POLITECNICO DI MILANO
Scuola di Ingegneria Industriale e dell’Informazione
Master of Science in Management Engineering
ANALYSIS OF THE ITALIAN RENEWABLE INDUSTRY: CHANGES
AND IMPROVEMENTS IN THE SECTOR
Supervisor:
Prof. Davide Chiaroni
Author:
Lorenzo Bassanelli 841402
Table of Contents
Abstract ... 9
Abstract – Italian version ... 10
1. Introduction ... 11 2. Technologies ... 15 2.1 Photovoltaics ... 15 2.1.1 Introduction ... 15 2.1.2 Italian market ... 24 2.2 Wind ... 32 2.2.1 Introduction ... 32 2.2.2 Italian market ... 36 2.3 Biogas ... 38 2.3.1 Introduction ... 38 2.3.2 Italian market ... 40 2.4 Hydropower ... 41
2.5 Other renewable sources ... 43
2.5.1 Geothermal power ... 43
2.5.2 Sea Power ... 43
3. State of art of the renewable market ... 45
4. Type of incentives for renewable energy producres ... 49
4.1 PV incentives ... 49
4.2 Incentives for other renewable sources ... 53
5. Green bonds and other facilitations ... 55
6. Renewable energy sources potential ... 58
7. Methodology of the analysis ... 60
8. Electric components for renewables ... 66
9. Sale of electricity through renewable energy ... 69
9.1 Sale of electricity through PV plants ... 70
9.3 Sale of electricity through hydropower plants ... 76
9.4 Sale of electricity through biomass plants and district heating ... 79
9.5 Sale of electricity through multi-asset owners in the renewable sector ... 82
10. Design and O&M ... 84
10.1 PV design and O&M ... 85
10.2 Wind design and O&M ... 88
10.3 Hydro design and O&M ... 90
10.4 Biomass design and O&M ... 93
11. Considerations about the overall analysis ... 96
A. Appendix ... 99
List of Figures
Figure 1, “Renewable electricity capacity growth by technology” ...12
Figure 2, “Photovoltaic plant” ...15
Figure 3, “Photovoltaic cell” ...16
Figure 4, “Another example of a photovoltaic cell” ...17
Figure 5, “PV cell, module and array” ...17
Figure 6, “Solar annual radiation in Italy” ...20
Figure 7, “Residential plant price breakdown” ...22
Figure 8, “Industrial plant price breakdown” ...22
Figure 9, “Solar farm price breakdown” ...23
Figure 10, “PV plant price trends” ...23
Figure 11, “PV market segmentation” ...25
Figure 12, “Segmentation of the Italian market from 2007 to 2016” ...25
Figure 13, “PV installed capacity in Italy from 2008 to 2016”...26
Figure 14, “New PV plants location in Italy”...27
Figure 15, “O&M price trends” ...31
Figure 16, “Horizontal and vertical configurations” ...33
Figure 17, “Wind investment costs” ...35
Figure 18, “Italian market segmentation” ...36
Figure 19, “Wind capacity installed in Italy” ...37
Figure 20, “Agricultural biogas plant” ...39
Figure 21, “Biogas installed capacity in Italy”...40
Figure 22, “Hydro installed power in 2016” ...42
Figure 23, “Elaboration from taken by BP” ...46
Figure 24, “Break down of the electric production by renewable sources” ...46
Figure 25, “Major electric energy producers in Italy (2014)”...47
Figure 26, “Example of a photovoltaic plant” ...50
Figure 27, “Installed power through different “Conto Enegia”” ...52
Figure 29, “The sample of the analysis” ...62
Figure 30, “The matrix of the analysis” ...63
Figure 31, “Picture of the Italian renewable industry during the 2008 – 2015 period” .64 Figure 32, “Performances during 2008 – 2015” ...67
Figure 33, “Performances during 2008 – 2012” ...68
Figure 34, “Performances during 2012 – 2015” ...69
Figure 35, “Performances during 2008 – 2015” ...70
Figure 36, “Performances during 2008 – 2012” ...71
Figure 37, “Performances during 2012 – 2015” ...72
Figure 38, “Performances during 2008 – 2015” ...73
Figure 39, “Performances during 2008 – 2012” ...74
Figure 40, “Performances during 2012 – 2015” ...75
Figure 41, “Performances during 2008 – 2015” ...76
Figure 42, “Performances during 2008 – 2012” ...77
Figure 43, “Performances during 2012 – 2015” ...78
Figure 44, “Performances during 2008 – 2015” ...79
Figure 45, “Performances during 2008 – 2012” ...80
Figure 46, “Performances during 2012 – 2015” ...81
Figure 47, “Performances during 2008 – 2015” ...82
Figure 48, “Performances during 2008 – 2012” ...83
Figure 49, “Performances during 2012 – 2015” ...84
Figure 50, “Performances during 2008 – 2015” ...85
Figure 51, “Performances during 2008 – 2012” ...86
Figure 52, “Performances during 2012 – 2015” ...87
Figure 53, “Performances during 2008 – 2015” ...88
Figure 54, “Performances during 2008 – 2012” ...89
Figure 55, “Performances during 2012 – 2015” ...90
Figure 56, “Performances during 2008 – 2015” ...91
Figure 57, “Performances during 2008 – 2012” ...91
Figure 59, “Performances during 2008 – 2015” ...93 Figure 60, “Performances during 2008 – 2012” ...94 Figure 61, “Performances during 2012 – 2015” ...95
List of Tables
Table 1, “Installed and forecasted Italian power in 2016” ...14
Table 2, “Photovoltaic technologies classification” ...19
Table 3, “PV plant price breakdown” ...21
Table 4, “Players classification by type” ...29
Table 5, “Main O&M players in Italy” ...30
Table 6, “All-inclusive tariff” ...53
Table 7, “Average profitability at the end of 2015” ...67
Table 8, “Average profitability at the end of 2015” ...71
Table 9, “Average profitability at the end of 2015” ...74
Table 10, “Average profitability at the end of 2015” ...77
Table 11, “Average profitability at the end of 2015” ...80
Table 12, “Average profitability at the end of 2015” ...83
Table 13, “Average profitability at the end of 2015” ...86
Table 14, “Average profitability at the end of 2015” ...88
Table 15, “Average profitability at the end of 2015” ...91
Table 16, “Average profitability at the end of 2015” ...94
Abstract
The following work provides an overview of the technical and entrepreneurial world of renewable sources and seeks to answer some of the dynamics that have taken place in this sector over the last decade.
