Res evolution italy_gse

Renewables
in Italy
74th Meeting
of the IEA Working Party
on Renewable Energy
Technologies
Luca Benedetti
Head of Energy Studies and Statistics
luca.benedetti@gse.it
GSE
WE GUARANTEE THE SUSTAINABLE DEVELOPMENT OF OUR COUNTRY.
WE PROMOTE RENEWABLE SOURCES AND ENERGY EFFICIENCY.
Rome, 25-26 October 2018

RES TARGET MONITORING: WHERE WE ARE
13,0% 12,9%
15,4%
16,7% 17,1% 17,5% 17,4% 17,6%
8,1%
8,6%
9,2%
9,9%
10,5%
11,2%
12,0%
12,9%
13,8%
15,1%
17,0%
2010 2011 2012 2013 2014 2015 2016 2017* 2018 2019 2020
Total and RES Gross Final Consumption [Mtoe] Observed RES share and 2020 target [%]
 In 2016 the share of renewables in gross final energy consumption was 17,4%, higher than 2020 Italian mandatory
target set up by Directive 2009/28/EC (17%). Preliminary estimation on 2017 indicates that RES share could amount
to about 17,7%
 Relevant growth of RES consumptions, slower in recent years. Decrease then weak recovery of total consumption
Observed Renewable share
Renewable National Plan (2010)
17,7%
74TH MEETINGOFTHEIEAWORKINGPARTYON RENEWABLEENERGYTECHNOLOGIES
17,4 16,5
19,6 20,7 20,2 21,3 21,1 21,7
133,3 128,2 127,1 123,9 118,5 121,5 121,1 123,0
2010 2011 2012 2013 2014 2015 2016 2017*
RES Transport RES Heating
RES Electricity Total gross final consumptions
*preliminary

• ELECTRICITY SECTOR
• THERMAL SECTOR
• TRANSPORT SECTOR

51 54 48 47
54 48 51 48
58
69
77 83
92
112
121
109 108 104
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
EVOLUTION OF RES-E: STATISTICS
RES cumulative installed capacity (GW) RES gross electricity production (TWh)
 Capacity: large stock of hydro, progressive increase of wind and bioenergy, and explosive PV in 2010-2013, now first RES
 Energy: hydro the largest RES, with large fluctuations, PV second source. In 2017 RES-E share was 34%
18 19 19 20 20 21 21 22 24 27
30
41
47 50 51 51 52 53
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Solar Bioenergy
Wind Geothermal
Hydro
0
5
10
15
20
25
30
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
GW
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
0
10
20
30
40
50
60
TWh

580
782
309
123
111
1.906
815
288
904
524
673
679
54
3.937
853
613
867
479
264
127
41
3.244-
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
Mln€
Investments
O&M costs
Added Value
EVOLUTION OF RES-E: IMPACTS ON JOBS
Mixed pumping, waste, sewage and landfill plants not included
3.979
6.141
2.984
1.158
1.124
15.395
9.677
3.719
11.502
6.454
3.621
1.990
689
37.652
-
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
JOBS
Temporary jobs
Permanent jobs
Investments and O&M costs in 2017* [mln €] Temporary and permanent jobs in 2017*
(*) preliminary data
 RES impacts is calculated within the framework of a standard demand driven I-O model, suitably integrated and matched
with the statistical and technical-economic data collected and analyzed by GSE
 In 2017, wind and PV attracted higher investments (and temporary jobs), hydro showed higher O&M costs (and permanent
jobs)

EVOLUTION OF RES-E: DRIVERS
6,5
1,7
3,3
0,11,0
2017 Burden (€ bn)Evolution and scenario of incentive burden (€ bn)
12,5
€ bn
 RES growth was largely driven by incentives. In 2017, more than 60% of RES energy was supported (a part of the energy
produced by old large hydro and geo plants without incentives)
 Progressive reduction of incentive tariffs over time: from an average incentive of 290 €/MWh of PV in Conto Energia to an
average of 50 €/MWh of the latest Decree in 2016)
 In 2017 the incentive burden was 12,5 € bn, around a half related to PV. The burden will decrease over time, partially
depending on energy price (which is expected to show a significant growth, already started)
3,6
7,4
9,8
11,6
13,4
12,7
14,4
12,5
12,1
11,8
11,7
11,7
11,8
11,7
11,1
10,6
9,9
9,2
7,8
7,5
7,1
5,9
2,3
1,3
1,0
0,9
0,8
0,7
0,6
0,5
0,5
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Net billing
RID
DM 23/06/2016
DM 6/07/2012
CIP6
TO
I ex CV
Conto Energia PV

