The conflicting case of the
energy transformation at times
of austerity in Italy
Tommaso Rondinella and Elena Grimaccia
Istat
Green economy trends
GDP. Greenhouse gas emissions, energy consumption and material consumption
(indexes 1990=100)
Source: Elaboration on Eurostat data
Energy consumption
Production, net imports, consumption in Energy Sector in Italy - all products (Million
tonnes of oil equivalent -Mtoe)
Source: Eurostat
Energy intensity
Gross inland consumption of energy divided by GDP – 2000, 2010 (chain-linked
volumes - reference year 2005) - kilogram of oil equivalent (kgoe) per 1000 euro
Source: Eurostat
Energy intensity
ODEX Index (1990=100)
Source: Enea elaborations on MSE data
Electric energy mix
Shares of electric energy production by source. 2000-2011 (%)
Source: GSE
RES 20/20/20 objectives
Share of energy from renewable sources by sector and 20/20/20 strategy objectives
(percentages on energy consumption)
Source: Eurostat
RES future perspectives
Expected evolution of electric energy production from renewable sources
(TWh per year, estimates)
Source: SEN 2013
Austerity
Principal measures affecting the state budget since 2008 (million euros)
Source: Ministry of Economics and Finance (2013a)
*Cumulated effects of laws and decrees (DL 112/2008, DL 185/2008, LF 2009, DL 5/2009, LF 2010, DL 78/2010, LS 2011, DL
98/2011 e DL 138/2011, LS 2012, DL 201/2011, DL 95/2012; DL 9/10/2013)
Green austerity
Expenditures for
environmental
protection (million
euros, percentage of
total public
expenditure,
percentage of GDP)
• Ministry for Environment from 1.6 billion to 470 million (-70% bw 2008-2013)
• Mission “Energy and energy sources diversification” from 100 million in 2008
and 2009 dropping to only 8 million in 2010 and 6 million in 2012.
• Public R&D from the state budget aimed at environment, transport and energy,
dropped respectively by 28.5, 90.3 and 72.1 %. Overall it dropped by 42.2%.
• Private investments in env protection (air, water, waste): -29%
Source: Eurostat (Cofog) and MEF
Green energy incentives
Produced energy and cost of the system of incentives for renewable sources
of electricity in Italy – Years 2008-2012
INCENTIVE
REGIME
CIP 6 (only
renewables)
Green Certificates
2008
Energy (TWh)
2009 2010 2011
2012
2008
Cost (Million €)
2009 2010 2011
810
6,9
6,3
4,77
4,9
948
10,5
0,2
17,4
0,7
21,2
1,2
27,4
2,4
31,7
3,3
615
36
Energy Account
(photovoltaic)
0,2
0,7
2,0
10,9
18,5
110
Total
18,7
25,7
30,7
45,5
58,4 1.709 2.521 3.398 7.300 9.006
Of which in A3
Source: Elaborations on AEEG data and reports, and GSE.
948
880
457
7,8
Fixed “all-in” tariff
780
2012
1.296 1.580 2.049 1297
112 212 441 959
303
826
3.930 6.293
1.872 2.758 6.632 9.163
Green energy incentives
Expected evolution of the costs for the development of electric renewable
sources – 2012-2020 (billion of euros)
14
12
10
8
6
Non PV post 2015
4
Non PV
2
PV
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
• 170 billion during the 15-20 years of incentives
• the SEN foresees that starting from 2016 it would be possible to support
further incentives for 0.5-1.5 billion a year.
• Strategy hopes a partial covering of these future incentives through the
introduction of a carbon tax at European level
• In case of overcoming of national objectives, which is about to happen, it is
possible to consider the hypothesis of selling of excessive production through
the mechanism of statistical transfer foreseen by the directive 2009/28/CE
Source: SEN 2013
Notes: 2012 base does not include auctions assigned between 2012 and 2013
Energy prices
Electricity prices components for industrial consumers (€/KWh)
Source: Elaboration of Eurostat data
Average of the MWh consumption classes (less than 20, 20-500, 500-2000, 2000-20.000, 20.000-70.000)
• 2012 saw an average annual increase of electricity prices of 14%.