Until the second half of the twentieth century, fossil fuels promoted industrialization in Europe and America. They are composed of coal, oil and natural gas. These sources were available at low prices but produced some negative effects globally: firstly, the effect of the atmospheric pollution that we still suffer today. Secondly, it has created the problem of global warming with effects on extreme climatic events (droughts, hurricanes and glacial melting), which will be a major issue to be solved over the coming decades. Another negative side of fossil sources is their concentration in some areas of the planet which has created several problems at the political level. Finally, fossil fuels are destined for gradual depletion and in the coming years will inevitably witness a rise in prices.
Renewable sources, clean energy (green) that does not produce pollution and impoverishment of resources, began in the second half of the last century as a form of energy for elite or research purposes only. Over the years, due to the increase in the technological performance of conversion devices (photovoltaic panels and wind turbines), their diffusion and large-scale effects and the cost of the KW/h produced from renewable sources is becoming similar to the on of fossil sources. Recently, we have seen some offshore wind farms installed in northern Europe that produce electricity at the same price as fossil fuels.
Today's attention to nature is growing and important topics such as biodiversity, sustainability and conservation of greenery are increasingly important. These are just some of the many reasons that have led to the assertion and the continuous increase in the use of renewable sources.
In conclusion, given the intrinsic qualities of renewable sources it is easy to predict that they will be our main source of supply over the next 20-30 years.
Abstract – Italian version
Il lavoro che segue costituisce una panoramica sul mondo tecnico ed imprenditoriale delle fonti rinnovabili e cerca di dare una risposta ad alcune dinamiche che sono avvenute in questo settore nell’ultimo decennio.
Fino alla seconda metà del ventesimo secolo, le fonti fossili hanno promosso l'industrializzazione in Europa e in America. Esse sono composte da carbone, petrolio e gas naturale. Queste fonti erano disponibili a prezzi bassi ma hanno prodotto alcuni effetti negativi a livello globale: in primo luogo l’effetto dell’inquinamento atmosferico di cui soffriamo ancora oggi. Secondo, ha creato il problema del riscaldamento globale con effetti sui fenomeni climatici estremi (siccità, uragani e scioglimento dei ghiacciai) che sarà una problematica notevolissima da risolvere nei prossimi decenni. Un altro lato negativo delle fonti fossili è la loro concentrazione in alcune zone del pianeta il che ha creato diverse problematiche a livello politico. Infine, le fonti fossili sono destinate al progressivo esaurimento e nei prossimi anni sarà inevitabile assistere ad un aumento dei prezzi.
Le fonti rinnovabili, energia per definizione pulita (verde) che non produce inquinamento e impoverimento delle risorse, sono nate nella seconda metà del secolo scorso come forma di energia per soli scopi d’elite o di ricerca. Con il passare degli anni, per via dell’aumento delle prestazioni tecnologiche degli apparati di conversione (pannelli fotovoltaici e aerogeneratori), per la diffusione degli stessi e per gli effetti di larga scala, il costo del KW/h prodotto dalle fonti rinnovabili si avvicina sempre di più a quello delle fonti fossili. È notizia recente che alcuni impianti eolici offshore installati nel nord Europa producono energia elettrica allo stesso prezzo delle fonti fossili. Oggi l'attenzione per la natura sta crescendo ed importanti temi come la biodiversità, la sostenibilità e la conservazione del verde sono sempre più importanti. Questi sono solo alcuni dei tanti motivi che hanno portato all'affermazione e al continuo aumento dell’uso delle fonti rinnovabili. In conclusione, date le qualità intrinseche delle fonti rinnovabili è facile previsione affermare che saranno la nostra fonte di approvvigionamento principale nei prossimi 20 – 30 anni.
1. Introduction
A renewable energy source is a kind of energy from which you can take a certain amount without reducing the amount available; this does not mean that the amount of energy is unlimited, but it means that nature rebuilds what has been deducted immediately. The power that comes from the sun, even in the case of wind energy, is the form of energy that feeds the renewable sources on Earth.
In 2015, according to the International Energy Agency, about 24% of the world's electricity was produced with renewable sources, 10% from nuclear power and the remaining 66% using fossil sources. Always according to the same source, 2016 was the year when for the first time installed MW of photovoltaic exceeded coal and solar increased its production capacity by 50%. The combination of renewable sources has thus secured two-thirds of the new electric power installed in the world.
For the IEA, electricity produced in the world from renewable sources in 2022 will reach 30% by getting overtaken on coal: clean sources will supply an amount of electricity equivalent to that consumed by China, India and Germany combined together.
The main market in which photovoltaics has developed has been China, which has become the majority shareholder in the industry, conquering half of the global market. But India pursues: it will double its renewable energy supply by 2022 by surpassing the European Union as a green electricity production capacity (solar and wind power account for 90% of the capacity of plants under construction). For that date, three countries - China, India and the United States - will account for two-thirds of the world's renewable energy production.
But while China and India follow a steady trend, the US situation seems uncertain as President Trump is implementing reforms that could reduce the economic attractiveness of renewable energies in favor of a return to fossil fuels.
Instead, as far as the African continent is concerned, environmental conditions (impossibility of creating extensive networks) are favorable for electrification via off-grid renewable sources. The same can be said for Asia, and it is interesting to keep
track of the situation because the capacity for energy production outside the networks in these regions will triple by 2022 by securing electricity to nearly 70 million people who are not currently connected.
The chart below shows the trend since 1994 to date and the new trends in the future; it is interesting to note how various renewable sources are growing more and that in the near future they will reach important goals.
As can be seen in the figure below, the predominant sources will be photovoltaic and wind energy with a gradual decrease in hydroelectric as a form of energy close to saturation.
As for the other "minor" sources, biomasses will continue to grow by exploiting their potential, while geothermal sources will see a slow and gradual affirmation in parallel with improving the technologies they can exploit.
Figure 1, “Renewable electricity capacity growth by technology” Credits by IEA
The company of the future will have to be fed only with renewable sources while fossil fuels are going to run out. In fact, it is estimated that oil, gas, coal and uranium have a residual life of 40, 70, 200 and 50 respectively.
The various climatic pressures that have occurred in recent years will be mitigated by the more intense use of these sources. At the same time, new jobs and new wealth would be created.
Another aspect that is important to consider is respect for the health of citizens because fossil fuels over the years have created well-known issues. In fact, respiratory diseases, eye irritation and mucous membranes are just some of the growing problems in industrialized countries.
Finally, fossil fuels are concentrated in some parts of the planet (especially in Arab countries) and this has led to wealth disparities and economic gains for users due to resource costs.
The situation of energy supply in Italy is based on facts. First of all is the refusal of nuclear power, dating back to the 1987 referendum. Secondly, the strong dependence on oil imports mainly from the Arab countries. Thirdly, the consolidation of natural gas supply facilities (gas pipelines) over the last decades mainly from eastern Europe and North Africa and the subsequent establishment of a capillary distribution network throughout the country. In addition, the use of coal-fired power plants using modern techniques of desulphurisation and seizure of CO2. Finally, importing electricity from the overseas nations where nuclear energy is generated in excess.