EVOLUTION OF RES-E: THE ROAD TOWARDS 2030
 National Energy Strategy (NES 2017) defined a high target share of RES-E in 2030 (55%), with a +80% increase with respect
to 2017 (from 103 TWh to 184 TWh). The higher contributions are expected from PV and wind: PV energy should triple (in
the past 4 years about 400 MW/year installed; the rate should raise up to 3 GW/year); Wind energy should double
 The National Energy and Climate Plan (NECP), under discussion, will probably be even more ambitious. NECP not only will
define new targets, but also policies and measures to reach the targets.
NES 2017 capacity targets and road towards 2030 NES 2017 energy targets and road towards 2030
0
10
20
30
40
50
60
70
80
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030SEN
TWh
Hydro Wind
Solar Geothermal
Bioenergy
0
10
20
30
40
50
60
70
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030SEN
GW
Hydro Wind
Solar Geothermal
Bioenergy
The represented trajectories are only conjunctions between 2017 and 2030, real development will obviously be not linear

EVOLUTION OF RES-E: THE NEW M.D. “FER1” DRAFT
 The new M.D. draft aims at supporting, in the period 2019-2021, energy from new, refurbished and upgraded plants from “mature” RES:
PV, onshore wind, hydro and sewage gas for a total capacity of about 8 GW (of which 7,4 GW new)
 8 rounds of competitive AUCTIONS for groups of technologies (with reserves for each technology if some conditions occur) and
REGISTRIES for smaller plants, with some competitive elements
 Plant owners offer a % reduction of the base tariff: between 2% and 70% for auctions, and up to 30% for registries (also other criteria)
 The support is mainly a Sliding FiP (“two-ways”: owner pays GSE back in case Pelectricity>Incentive tariff) and a FiT (≤100kW); premium for
PV plants removing asbestos in addition to the incentive
Registries: plants < 1 MW (PV >20kW)Auctions (plants ≥ 1 MW)
A
(Wind, PV)
A-2
(PV substitution
of asbesto)
B
(hydro,
sewage gas)
C
(refurbished
wind,hydro,
sewage gas)
770 800 80 80
A
(Wind, PV)
B
(hydro,
sewage gas)
C
(refurbished
wind,hydro,
sewage gas)
5.600 110 500
Group
Capacity
(MW)
Main priority criteria:
 group A: plants installed on exhausted landfills or other specific areas;
 group A-2: plants on schools, hospitals, public buildings etc;
 combined with recharge columns for e-mobility
 offered reduction of the base tariff (max 30%)
Specific financial requirements:
 capitalization as proof of financial and economic stability
 surety bond deposit (5% temporary, 10% definitive)

FOCUS ON PAST AND FUTURE WIND AUCTIONS
Onshore wind auctions base tariffs and offers range Increase in percentage reductions
offered over the four past wind
bidding sessions (all plants offered the
maximum allowed reduction in 2016
session, 40% of the base tariff)
 Promotion of competitiveness and
reduction of system cost
 The tariff resulting from the latest
auction is comparable and can be even
lower than the current and future
energy price
89 89
89
66
21
127 127 127
110
70
124
115
93
66
96 103
89
75
63
52
43
72
124 124 124
108
69
2012 session 2013 session 2014 session 2016 session 2019 session
€/MWh
Possible range Base tariff Min admitted reduction Max admitted reduction Energy price
Applied capacity (MW) 442 982 1.223 1.944
Admitted capacity (MW) 442 465 368 800
in operation capacity (MW) 346 452 306 118
% in operation/admitted 78% 97% 83% 15%

