

22 domestic operators

identified plants: 68 hydro, 2 biogas, 3 biomass and 2 wind, with a total

capacity of 1,389 MW

GOs are being issued (for an estimated capacity of 5 TWh)

* The GO is issued, upon request, to RES electricity generation by old and new plants

Release of Guarantee of OriginRelease of Guarantee of Origin

Page 26: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

26CONTENTSCONTENTS

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

Renewables in ItalyRenewables in Italy

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Situation of Green Certificates Situation of Green Certificates

Release of Guarantee of OriginRelease of Guarantee of Origin

PV incentive schemePV incentive scheme

Co-generationCo-generation

CIP-6 electricityCIP-6 electricity

Dedicated withdrawal of the electric power Dedicated withdrawal of the electric power

Page 27: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

27 The feed in tariff systemThe feed in tariff system

The mechanism is based on an incentive proportional to the electricity

produced by the PV plant.

The capacity cap is 1200 MW

The tariffs, fixed for 20 years, are added to

- revenues of energy fed into the grid if the system operator chooses

the sale.

- saving on bill in case of net-metering system (for the plants up to 20 kW)

Tariffs promote architectural integration and building energy efficiency.

The key elements of mechanism

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28

PV feed in tariffs in Euro cents per kWh for plants commissioned before 31th December 2008

The tariffs do not change during the period.

In addition, a further increase is granted for specific kind of plants (5%) and for plants with a capacity up to 20 kW, operating in net-metering system, for improving the energy efficiency of the annexed building (with a limit of 30%).

0,440,400,36P 20CC

0,460,420,383 P 20BB

0,490,440,401 P < 3AA

3

Integrato

2Parzialmente

Integrato

1

Non integrato

Potenza nominale dell’ impianto

P (kW)

IMPIANTI FOTOVOLTAICI

0,440,400,36P 20CC

0,460,420,383 P 20BB

0,490,440,401 P < 3AA

3

Integrated

2Partially

integrated

1

Not integrated

Capacity

P (kW)

PV PLANTS

The feed in tariff systemThe feed in tariff system

Page 29: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

29

Additional changes for electricity sale to the grid

Decree n° 280/07 of AEEG

From 1st of January 2008 GSE purchases the electricity produced by

PV plants (paying the zonal hourly price) if the system operator

doesn’t operate through IPEX.

For the first 2 million kWh there is a minimum guaranteed price for

plants up to 1 MW.

The feed in tariff systemThe feed in tariff system

Page 30: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

30 ConclusionsConclusions

General observations

Italian incentives are among the highest in the world. Thanks to

good geographical position, expecially in the south of Italy,

plants achieve a high level of utilization (over 1500 hours/year).

The authorization process is very long, with huge differences

among regions.

The private investors complain about long lag time for the

connection to the grid and about difficulties for financing

(collateral guarantee).

Page 31: Www.gsel.it ENERGY SECURITY OR ENERGY INDEPENDENCE? RENEWABLE ENERGY SOURCES IN ITALY 1° Encontro Latino-Americano de Economia de Energia Salvador Bahia.

31

Total results by 1st of March 2008

8.027 commissioned plantsN°

0 0 0 8 40 104 174 278442

681935

1.2181.524

1.815

2.159

8.027

0 0 0 8 40 104 174 278442

681935

1.2181.524

1.815

2.159

3.772

7.032

6.057

5.671

2.533

4.973

4.380

4.228

3.736

3.381

2.873

4.255

4.1504.003

3.7623.908

3.5903.363

3.1912.806

2.517

3.548

2.882

2.054

1.763

1.211

790680373

19067160

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

5.500

6.000

6.500

7.000

7.500

8.000

8.500

feb

-06

ma

r-0

6

ap

r-0

6

ma

y-0

6

jun

-06

jul-

06

au

g-0

6

sep-

06

oct

-06

no

v-0

6

de

c-0

6

jan

-07

feb

-07

ma

r-0

7

ap

r-0

7

ma

y-0

7

jiu-0

7

jul-

07

au

g-0

7

sep-

07

oct

-07

no

v-0

7

de

c-0

7

jan

-08

feb

-08

ma

r-0

8

Total

First Decree

New Decree

ConclusionsConclusions

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32

Total results by 1st of March 2008

82,4 MW capacity of commissioned plantsMW

0,0 0,0 0,0 0,0 0,1 0,5 1,0 1,9 3,14,5

6,58,2

11,713,8

17,7

82,4

0,0 0,0 0,0 0,0 0,1 0,5 1,0 1,9 3,14,5

6,58,2

11,713,8

17,7

37,5

45,7

49,0

62,1

20,3

70,0

59,8

55,1

24,8

21,6

30,2

34,5

40,541,3

47,6

55,0

24,421,5

37,2

32,7

29,2

41,8

15,0

10,89,4

0,1 0,4 1,01,8 3,3 3,85,8

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

50,0

55,0

60,0

65,0

70,0

75,0

80,0

85,0

feb

-06

ma

r-0

6

ap

r-0

6

ma

y-0

6

jun

-06

jul-

06

au

g-0

6

sep-

06

oct

-06

no

v-0

6

de

c-0

6

jan

-07

feb

-07

ma

r-0

7

ap

r-0

7

ma

y-0

7

jun

-07

jul-

07

au

g-0

7

sep-

07

oct

-07

no

v-0

7

de

c-0

7

jan

-08

feb

-08

ma

r-0

8

Total

First Decree

New Decree

ConclusionsConclusions

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33

Total incentives distributed

by 1st of March 2008

TYPE OF CONTRACTPlants

under contractCapacity

kWEnergykWh

Incentives distributed

NET-METERING 4.358 21.125 17.116.102 7.788.074

SALE TO THE GRID 492 22.987 18.848.610 9.012.799

TOTAL 4.850 44.112 35.964.712 16.800.873

ConclusionsConclusions

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34CONTENTSCONTENTS

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

Renewables in ItalyRenewables in Italy

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Situation of Green Certificates Situation of Green Certificates