Faced with this situation of Italy being strongly linked to the traditional fossil source, however the tendency of Italian scientific and managerial culture is towards renewable sources. This is certainly due to the geographical position of Italy in the Mediterranean sea, that sees the national territory fortunately privileged for solar irradiation which has led to long-standing tradition of solar thermal panels.
Italy is fortunate because it gets a lot wind, as well as being hilly where the wind is constant and storms are relatively rare.
The Italian hydroelectric industry has many years of experience gained over decades and today has reached high levels of efficiency and profitability.
Biomasses have recently been introduced to the Italian energy landscape and have great improvement margins, especially in Northern Italy.
Geothermal energy, however minor, puts Italy in second place behind only the United States and therefore gives Italy a technological position of proven experience. These conditions have led to a strong focus on renewable sources that, with their state-of-the-art state incentives, have now reached high levels of competitiveness with fossil fuels.
In the table below it is possible to compare the cumulative power installed at the end of 2016 and the expected power that will be installed for the various sources in the period 2017 - 2020. Photovoltaic and wind power will be the sectors in which it will be possible to see a marked increase while other sectors will continue to grow gradually.
Source Installed power
(MW) Forecasted power (MW) Photovoltaic 19261 2300 Wind 9450 1600 Hydropower 18606 320 Biomass 4248 130 Geothermal 824 50 TOTAL 52389 4400
Table 1, “Installed and forecasted Italian power in 2016” Credits by Energy & Strategy Group
This situation is perfectly consistent with the international landscape and aligned with the European objectives of the well-known climate agreement 20-20-20; these trends will surely improve even after 2020 and will bring renewables to their maximum expansion.
In conclusion, apart from temporary crises and fluctuations in the energy market, everything suggests an optimistic future for affirming renewable sources and improving energy costs and global environmental conditions.
2. Technologies
2.1 Photovoltaics
2.1.1 Introduction
The photovoltaic energy is based on the direct conversion of incident solar energy on the earth’s surface into electricity. This process is made possible by special materials called “semiconductors”. The semiconductor material most of the times is silicon and it’s treated in order to create an electric current. This doping process is possible by using two different types of atoms (boron and phosphorus) in the same crystalline structure of the silicon; then putting in contact two different layers of silicon, it’s possible to create the electric current.
Figure 2, “Photovoltaic plant” Credits by Energy & Strategy Group
The figure 2 shows a simplified picture of a photovoltaic plant; to produce electric energy the plant has to use modules, made by silicon layers, in order to convert the solar radiation into electrical energy. After the modules, a PCS system is installed: usually it’s called Power Conversion System and it’s used for the conversion from DC (direct current) to AC (alternating current). The DC is the energy produced by the plant
while the AC is the energy for the electrical equipment. A supporting structure is needed in order to support all the elements of the plant; switchboards and cables are important to connect all the structures of the plant as well. Before the grid and the user of the plant is composed by meters in order to estimate and calculate the amount of energy associate to each user. In the figure, it is not possible to see the energy storage system but some plants have it; the energy storage system allows the user to store a certain amount of energy and then use it when he/she needs it.
A plant is also composed by cells, modules and arrays; the first one is the most basic element of the plant and it is also called solar cell as shown in the figure 3. The cell comes from a slice of the semiconductor material called “wafer” and it is composed by the following elements:
• Semiconductor material; • Electrical contacts; • Antireflective coating; • Texturing.
Figure 3, “Photovoltaic cell”
The first element is most of the times silicon and its layer is around 0.25mm; the electrical contacts are silver or aluminium and they are important in order to convey the electrical current outside the cell; the antireflective coating is usually a thin layer of titanium oxide that minimizes the reflected radiation; the texturing is used to increase the useful area and facilitate mutual reflections.
Figure 4, “Another example of a photovoltaic cell”
As shown in figure 4 it is possible to better understand how a PV cell works; through the use of a PV cell is possible to convert solar energy into DC electricity exploiting the photovoltaic effect. It is important to remark that only the absorbed light generates electricity because the other solar radiation could be reflected or pass right through. After describing how a PV cell works and how it is composed, it is useful to understand how a module and an array are made; in the figure 5 it is possible to see the main difference between all the PV elements.
An array is a combination of two or more modules such as a module that is a combination of two or more cells.
A PV module, like a PV cell, is made by some elements and these are the following: • Plate of tempered glass;
• EVA transparent sealer; • Photovoltaic cells; • PVF or Tedlar.
The first element is a special glass that ensures transmittance and resistance and it is important in order to guarantee high performances. The EVA or better ethylene vinyl acetate guarantees insulation and it is used to seal all the module’s component and gives to the module flexibility and elasticity. Tedlar or PVF is a polymer that it is mainly used in PV industry and it has low permeability for vapors and excellent resistance to weathering and staining. The last but not least there are the PV cells. This big “sandwich” is heated at 150° C in order to eliminate air and steam and seal everything together.
The last element that it is showed in the figure 5 is an array that is a simple combination of modules; modules are wired in series and parallel into the PV array. Talking about available PV technologies there are some that are better than the other ones; at the moment, there are 3 generations of cells and modules. Here are the generations:
1. Silicon (Mono – Poly crystalline);
3. DSC, organic cell, hybrid cell.
Table 2, “Photovoltaic technologies classification” Credits by Energy & Strategy Group
The first generation is the most mature on the market and it has a share of 80% while the second one has 20% share; a different speech has to be done for the last generation because it’s under development and it belongs to new technological trends. As the figure 6 explains the mono and poly-crystalline silicon are mature under a technological point of view and they have the same strengths and weaknesses; both are high efficient and reliable technologies but they have unitary cost of realization. Instead the second generation (thin film) that is composed by amorphous silicon, cadmium telluride and CIGS / CIS. These technologies are still under development and are not really diffused in the market. Sharp and Kyocera, United Solar Ovonics, Trina Solar, GS Solar and Sungen Anwell are the main producers of amorphous silicon solar cells and modules and they come from Japan, US and China. First Solar and Calyxo are some cadmium telluride manufactures and they come US and Germany. As it is reported above, in the table 2, there are some weaknesses such as low efficiency,
cadmium toxicity and the problem of raw material supply for these technologies of second generation. For what concerns the third generation (DSC, organic cell, hybrid cell) the level of maturity is very low and the level of efficiency as well; talking about organic cells, that are made by special polymers (carbon-based) they can exploit large surfaces and their cost is very low, but as it has been said the level of maturity is very low and the other generations are spreading into the market.