FOCUS ON PAST AND FUTURE WIND AUCTIONS
Onshore wind auctions base tariffs and offers range Increase in percentage reductions
offered over the four past wind
bidding sessions (all plants offered the
maximum allowed reduction in 2016
session, 40% of the base tariff)
 Promotion of competitiveness and
reduction of system cost
 The tariff resulting from the latest
auction is comparable and can be even
lower than the current and future
energy price
89 89
89
66
21
127 127 127
110
70
124
115
93
66
96 103
89
75
63
52
43
72
124 124 124
108
69
2012 session 2013 session 2014 session 2016 session 2019 session
€/MWh
Possible range Base tariff Min admitted reduction Max admitted reduction Energy price
Applied capacity (MW) 442 982 1.223 1.944
Admitted capacity (MW) 442 465 368 800
in operation capacity (MW) 346 452 306 118
% in operation/admitted 78% 97% 83% 15%
 Uncertainty for the next auctions: the
base tariffs established in the latest
Decree draft is lower than the forward
energy price

Total and RES Gross Final Consumption [Mtoe]
15,6%
13,8%
17,0%
18,1%
18,9% 19,3% 18,9%
6,5% 7,1%
7,7%
8,4%
9,2%
10,1%
11,1%
12,3%
13,6%
15,2%
17,1%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Quota FER rilevata
Traiettoria PAN
RES-H TARGET MONITORING: RESULTS AND DRIVERS
Observed RES share and 2020 target [%]
 In 2016, 10,5 Mtoe (18,9% of total consumption) were consumed from RES. Preliminary data indicate 11 Mtoe in 2017
 The main contribution is due to biomass (7,6 Mtoe in 2016) and in particular firewood and pellet for domestic heating. Operating
devices are about 7 million, with an annual market around 0,2-0,4 million of devices (only 25% increasing the stock)
 Heat pumps for heating play a relevant role (2,6 Mtoe). Operating heat pumps are 19 million, with an annual market of 1-1,5 million
(only 15% increasing the stock)
 RES consumption in the thermal sector mainly depends on climate variability.
 From an economic point of view, RES-H is mainly driven by the relatively low cost of energy sources, also due to fiscal measures (tax
exemption on biomass and reduced VAT rate) rather than incentives on new devices (heating account, fiscal deductions, white
certificates)
10,0
8,1
10,2 10,6 9,9 10,7 10,5 11,0
64,0
58,6 60,2 58,6
52,5
55,5 55,8
2010 2011 2012 2013 2014 2015 2016 2017*
* preliminary
10,0 8,1 10,2 10,6 9,9 10,7 10,5 11,064,0 58,6 60,2 58,6 52,5 55,5 55,8
20
70
0
50
2010 2011 2012 2013 2014 2015 2016 2017*
Migliaia
Migliaia
Biomass Heat Pumps Solar (thermal) Geotermal Thermal final consumption

THE ROAD TOWARDS 2030: MAIN GUIDELINES
 UE requires for 2030 a 13% increase of RES-H share vs 2020. The National Energy Strategy 2017
defined a 30% RES-H target for 2030. The National Energy and Climate plan under discussion might
increase this target.
 The first resource to focus on is energy efficiency and energy savings, in order to reduce thermal
consumption, especially in the residential sector.
 Strengthening the regulation on mandatory RES share on buildings might be important.
 Heat pumps have a key-role, also for the electrification of thermal consumptions.
 Solar thermal technologies, not developed so far, may be enabled (but in some circumstances they
have the competition of the photovoltaic-heat pump coupling)
 Italy has a problem of high levels of particulate matter, so the role of biomass for heating sector
should be revised. But there would be a really interesting market of replacement of old devices with
new technologies more efficient and with lower emissions
 District heating could be developed, mainly considering current networks, enabling synergies
between renewables, waste and high efficiency cogeneration
 The possibility to include cooling in RES counting, and how, is currently under investigation at UE level