• The electricity price index saw its first reduction at the beginning of
2013 after seven consecutive years of increase.
• The overall A3 component costs 30 euros/MWh.
• Only PV incentives: 2006: 2 €cents/MWh consumed.
2008: 32 cents.
2012: over 20 euros
Energy efficiency incentives
• Tax incentives for both service enterprises and the building sector.
55% detraction in income and corporate taxation for all intervention: efficient
structures and materials, adoption of solar panels for water heating and new
generation boilers and heating systems.
Now is 65%, to be lowered to 50% in 2015-16 and 36% afterwards.
• White certificates for the industrial sector.
At mid-2012 had covered 14.8 Mtoe saved by (mostly) energy service enterprises.
A fund for subsidized loans (interest rate at 0.50%) called “Kyoto rotating fund”, is
established for financing investments for a total of 600 million euro.
• A large number of initiatives for sustainable transport.
The most relevant has been a fund for sustainable mobility of 239 million euros
between 2007 and 2009.
The combined effect of these measures allowed between 2007 and 2010 the
saving of about 4 Mtoe per year of final energy (and about 6 of primary energy)
fulfilling the objectives fixed for that time of about 3,5 Mtoe (SEN, 2013).
Energy efficiency incentives
Overall effects of energy efficiency measures in 2010-2020
(cumulated effects, million euros)
Personal taxes due to increased employment
Corporate taxes
Effects on state budget
VAT due to increased consumption
Public incentives
VAT and duties due to less energy consumption
TOTAL
Economic value of saved energy*
Economic impact on
Economic value of saved CO2**
energy system
TOTAL
OVERALL IMPACT ON COUNTRY SYSTEM
Effects on industrial
development
Increased demand
Increased production
Increased employment (thousands of FTE)
Source: Agenzia per la diffusione delle tecnologie e per l’innovazione, 2013
*considering oil price at 0.75$ per barrel and Us$-Euro exchange rate of 1.25
**considering a value of 25€ per tCO2
4,555
2,312
18,302
-22.817
-17,781
-15,492
25,616
5,190
30,806
15,377
130,118
238,427
1,635
Fossil fuel subsidies
Direct subsidies (4,7 billion):
• in 2012, the non-renewable CIP6 financed 2.34 billion of incentives to fossil fuel
plants (from 3.4 billion in 2001). “Assimilated sources” cost about 38 billion since
2001 (within A3);
• 1.6 billion to energy consuming industries for their availability on a sudden energy
interruption in case of need or emergency (100-150 thousand € /yr/MW);
• subsidies to road transport amount for about 500 million every year including
direct transfer, reduced highway tariffs and reduced insurance premiums;
• incentives for old fuel oil centrals to be activated in case of emergency needs
without any environmental constraints. 250 million in 2013 (A3).
Indirect subsidies (4,3 billion):
• 3 billion euros for investments in new roads and highways; and
• the very low royalties for oil drilling (10%, while in the rest of the world they vary
between 20 and 80%). Should be applied 50% royalties, they would have
generated revenues for 1.3 billion euro.
Source: Legambiente
Photovoltaic incentives
PROS:
• Reaching of 20-20-20 objectives.
• Reduction of CO2 emissions.
• Fostering of energy security by the reduction of imports of fossil fuels.
• Activation of relevant investments and the generation of fiscal
revenues.
• Occupational effects.
• Spreading the culture of energy sustainability .
CONS:
• Unfair redistributive effect allowing huge profits for foreign investors.
• Important hidden taxation in times of crisis.
• Inefficient strategy for greenhouse gas reduction.
• Lack of development of a national industry.
PROS
•
Electricity sector 20-20-20 objective reached 8 years in advance: 93 out of 100
TWh from RES (13 GW of PV power installed since 2010, reaching 19 GW).