Keep talking about technology it is fundamental to consider that the amount of electricity produced by a PV plant during a year depends on several aspects; modules efficiency, modules position, solar irradiation, total plant surface and other parameters like the operating temperature are just some of the variables that it is important to calculate in order to achieve the best outcome possible from the plant.
Figure 6, “Solar annual radiation in Italy”
The figure 6 shows the solar annual radiation in Italy and it is clear than the South has more factors that can raise the amount of electricity produced in a year.
The picture shows a better radiation in the South that it is expressed in kWh/m2; that
is why most of the PV plants that are present in Italy are located in the South. However, the whole peninsula is characterized by very likely conditions for installing a PV plant because the solar radiation ranges from 3.6 kWh/m2 to 5.4 kWh/m2. In order
to be more precise, the Po river plain area has a radiation of 3.6 kWh/m2, the
important data that it comes out looking at the figure 6 is that in Milan the annual radiation is around 1200-1300 kWh/m2 while in Sicily it reaches 1700-1800 kWh/m2.
The table 3 shows the typical PV plant price for different sizes of plants; the more you invest in your plant the less you pay for each kW of energy produced and this is possible due to the size.
As it showed for a residential plant around 3 kW, that it is basically installed on the roof, you have to invest 2100€/kW and this is the normal prize that usually it costs a plant like that; it is possible to achieve 6 kW for a residential plant (big houses) and the total cost is more or less the same.
Residential plant Industrial plant Solar farm
Size 3 kW 200 kW 1000 kW
Investment 6300 € 240000 € 850000 €
Price 2100 €/kW 1200 €/kW 850 €/kW
Table 3, “PV plant price breakdown” Credits by Energy & Strategy Group
A different speech it has been done for the other plants because when you increase the size it becomes clear that the total cost will be lower.
In the graphs reported below are showed all the percentages related to each type of plant and how the cost can impact on the total of the plant. Figure 7 shows the price percentage related to a residential plant; it’s clear that design and installation require most of the investment related because each time the plant has to be designed and installed taking into consideration the house’s space and all the problems related. Modules are the second cost voice because they represent the plant itself; for what concerns the other two voices are more or less equivalent.
Figure 7, “Residential plant price breakdown” Credits by Energy & Strategy Group
For an industrial plant, instead, it’s more important the voice related to modules because you have to provide more PV elements in order to build up the plant.
Figure 8, “Industrial plant price breakdown” Credits by Energy & Strategy Group
A similar speech it can be done for solar farms in which modules are the key elements while the other components are in equal percentage.
Modules 29% PCS 13% Other constitutive elements 19% Design and installation 39%
RESIDENTIAL PLANT
Modules 36% PCS 17% Other constitutive elements 22% Design and installation 25%INDUSTRIAL PLANT
Figure 9, “Solar farm price breakdown” Credits by Energy & Strategy Group
Figure 10, “PV plant price trends” Credits by Energy & Strategy Group
Modules 48% PCS 15% Other constitutive elements 20% Design and installation 17%
SOLAR FARM
1500 1100 900 900 850 825 800 1850 1300 1100 1100 1000 900 850 2000 1500 1300 1200 1150 1100 1000 3000 2500 2200 2100 2150 2100 2000 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 2011 2012 2013 2014 2015 2018 2020 €/ kW p YearsPV plant price trends
The graph above shows how the cost of PV plants has decreased during the years; on the horizontal axis, the years are showed while on the vertical one the cost per kW expressed in €/kW.
The interesting thing is that all the other PV sizes, except the one above 1MW (solar farms), they will reduce their costs up to 1000 €/kW by 2020; for what concerns the cost related to solar farms is more stable during the years. It is important to remark that the family (residential plant) or the industrial site (commercial or industrial) make a self-consumption of the electricity produced and the rest is sold on the market; meanwhile the whole electricity produced by a solar farm is sold on the market. Why did the cost decline?
First of all, through the years, it was and is possible to achieve technological improvements and economies of scale in order to reduce the total cost and this led to a constant reduction year by year. Then oversupply played an important role in the whole segment because supply was much higher than demand so the market operators had to reduce the cost. Last but not least incentives have played and they’re still playing an important role (only for residential because incentives for solar farms ended in 2013); generally, the price is fixed on the basis of the incentives and when they felt down this led to cost reduction in order to ensure a return on investment.
2.1.2 Italian market
Before describing how the Italian market is characterized and organized it is better to segment the market and explain which actors are involved; as it is possible to see in the figure 11, and how it has been explained before, the market is divided in four main sectors: residential market, commercial market, industrial market and solar farm market. Previously we didn’t mention the commercial market because it’s a sub market included in the industrial one; anyway, the first segment is related to the residential market and typically include private and small businesses such as houses (3 – 6 kW) and small shops (up to 20 kW). The commercial and industrial market include the related businesses and they are contained between 20 kW – 1 MW: from 20 to 200
kW we’re talking about the commercial market while from 200 kW to 1 MW it’s the industrial market. The last market is related to solar farms with a size above 1 MW and they’re usually managed by utilities or investment funds. The first actors build up solar farms in order to sell them and earn money while the second ones usually buy plants in order to manage them; utilities can build up the plant and manage it as well.
Figure 11, “PV market segmentation” Credits by Energy & Strategy Group
Figure 12, “Segmentation of the Italian market from 2007 to 2016” Credits by Energy & Strategy Group
45% 34% 27% 12% 11% 18% 42% 59% 60% 57% 24% 28% 23% 21% 17% 24% 24% 25% 23% 27% 31% 34% 32% 45% 41% 32% 20% 12% 16% 9% 0% 4% 18% 22% 31% 26% 14% 4% 1% 7% 0% 20% 40% 60% 80% 100% 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 AXIS TITLE
SEGMENTATION OF THE ITALIAN MARKET
FROM 2007 TO 2016
Looking at the figure 12 it is interesting to see how the percentage related to the various plants has changed through the years; in fact, until 2012 there were huge investments in the industrial and solar farm market due to favourable incentives but after that period the operators started to reduce those types of investments because the incentive period for big plants ended. As natural, thanks to tax deduction and net metering a lot of people started to invest in small plants, typically roof top plants in order to exploit these incentives. Another reason behind this trend is the high self-consumption of these plants that it is usually more than 50%.
However, it is interesting to notice that the market had seen new investments in the solar farms’ sector in 2016; around 7% of the total market share is composed by plants with a size higher than 1 MW.