• ELECTRICITY SECTOR
• THERMAL SECTOR
• TRANSPORT SECTOR

Total and RES Gross Final Consumption [Mtoe]
RES-T TARGET MONITORING: RESULTS AND DRIVERS
Observed RES share and 2020 target [%]
 RES evolution in the transport sector is mainly driven by final consumption and biofuels blending obligation (6,5% in 2017;
from 2018 we will also have a sub-obligation for advanced biofuel)
 In 2016 the RES share was 7,2% considering the multipliers (“x 2” for double counting biofuels; “x 5” for RES electricity for
roads; “x 2,5” for RES electricity for rails)
 Preliminary estimates for 2017 indicate an increase of biofuels injection with respect to 2016 (+2%), in particular for
double counting (+13%)
4,8% 5,0%
6,0%
5,4%
5,0%
6,4%
7,2%
3,5%
4,1%
4,7%
5,3%
6,0%
6,6%
7,3%
8,0%
8,7%
9,4%
10%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Quota FER rilevata
Traiettoria PAN
*preliminary

Indonesia
Spain
Italy
France
Other UE countries
Other extra UE countries
By-products of oil processing
Animal fat
Palm
Aother food crops
Other waste/by-products
RES-T TARGET MONITORING: RESULTS AND DRIVERS
 In 2016 about 10,6 million Gcal of sustainable biofuels were put in consumption
 89% of injected biofuels were biodiesel. By-products of oil processing and animal fats are the main raw materials. 59%
of raw materials come from UE countries (mainly Spain and Italy), while 41% from extra UE countries (mainly Indonesia)
Type of biofuels injected in 2016
89%
6%
4%
1%
Raw materials for biofuels in 2016
33%
30%
18%
18%
11%
Countries of origin of raw materials of biofuels in 2016
32%
15%
10%
6%
28%
10%
Biodiesel
Hydrotreated vegetable oil
bio-ETBE
Other

THE ROAD TOWARDS 2030: MAIN GUIDELINES
 NES defined a very ambitious 21% RES-T target share in 2030. This would require a relevant RES increase
from the current 7,2%. UE require a 14% share in 2030, but with a new calculation methodology, reducing
multipliers for renewable electricity used in road and rail, limiting the use of some raw materials such as UCO,
excluding palm in 2030, etc.
 Biomethane is identified as an important alternative fuel for the transport sector. The M.D. 2/3/2018 sets
incentives, having a duration of 20 years, based on the emission of blending obligation certificates. The
certificates can be sold to oil companies subject to the blending obligation mechanism. For biomethane and
biofuels from wastes and non food feedstock (advanced), certificates are bought by GSE at a fixed price.
 A relevant role expected to be played in 2030 by electric and hybrid (plug-in) vehicles. Improvement of
batteries performance, decrease of the cost, development of recharge infrastructure, will allow an increase
of the penetration of such vehicles. Legislative Decree 16/12/2016, transposing the Directive on Alternative
Fuel Infrastructure, foresees an increase of recharge stations from the current 2.900 up to at least 6.500 in
2020.
 Not only technologies. To reduce consumption in the transport sector, other strategies will also be very
important: ”avoiding” (smart working, online services, etc.) and “shifting” (upgrading of local public
transport, intermodal freight transport, intelligent transport system, car-sharing, car-pooling, cycling, etc.)

LOOKING AT THE FUTURE

16,1%
34,0%
55,0%
5,7%
18,9%
30,0%
1,2%
7,2%
10%
20,5%
6,3%
17,4% 17%
28,0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
RES-E share on electricity consumption
RES-H share on heating consumption
RES-T on transport consumption
RES tot on gross final consumption
THE FUTURE OF RENEWABLES: A LOOK AT 2030
RES share on renewable consumptions: past trend, mandatory 2020 targets and 2030 targets
In 2017, the National Energy Strategy (NES) set challenging targets for 2030. The Energy and Climate Plan (NECP),
currently under elaboration, will update 2030 targets, and will probably be more ambitious
NES
NES
NES
NES

16,1%
34,0%
55,0%
5,7%
18,9%
30,0%
1,2%
7,2%
10%
20,5%
6,3%
17,4% 17%
28,0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

16,1%
34,0%
55,0%
5,7%
18,9%
30,0%
1,2%
7,2%
10%
20,5%
6,3%
17,4% 17%
28,0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
«The best way
to predict the future
is to create it»
(Peter Drucker)

Res evolution italy_gse

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