•
Reduction of imports of fossil fuels by 2.5 billion euro a year.
•
Flattening of the demand curve on wholesale markets for a value of about 400
million euro a year.
•
Investments to install over 19GWp of photovoltaic panels have activated several
billion euros of investments which amounted in 2011 to about 1.5 percent of
Italian GDP.
•
Fiscal revenues for 1.7 billion a year (less the eroded shares of traditional
production).
•
In 2011, the whole sector employed more than 100.000 people, of which 18.000
new ones (7.000 in components production and 11.000 in marketing and
installation). Another 40-45.000 can be attributed to ancillary industries.
Efficiency issues
Incentive tariffs, 3kW roof plant vs. 1MW ground plant, 2008-2013, €/KWh
The boom: marginal Ebit of 20% or more.
…and the bubble along value chain:
•
•
•
•
LAND: rent 20 000 €/ha during 20 years
(sold before for 5 to 10 thousands euros).
PERMISSIONS: reached the value of 400
thousand euros per Megawatt. Even 100
times higher.
FIRMS: charging 20% over their costs
PANELS: halved their price in 2013
SOLAR: RoE of more than 7.5% guaranteed by 70 €/MWh incentives, they now pay
89.7 €/MWh (KPMG)
Too generous incentives, nearly no risk, predictable profits
Equity issues
Share of the installed plants for different power classes - 2012
1-20 MW
Over 20 MW
Number
88.3%
11.7%
MW
15.4%
84.6%
M€
14.9%
85.1%
1-200 MW
Over 200 MW
97.6%
2.4%
36.6%
63.4%
23.3%
76.7%
Total
478,331
16,420
6,036
• Hidden taxation during a domestic demand crisis:
Every year at least 1 billion (6,5 billion*0.2 Roe*0.77) is transferred from 29
million households and enterprises towards big investors, often foreigners.
Efficiency issues
• Disproportionately high level of expenditure per Kilowatthour of renewable energy produced
Photovoltaic 2008
550 €/MWh
Photovoltaic 2012: 333 €/MWh
All-in tariff (small wind and hydro) 260 €/MWh
Green Certificates (High power wind and hydro) 82 €/MWh
Residential tax benefits
65€/MWh
White Certificates
(92€ per avoided toe = 8 €/MWh)
• All available resources used for non optimized technologies:
Grid parity reached in southern regions already in 2013
Industrial development
Share of
national
industry on
whole life cost
(investments,
operative costs
and fuel, %)
•
•
•
ComEx:
Photosensitive
semiconductor
devices; lightemitting diodes
(Million €)
80% of components distribution and of plants install.
50% of modules and inverters.
6% of silicon wafers.
Industrial development
• Which Green Jobs?:
Without the development of a photovoltaic industrial sector, jobs
limited to bricklayers assemblers and electricians who made the
connections.
Maintenance is then limited to the cleaning of the panels and the grasscutting of the dedicated area. Without investments in a national
industry, this kind of incentives supporting only the demand side and
not the supply side, then never really creating green jobs.
Lower but longer term incentives, together with related
R&D, may have fostered the birth of a national industry in
a sector with secure future development.
(Smart) grids
• With the progressive reaching of the grid parity these infrastructures are
more and more needed for an efficient exploitation of renewable sources.
• Smart grids are particularly urgent in southern regions where the power
installed is already higher than the peak demand (25 GW vs. 21 GW). Pilot
projects started.
• Fast increase of traditional lines, with the national asset boosting from 45
thousands to 64 thousands kilometers between 2008 and 2009.
Assets of national transmission network – 2000-2012
Even if not made smarter, the grids has been widely enlarged.
Conclusion
Italian energy production and consumption is greener and
less import dependent
The system of incentives:
Based on a hidden taxation
Too generous (with a few)
Too quick (to exploit more efficient technologies, to let a
national industry develop)
Need to push on efficiency
Need to be further decarbonized
Lack of RnD and Smart Grid Investments
Thank you.
rondinella@istat.it
elgrimac@istat.it