Figure 13, “PV installed capacity in Italy from 2008 to 2016” Credits by Energy & Strategy Group
0 2 4 6 8 10 12 14 16 18 20 2008 2009 2010 2011 2012 2013 2014 2015 2016 Insta lled po w er (G W) Years
PV installed capacity in Italy from 2008 to 2016
The current cumulated PV installed capacity is 19261 MW at the end of 2016 thanks to the new power installed of 369 MW during that year; the power installed in 2015 was around 290 MW of which more than 50% was related to residential size.
The figure 14 shows how the new PV plants present in Italy are located in the different regions of the peninsula. Lombardy is the region with the highest level of PV plants (14,5%) followed by Emilia Romagna (13,5%) and Veneto (12,7%).
Figure 14, “New PV plants location in Italy” Credits by Energy & Strategy Group
These new installations have produced investments for 637 million € in 2016; more than 66% of the total investments were done in the residential market in which the total power is around 57% of the total installed one. The cost per kW is approximately 2000 €. It is interesting to evidence that the investments done in the solar farm sector were higher in 2016 than 2015. The previous situation (2015) is lightly different
Abruzzo 2.1% Basilicata 0.4% Calabria 3.2%Campania 6.3% Emilia Romagna 13.5% Friuli Venezia Giulia 2.4% Lazio 6.9% Liguria 1.8% Lombardia 14.5% Marche 2.4% Molise 0.3% Piemonte 5.7% Puglia 4.7% Sardegna 3.7% Sicilia 8.9% Toscana 6.2% Trentino Alto Adige 2.1% Umbria 1.9% Valle D'Aosta 0.3% Veneto 12.7%
because there were more investments in the industrial market and less in the residential one.
There is another market, over the one previously described, and it is the secondary market; the primary market is the one for new installations and as we saw is very limited due to several factors already said. The secondary market is about buying and selling the existing plants, especially solar farms. The companies that invest in this market have a stable return for the next 10 – 15 years because the market is very profitable. Who are the sellers?
The sellers are usually EPC companies and utilities; EPC stands for engineering, procurement and construction and these companies follow the whole project on behalf of the client and they get paid for this. While the second group of sellers are utilities and they build up the plant but they don’t want to manage it and at the end they sell it. The difference is that the first sellers build up the plant for a client earning money from this although the second sellers build up without getting paid and earning money from selling the whole finished plant. The buyers are investment funds and financial institutions. Why did the value of transactions in the secondary market go down?
There are several reasons to answer this question; first of all, the number of solar farms available decrease and this was evident starting from 2012. Then the problem is characterized by the subsidies available because by years they were lower and lower and the years of subsidies available decreased.
Another sector to take into account is the one of operation and maintenance (O&M). Why is O&M so important?
When the incentives started to become lower and lower a lot of PV plants owners hurried up building plants in order to gain the incentives; as a result, technology was not too reliable and this brought inefficient production. Secondly, there are a lot of PV plants around Italy that need some regular maintenance. There are 93 O&M players offering after-sales services for PV plants in Italy; here it is possible to have a better look at them:
• 45% EPC and System integrators; • 30% specialized O&M companies; • 14% asset management companies; • 11% plant components manufacturers.
These are the types of players involved in this market and obviously they are focused on different market segments.
Table 4, “Players classification by type” Credits by Energy & Strategy Group
The table 4 shows the main differences between all the actors previously described. Components manufactures, EPC companies and O&M companies were fully described before but now it is time to focus on asset management companies; these companies have to manage all the administrative, legal and tax issues related to a plant and risk management services as well. Normally they act on owned PV plants or third-party PV plants. For what concerns the rest it is easy to collocate the other actors in their operation sector.
Usually these companies (O&M) offer different services in which there are several levels of benefits offered: standard, advanced and premium. Of course, the cost will be higher the more you ask. Each service can be divided into two categories (base and extended) and so at the end there are 6 levels of services. These services typically include preventive maintenance, cleaning modules, corrective maintenance, extended warranty, surveillance and supervision.
For each extended configuration (standard extended, advanced extended and premium extended) the base one is included.
Company Player type PV capacity managed
(MW)
SunEdison Italia EPC 402
Enerray EPC 230
Kenergia Sviluppo O&M 210
Esapro O&M 200
Asja Management A.M. 148
9Ren EPC 157
ABB EPC 150
Asja Management A.M. 148
Energy Intelligence A.M. 104
Enerqos Italia EPC 100
Martifier Solar EPC 90
Geosol O&M 70
Future Energy O&M 60
Innovatec EPC 50
Table 5, “Main O&M players in Italy” Credits by Energy & Strategy Group
The table 5 shows the main players that are involved in the O&M market in Italy. Some of them own PV plants while other players are involved in the distribution market or in the asset management market.
In figure 15 O&M price trends are shown and it is evident that a strong decrease in price took place in the last 5-6 years; in particular for plants with a size lower than 1 MW we had a huge decrease due to the market entry of new foreign operators. The value reported for 2011 is 78000 € and the value for 2015 is 25000 € so it means that huge improvements have been done in this market. This happened for solar farms as well but in a way not too evident.
Figure 15, “O&M price trends” Credits by Energy & Strategy Group
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O&M price trends
2.2 Wind
2.2.1 Introduction
The wind energy could be defined as follows: conversion of energy associated to the movement of air masses into usable energy carrier. To be more precise another possible definition is that wind energy is a renewable and inexhaustible energy source, even if it is possible to use it only in a discontinuous and heterogeneous manner, because wind intensity, speed and direction are variable and strongly dependent on the geographical location.
A wind farm is usually composed by two or more wind turbines that are able to produce energy exploiting the wind energy that naturally comes to the earth. The generation of energy is made possible by several elements:
• Rotor; • Blades;
• Gearbox system; • Electricity generator.
Wind moves the rotor which is equipped with two or three blades connected to a horizontal axis; then the movement is transferred from the gearbox system to the electricity generator. All this system is installed on a tower in order to use the wind power and facilitate the rotation of the blades.
This is the main technology behind a wind turbine but it is not all because there are two possible configurations available: vertical axis and horizontal axis.
The vertical configuration is different from the one described before because it has the blades installed as reported in figure 16. This configuration has low impact and it is more adaptable than the horizontal one. A big disadvantage is that this solution is less efficient than the previous one because the movement of the blades generates a huge
stress along the axis. Instead, the horizontal one is more efficient due to the higher rotation speed but in order to achieve higher performances the turbines have to be oriented in the direction of the wind. Another weakness of this layout is the complexity due to the construction of the plant.
Figure 16, “Horizontal and vertical configurations”
According to GSE (Gestore dei Servizi Energetici) wind power plants can be divided into 3 different sizes: small size plant, medium size plants and large size plants.