Release of Gurantee of OriginRelease of Gurantee of Origin

PV incentive schemePV incentive scheme

Co-generationCo-generation

CIP-6 electricityCIP-6 electricity

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35

Quality indexesQuality indexesaccording to Act n. 42-02according to Act n. 42-02

Energy saving index (I.R.E.) Energy saving index (I.R.E.)

Fuel saving (per cent) achieved in a plant by producing electricity and heat in cogeneration Fuel saving (per cent) achieved in a plant by producing electricity and heat in cogeneration

(as compared to separate productions).(as compared to separate productions).

Thermal limit (L.T.)Thermal limit (L.T.)

Ratio of heat produced to total (heat+electricity) production.Ratio of heat produced to total (heat+electricity) production.

Co-generationCo-generation

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36

Benefits for power cogeneration-produced Benefits for power cogeneration-produced powerpower

No obligation to purchase No obligation to purchase green certificatesgreen certificates..

Priority of dispatching, after power produced by RES (Renewable Energy Sources).Priority of dispatching, after power produced by RES (Renewable Energy Sources).

Issuing of green certificates (only for cogeneration applied to district heating and put in Issuing of green certificates (only for cogeneration applied to district heating and put in operation within a definite time period).operation within a definite time period).

Issuing of Issuing of certificates of energy efficiencycertificates of energy efficiency, which can be sold., which can be sold.

Tax benefits.Tax benefits.

Co-generationCo-generation

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37

Units with overall annual efficiency 75% and higher (80% and higher, according to type):

All annual electricity production is assumed to be from cogeneration.

Co-generationCo-generation

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If this is not the case, electricity from cogeneration is calculated as follows:

ECHP = HCHP *C

ECHP :electricity from cogeneration (MWh);

C : “power to heat ratio“: conventional ratio of annual electricity production and annual heat production of the unit.

C is listed as a function of technology (combined cycle, steam turbine, gas turbine, internal combustion engine etc.)

HCHP useful heat from cogeneration

Co-generationCo-generation

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39CONTENTSCONTENTS

GSE – Gestore dei Servizi ElettriciGSE – Gestore dei Servizi Elettrici

Renewables in ItalyRenewables in Italy

Certification for issuing Green CertificatesCertification for issuing Green Certificates

Situation of Green Certificates Situation of Green Certificates

Release of Guarantee of OriginRelease of Guarantee of Origin

PV incentive schemePV incentive scheme

Co-generationCo-generation

CIP-6 electricityCIP-6 electricity

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40

Law no. 9 of 9 Sept. 1991 (Art. 22) – Liberalisation of electricity generation from renewable and so-called “assimilated” sources; new initiatives compatible with Enel’s programmes; purchase of electricity generated by new plants at incentivising prices

Decree of CIP (Interministerial Committee on Prices) no. 6 of 29 Apr. 1992 and Ministerial Decree of 4 Aug. 1994 – Definition of sources “assimilated” to renewable sources; prices equal to Enel’s avoided cost + 8-year incentives to new plants; procedure for yearly revision of prices

AEEG’s Decisions 108/97 and 81/99 – Reduction of prices for the sale of surplus electricity and injection of electricity into the grid by former producing-distributing companies

Legislative Decree 79/99 (art. 3) and Ministerial Decree of 21 Nov. 2000 – Transfer of rights and obligations to GRTN (now GSE) for the purchase of electricity from 1 January 2001

AEEG’s Decision 34/05 – Definition of prices for system operators’ purchase of electricity generated by plants of up to 10 MVA and from non-plannable renewable-energy plants (excluding CIP-6 plants) from 1 January 2005

CIP-6 electricityCIP-6 electricity

Reference legislationReference legislation

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41

Evolution of CIP-6 electricity: 2008 - 2020Evolution of CIP-6 electricity: 2008 - 2020

As per art. 3, para. 12, Legislative Decree 79/99, the volume of electricity purchased by GRTN (now GSE) shall vary depending on the number of plants having entered into a CIP-6 agreement, on the contractual capacity and on the duration of the agreements (notwithstanding the payment of an incentivised tariff for the first 8 years of operation of the plant, such duration may in some cases reach 15 or 20 years)

(1) Values based on prices for payment on account in 2006, yearly increased by 2%

(1)

CIP-6 electricityCIP-6 electricity

Expected CIP-6 generation 2008-2020 – Years

Projected CIP-6 electricity purchasing costs 2008-2020 - Years

INC: incentive

CEC: avoided fuel cost

CEI: avoided plant/installation cost

INC: incentive

CEC: avoided fuel cost

CEI: avoided plant/installation cost

Proiezione energia Cip6 2008 - 2020

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

50.000

55.000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

GWh

Proiezione costi acquisto Cip6 2008 - 2020

0

1.000

2.000

3.000

4.000

5.000

6.000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Mn€

INC

CEC

CEI