These sizes have different power, tower height and rotor diameter but at the end is like the partition did for PV plants. Here are the subdivisions:
• Small size plants
o Power 1 – 200 kW; o Tower height 20 m; o Rotor diameter 1 – 20 m. • Medium size plants
o Power 200 – 1000 kW; o Tower height 40 m; o Rotor diameter 20 – 50 m. • Large size plants
o Power above 1000 kW; o Tower height 90 m; o Rotor diameter 55 – 80 m.
These are the main sizes that characterized the wind market but it is possible to do another classification by segments of applications: micro/mini wind plants and wind farms.
The first ones are used to produce individual energy and can be connected to the grid or be stand-alone. They usually adopt small wind turbines. The second ones are composed by wind farms and they use medium/large wind turbines. The real segment is the one of wind farms (more than 95% of the market share) because the micro/mini wind technology is very unreliable and this solution has been a failure.
For what concerns wind farms, two other technological configurations are available: on-shore and off-shore. The first one is the most used, especially in Italy where there are a lot of local acceptance problems, and it is composed by a group of turbines that are connected to the grid and their installed capacity is up to hundreds of MW. Generally, a wind farm occupies around 0,15 km2/MW and about 5 – 10 % of the total
area is occupied by wind turbines and roads for accessing them while the rest 90 – 95% is composed by the whole area that can be used for agricultural purposes or other. Another important fact is that the real reason behind wind farms is to sell all the energy produced and this is maximized only if the hours per year are above a certain threshold. In Italy, this threshold is represented by 2000 h/year and all the plants have a capacity above this limit.
Off-shore wind plan is a solution built in the sea but less than 30 meters deep due to economic feasibility. This technology is more or less the same used for on-shore wind farms. With this configuration is possible to achieve a higher productivity than the
normal one (up to 30%) due to constant and less turbulent winds; a less environmental impact is achieved as well but not in Italy because the sea is very important under an economic point of view due to touristic incomes. In Italy, there are not off-shore wind farms yet. On the other hand, the investment costs are 30 – 50% higher than the normal solution and ad hoc infrastructure is needed in order to connect the off-shore farm to the grid.
In the figure 17 are represented all the costs related about a wind farm. Investing in wind power is expensive and the initial investment costs are very high. As it is reported in the figure, the principal voice cost is the one related to wind turbines; a wind turbine costs between 900 and 1200 €/kW but there was a decrease until 500 €/kW due to the aggressive market offers by Chinese manufacturers.
The rotor and the tower are responsible for 65% of total costs, followed by the gearbox and generator, respectively with 15% and 10%.
The rest of the total investment cost is more or less divided into equal portions and these are related to construction, project and development, groundwork and area purchasing and auxiliaries.
Figure 17, “Wind investment costs” Credits by Energy & Strategy Group
72% 9%
8% 6% 5%
Wind investment costs
Wind turbine Construction
Project design and develpment Grounwork
The initial investment cost is between 1,3 and 1,6 million € per MW (all the percentage related were mentioned above) of which 3% of the total investment is about O&M. Another important aspect to take into consideration is that the investment value in Italy is around 20% higher than the European average for extra-costs related to development and design stages, land acquisition and arrangements.
2.2.2 Italian market
The wind Italian market is mainly composed by wind farms because the micro/mini wind plants did not have great success due to the high difficulty to find a proper site for the installation; moreover, the little amount of energy produced and the difficulty of managing these types of machines make the investment not attractive for families, private users or small entrepreneurs.
The only possibility of utilization of this technology remains in the islands in which there is no connection with the main network or in isolated regions (mountains). About 95% of the market is in the hands of wind farms with a power above 5 MW and the rest 5% is shared with mini/micro plants.
Figure 18, “Italian market segmentation” Credits by Energy & Strategy Group
2% 3%
95%
Italian market segmentation
In the last 10 years there was a constant grow of the installed capacity in Italy. There are several reasons behind this fact:
1. Availability of sites suitable for wind plant installations; 2. Decreasing costs of wind turbines;
3. Availability of public financing and contributions; 4. Growing attention for reducing air pollution; 5. Nuclear energy refusal.
Figure 19, “Wind capacity installed in Italy” Credits by Energy & Strategy Group
The majority of the plants are installed in the South Italy because that region has better wind currents that can be exploited and used. Puglia, Basilicata and Campania have most of the total capacity installed in Italy.
A reported in figure 19, the red part of the graph that represents the annual increment is going down because the incentives in the sector are decreasing.
0 2000 4000 6000 8000 10000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Ins ta lled pow er (M W ) Years
Wind capacity installed in Italy
2.3 Biogas
2.3.1 Introduction
In this context, we called biomass any kind of substance of organic waste coming from agricultural or gardening activities used to be transformed into natural gas exploiting natural methods such as anaerobic digestion. The final product is a fuel gas suitable to be employed in engines, heating purposes and other. Note that the combustion of these kind of fuels does not increase the amount of CO2 currently in the atmosphere
because the quantity released is equal to the amount absorbed by the vegetable plants treated during their lifetime.
During this dissertation, only gas biofuels are going to take into consideration because the research is going to focus on biogas; solid biofuels and liquid biofuels are not going to treat.
The raw materials that are required to produce biogas are various: sewage sludge from the treatment of municipal wastewater and industrial, organic fraction in landfill, organic fraction of Municipal Solid Waste (MSW), crop residues, sewage from farms and animal manure.
The final product that comes from the anaerobic digestion is a fuel gas, called biogas, composed by methane for the 50 – 80% of the volume, 25 – 40% in mass and most of the remaining fraction is CO2.
This type of gas is generally used for feeding an internal combustion engine which is connected to an electrical generator and the group produces electricity that supplies the farm’s facilities while the excess of electricity can be sold and put into the grid. For producing biogas there are two main types of plants that can be used and both of them have mutual parts; these plants are respectively the landfill and agricultural biogas and the common parts are the digester and internal combustion engine.
The digester is an important part because is where the digestion takes place while the internal combustion engine is a part connected to the digester.
The landfill biogas plant is a simple configuration of a biogas plant because the digester is represented by the landfill itself; the production of biogas takes place in the lower part of the digester and then through pipes the gas is picked up and burned in order to produce energy. Instead, for the agricultural biogas plant the digester is made out of steel or masonry and it has to be closed in order to contain all the biogas produced, which is accumulated in the upper part and on the other hand avoid that the biogas can mix with the atmospheric oxygen.
Figure 20, “Agricultural biogas plant”
The figure 20 shows how the plant is composed and the big container on the right it is exactly the digester where all the gas is produced and stored until the effective utilization.
Another alternative use of biogas is the one that exploit this source in order to produce bio-methane; this is made possible by “upgrading” the gas through an upgrading plant in which biogas is treated in order to remove impurities and carbon dioxide. In this way, bio-methane can be placed side by side with methane and it can be added into the pipeline network or being stored into tanks. Note that during the
upgrading process not all the biogas is converted into bio-methane because there is a part that remains solid and represents a very good fertilizer.
Bio-methane can be used in all the ways that conventional methane is exploited.
2.3.2 Italian market
The Italian market of biogas is still growing even if in 2016 only 10 MW were installed; the market has a historical prevalence of landfill biogas plants but in the recent times there has been a diffusion of anaerobic biogas plants especially in farms and agricultural contexts.
Figure 21, “Biogas installed capacity in Italy” Credits by Energy & Strategy Group
As reported in the graph between 2011 and 2012, there was an exponential growth related to the fact that in July 2012 a new decree was issued (DM July 2012) and new incentives allowed this growth (around 505 MW).
In Italy over 50% of the actual plants are located in the Northern regions such as Lombardy, Veneto, Emilia Romagna and Piedmont because there are better environmental conditions due to agricultural and animal farms. For what concerns the
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plant size most of the plants have a power below 2 MW (800 kW on average) and the market is growing regarding these types of plants.
According to the 2012 decree there is a new demand of incentives that can advantage the construction of small plants because the market has changed since that date; almost the 80% of the new installation regard plants with a size up to 600 kW while before 2012 the typical size for a biogas plant was around 1000 kW.
2.4 Hydropower
Hydropower or water power is a type of energy that comes from the exploitation of falling water or fast running water; in the first case, it is possible to use the potential energy while in the second one to take advantage of the kinetic energy.
There is another use of hydropower energy that is not really a primary source of energy; with the use of two basins connected between each other through pipelines is possible to pump up the water during the night (when the cost of electricity is lower) and then using the potential energy to move down the water obtaining electricity. Then the electricity can be sold during the day (typically at a higher price). Secondly, it represents the only efficient form of storage of electric energy very useful to maintain the stability of the electric network.
There are two main types of plants: waterfall plants and fast running water plants. The waterfall solution requires a jump of about 30 – 40 m, which can be of natural origin, especially in mountain or artificial areas with dam construction. This solution requires high costs for civil works, especially for pipes, because they have to be large with high pressure.
The fast running water plant has less environmental impact as the turbines are placed under the surface of the water and are therefore well hidden.
Both of these forms are subject to the amount of available water and therefore are closely related to the season; the lowlands are related to snow melting and therefore there is plenty of water in spring while in other areas the resource is linked to autumn rains.
This source of energy can be considered saturated as early as the beginning of the 900s, as all the opportunities for exploiting Italian orography have been identified. Plants can be classified in different sizes: big plants (P > 10 MW), small plants (1 MW < P < 10 MW), mini plants (100 kW < P < 1 MW) and micro plants (P < 100 kW).
Because of the nature of the plant and the fixed costs involved, small plants are not attractive from an economic point of view; in fact, almost all installed plants are above 5 MW with a percentage of 86%. It is important to point out that at the beginning of the year 2000 almost all of the energy produced from renewable sources was produced by the hydroelectric sector (87%). At present, the percentage has been considerably reduced due to the massive presence of solar, wind and biomass energy, respectively 19%, 13% and 15%.
The regions where it is possible to find the highest installed power are in the following order: Aosta Valley (230368 kW), Tuscany (36975 kW), Emilia Romagna (28393 kW), Piedmont (20687 kW), Umbria (20125 kW) and Lombardy 15253 kW).
The total number of installations has reached a constant level of just over 18 GW and is now a value that has been found for 10 years. The division between the various classes of power sees the predominance of the large sizes as can be seen in Figures 22.
Figure 22, “Hydro installed power in 2016” Credits by Energy & Strategy Group
2% 2%
10% 4% 82%
Hydro installed power in 2016
0 - 500 kW 500 - 1000 kW 1000 - 5000 kW 5000 - 10000 kW > 10000 kW
In a hydroelectric plant, there are many costs to consider before the actual construction of the plant. Almost 50% of the total cost is represented by civil works and actual construction costs of the plant. The remaining 50% is divided into turbine purchases, design costs, permits and permissions, and finally the connection costs respectively 28%, 13% and 11%.
2.5 Other renewable sources
2.5.1 Geothermal power
Geothermal energy means the exploitation of heat resources located deep in the subsoil. In some situations, warm veins appear on the surface and are therefore easily usable. This type of resource has the same origin as the volcanic one but in the latter case there is no technology that can exploit this energy.
Exploitation technology involves two distinct zones: heat withdrawal and steam turbine exploitation. The main problem for these plants is the high degree of salinity that creates obstructions, incrustations and corrosion in pipes that cannot be eliminated.
At the moment in Italy there are 34 plants all located in Tuscany with a total capacity of 850 MW, so this makes Tuscany the most interesting region with regard to geothermal power.
There are many other hot water outcrops in Italy (40-50 ° C) but they cannot be industrially exploited and are therefore used as spa areas.
2.5.2 Sea power
The ways to exploit marine energy are through tides, wave motion and sea currents. The tide is a natural phenomenon of raising and lowering the sea level due to lunar weather. The range can reach up to 20 meters but for the exploitation of this resource you need: a considerable amount of water level variation, morphological conditions to
create large flood invasion areas and a link to the small open sea for installing turbines to produce energy. There are no such conditions in Italy.
Wave motion can be exploited by installing small floating plants offshore or with fixed structures on the coast. At present, this technology is under development and looks promising for the next few years but there are no functioning systems. The energy of marine currents is similar to hydroelectric energy that exploits the kinetic energy of water currents. Turbine efficiency requires a speed of at least 1 m/s and this makes searching difficult. At the moment, there is an 80 kW plant located in the Strait of Messina and has been connected to the national network for about 10 years.
3. State of art of the renewable market
The Italian energy demand in recent decades has been strongly influenced by the alternatives between oil availability at low prices and economic crises.
There was a rapid and steady growth in energy consumption in the full economic boom between 1965 and 1973, which in less than a decade grew by 70%, most of which was supplied by oil.
Between 1974 and 2005, the growth in energy consumption was less effective. In fact, the increase was 36% in just over 30 years. The interesting fact at this stage is not so much the overall value of the consumption, but the change in the composition of the sources of supply. Firstly, there was a slight drop in oil (-14%) due to the known oil crisis of the 1970s. Secondly, a significant increase in coal (+ 78%), the impact of which on the overall budget, although not negligible, is modest compared to that of many other European countries. Lastly, in parallel with the oil crisis, we saw a significant increase in natural gas from Algeria and Russia (regions not linked to the economic policies of Arab oil producers).
Since 2006, the most important phenomena are two: on the one hand, there is a decrease in energy requirements of 15% due to the reduction of consumption and the greater efficiency of the user equipment. On the other hand, there is a disruptive increase in new renewable energies, which, thanks to the incentive policies, like “Conto Energia” increase their contribution. Solar and wind energy reached 6% of the total. Traditional renewable sources, in this short period of time, remain largely stable: in any case, moderate variability in hydroelectric production depends mainly on seasonal variations in rainfall. Incidentally, the hydroelectric production record for 2013 was slightly above the peak production recorded in 1977.
The overall growth of renewable energy sources in this time span is accompanied by a sharp drop in fossil fuels, which in absolute terms account for 30%: for gas, in particular, this is a true trend reversal over the previous decades, with methane
consumption returning to the values of the late 1990s. The chart below shows the global trend of energy sources in Italy from 1965 to 2013.
Figure 23, “Elaboration from taken by BP”
In 2016 the total energy demand for Italy was 156 Mtep and at the same time electricity demand was 316 TWh. By converting the Italian demand, they get 1814.28 TWh and the percentage of demand for electricity compared to the demand is 17.4%.
Figure 24, “Break down of the electric production by renewable sources” Data taken from ISPRA
0 20000 40000 60000 80000 100000 120000 G W h Years
Break down of the electric production by renewable
sources
Hydropower Wind PV Geothermal Biogas
The effect of renewable sources on electricity demand is very evident due to their predisposition towards electricity generation.
The power sector had been in the hands of a single operator (Enel) for a long time and was liberalized by the Bersani decree (1999), which made it possible for a number of companies to enter this sector. As a result, three business sectors can be distinguished: production, distribution and sale to the end user. The legislator has introduced two types of end-user offerings that are the free market and the highest protection service. The main producers of electricity in Italy are often present both in the field of production and in distribution and sales. Much of the electricity is produced in Italy (about 86%) while the remainder is imported from Switzerland, France, Slovenia and Austria (14%); the well-known fact is that France has a surplus of production at the disposal of nuclear power plants.
Figure 25, “Major electric energy producers in Italy (2014)” Data taken from Autorità energia
As seen in Figure 25, the main electricity producers are Enel, Eni and Edison and in more or less equal amounts E.On, A2A and Gdf Suez. There are other manufacturers who supply energy but in lower amounts. With regard to renewable sources, Italy is going at a good pace, ensuring that it reaches the target set for 2020. In fact, 20% of
27.2 8.3 6 3.6 3.1 2.8 2.5 2.4 2.1 1.8 1.7 1.6 0 5 10 15 20 25 30 GW h Energy producers
MAJOR ELECTRIC ENERGY PRODUCERS
IN ITALY
electricity will have to be produced by exploiting renewable sources; by the end of 2015, 17.5% of the energy consumed came from renewable sources.
In 2014 gross electricity production was almost 280 TWh. Just over half of the total, about 150 TWh, was generated by thermoelectric power plants that burn fossil fuels. Two thirds of this energy were obtained by burning natural gas, just under a third is obtained from coal and the remainder from fuel oil. Almost all of these fossil fuels have to be imported because our country's subsoil is very poor in energy raw materials. In 2015, for example, our country consumed 67.5 billion cubic meters of natural gas, of which only 6.7 were produced in Italy. The remainder was mainly imported from Russia, Algeria and Libya (about 30 percent of the gas is used for the production of electricity, the rest for heating and other uses).
As we have seen, about two-thirds of the electricity produced in Italy comes from thermoelectric plants that burn fossil fuels. The rest, that is around 37% of the total (120 TWh), comes from renewable sources. Half of the total, almost 60 TWh, comes from hydroelectric production. Photovoltaic energy is the second highest among the most used renewables, with approximately 22 TWh generated in 2014, followed by biomass, wind and geothermal energy respectively with 18,7 TWh, 15,2 TWh and 5,9 TWh.
The production of renewable energy sources has grown a lot in recent years. The share of total national consumption has more than doubled only in the last ten years and far above the European average (according to preliminary data from Terna, there would be a slight decrease in this share in 2015, mainly due to the scarcity of rain that made the hydroelectric plants less productive). In the ranking of European countries with the highest share of renewable energy produced, on a renewable basis on total consumption, Italy occupies the 12th position but is ahead of all major European countries: Germany, France and the UK. Spain is the only country of comparable size to use more renewable energy than we do.
Two peculiar characteristics of renewable sources are the homogeneous distribution and uncertainty of production. In fact, as far as photovoltaic is concerned, it is well-known that sunny regions in the South even with less clouds than the Northern regions
but with the wind along the Apennines regions can be exploited. This implies the need for a transfer of energy from the South to the North with the possibility of overloading transmission lines in the most critical areas. The second aspect regards the solar and wind energy because they are unpredictable and therefore unmanageable.
These two aspects negatively affect the network's instability, whose management is a serious problem for entities that guarantee continuity of service. There is also an economic consequence of the problem because the network control body, which carries out the dispatching operations, is forced to buy and sell at high prices the surplus of energy anticipated but not used. At this point we are trying to solve the issue with large energy storage centres using lithium batteries.
4. Type of incentives for renewable energy
producers
4.1 PV incentives
A typical photovoltaic system is formed by the components shown in the figure below. The essential components to get access to the “Conto Energia” incentives are the two counters; a general located at the point of connection to the network and another at the output of the photovoltaic production area. The energy account allows the following operations:
1. On-site consumption of self-produced energy;
2. The sale of electricity surplus produced at a price higher than the purchase price (e.g. at the time of purchase at 20 cents / kWh and sales at 45-46 cents / kWh);
Figure 26, “Example of a photovoltaic plant”
The “Conto Energia” was introduced in Italy with the Community Directive on renewable energy (Directive 2001/77/EC), transposed with the approval of Legislative Decree 387 of 2003. This mechanism, which rewards incentive tariffs for energy produced by photovoltaic plants for a period of 20 years, became operational with the decrees that came into force on 28 July 2005 and 6 February 2006 (First “Conto Energia”) which introduced the system of financing into the account of electricity production, replacing the previous state grants for waste destined for commissioning the plant. These state subsidies were abandoned as they were not aimed at energy production because they did not encourage electricity production but only stimulated the circuit of manufacturers and installers.
With the Ministerial Decree of 19 February 2007, the so-called Second “Conto Energia”, the Ministry of Economic Development set new criteria to stimulate the electricity production of photovoltaic plants that went into operation until 31 December 2010. Among the main novelties introduced by the Second “Conto Energia”, was the application of the incentive tariff on all energy produced and not just on local production and consumption along with the streamlining of bureaucratic practices for obtaining incentive rates and the differentiation of tariffs on the basis of the type of
