Pre Trip Webinar Presentation Final
Helping Utilities Make Smart Solar Decisions
SEPA International Fact Finding Mission to Italy 7-14 May 2011
Pre-Mission Webinar
SEPA’s Fact Finding Missions
This is the 4th annual International Fact Finding Mission • Germany - 2008 • Spain - 2009 • Japan - 2010 • Italy - 2011 Helping Utilities Make Smart Solar Decisions
Mission Objectives • Learn about the Italian electricity market and about the impacts of solar on the market • Visit innovative solar sites and hear about the motivating factors behind them and the results • Meet and share with your Italian colleagues and utility and solar market stakeholders
Helping Utilities Make Smart Solar Decisions
Why Italy Now? • 300% solar market growth spurred by attractive tariffs and government support. • The government is working to adjust incentives to provide a sustainable market. • Italy’s combined wind and solar capacity is about equal to their peak load and both MV and HV grid upgrades are required. Italy is a singular laboratory and the experiment is reaching an interesting phase….
Helping Utilities Make Smart Solar Decisions
Overview of Italy Parliamentary, democratic Republic with a multi-party system Founding member of EU One of G8, G20 and NATO Population: 60.4 Million Very high standard of living – 23rd most developed country (UNDP) Last 10 years annual GDP of 1.23% (less than European annual growth rate of 2.28%) Helping Utilities Make Smart Solar Decisions
Italian Government • Bicameral national legislature includes a Senate and a Chamber. • Council of Ministers (headed by the Prime Minister) • 20 Regions (including 4 autonomous) • Rapid transfer of legislative and regulatory powers from national to regional. New constitutional amendments (2001) provided a new structure for power sharing between the State and the Regions Helping Utilities Make Smart Solar Decisions
Market Liberalization • Monopoly Liberalization – From vertical state-owned ENEL – Legislation directing operators can trade electricity through 2 contracts: Offer/bids within the power exchange and bilateral contracts • Process (by EU and Italy): – 1992 – ENEL limited co. – 1995 – AEEG new, independent energy regulator
• Promote competition, set standards for service, set tariffs for T&D, grid access regulation
– 1999 – ENEL privatization – 1999 – Supply and demand liberalization • Bersani Decree – Supply & demand liberalization
Source: Autoritá per l’energia elettrica e il gas
Helping Utilities Make Smart Solar Decisions
Electricity Market Players • Parliament and Government including the Ministry of Economic Development (MSE) whose role includes defining strategy and guidelines for the national power system security and cost-effectiveness. • Terna – Transmission system operator - Started 1999 - owns, develops and maintains electricity grid
– T&D and balancing services – Congestion management and network upgrades – Owns 98.3% of transmission infrastructure (>62,000 km of lines, transformer and switching stations and 3 remote stations) – Distribution companies are reducing in number but many of them are municipal/local authority companies.
• GSE – Electricity services operator (state-controlled under the Ministry of Finance) - Responsible for promoting and developing RE resources
– Owns GME (Electricity Market Operator that organizes and manages electric power exchange and Green & EE Certificates and GHG Emission Units) – Buys electricity generated by RE and sells it in the market. – Issues Green Certificates, certifies RE and co-gen plants, and monitors compliance with RE – Manages PV incentives Sources: GME and AEEG Helping Utilities Make Smart Solar Decisions
Market Players cont’d • AU – Single buyer (procures electricity for households and small
businesses (‘vulnerable consumers’), and buys electricity in the market and resells it to distributors)
• AEEG – Regulates electricity and natural gas sectors and T&D • AGCM – Antitrust authority • ENEA – the National Agency for New Technologies, Energy and the Environment - Promotes and carries out research and technological innovation – Develops prototypes, disseminates and encourages use of research results. Sources: GME, AEEG and OECD/IEA
Helping Utilities Make Smart Solar Decisions
9
IPEX – The Italian Power Exchange • The Ministry of Economy and Finance owns GSE and GSE owns GME – the company that organizes and manages the regulated wholesale electricity market. – GME manages the various energy markets: • Spot electricity (MPE) incl. day ahead, intra-day, forward
• GME’s mission is to help development of a competitive national power system. • GME also implements environmental policy, managing the Environmental Markets – Green Certificates, EE Certificates, Emissions Trading Source: Gestore Mercati Energetici (GME)
Helping Utilities Make Smart Solar Decisions
Electricity Market Diagram
Source: Gestore Mercati Energetici
Helping Utilities Make Smart Solar Decisions
Italy is now the second largest solar market Italy as compared to US
Italy • PV Market 2009 - 720 MW 2010 - 2300 MW • About ¾ the land mass of CA, similar size economy • Avg. Residential costs – 17 €¢/kWh (22 ¢/kWh) – Annual consumption 2400 kWh
US/CA • PV Market 2009 - 435 MW 2010 - 900 MW • CA installs the same amount of solar annually that Italy installs in 1 year • Avg. Residential costs – 13.5 ¢/kWh – Annual consumption 7000 kWh Helping Utilities Make Smart Solar Decisions
12
Solar Maps: Italy, CA and US
Helping Utilities Make Smart Solar Decisions
Energy Demand
Helping Utilities Make Smart Solar Decisions
14
Generation
Helping Utilities Make Smart Solar Decisions
15
Some Generation Facts • Since 2007 electricity consumers have been able to choose their supplier (still limited market) • Retail prices are very high – even compared to other European countries. • Complicated National/regional relationships cause delays in new generation projects as local authorities can delay or block. • PV capacity grew by ~250% from 1995 – 2007 (38GWh) • Additional PV projects in the pipeline may bring capacity to 7k MW – Italy’s target for 2020 is 8k MW
Incredible Growth of PV Installed in Italy Year | Amount (from GSE) 2007
60 MW
2008
340 MW
2009
711 MW
2010
2,300 MW
Helping Utilities Make Smart Solar Decisions
More Italy Facts • 4th largest electric consumer in Europe • Electric production in 2007 was 301.3 TWh and consumed 309.3 TWh • ~88.9 GW of installed capacity (end 2007) – Oil and gas generation 63% – Hydro-electric 24% – Coal 9% – RE 4% Helping Utilities Make Smart Solar Decisions
Italian Transmission System Overview
(720MW)
Map above: Transmission zones – both geographical (within Italy) and virtual
Source: GME
Helping Utilities Make Smart Solar Decisions
Motivations for RE in Italy • Continued and growing dependence on electricity imports • Improve energy diversification and security • Encourage new generating capacity • Meet EU (including UNFCCC and Kyoto) policies and targets • Energy prices are higher than the rest of Europe – and Italy adds VAT to energies. (10% VAT for residential + excise tax if over X amount used) • Total GHG emissions (CO2) increased by 12.13% from 1990 to 2006. Helping Utilities Make Smart Solar Decisions
Legal Framework for RE •
Legislative decree 387/03, 2004, national framework for the promotion of renewable energy sources.
– Est. a .35% annual rate increase for RE. (Finance Law 2008 increased this to .45% from 2007-13 reaching 7.55% in 2013) – 5 Year R&D program for RE and EE – Regional targets as well as national encouraged
•
Budget Law 2007, incentives and financial measure encouraging RE, EE and reduced emissions – Included tax breaks – Revolving fund from 2007-2009 – 200M Euro budget to finance GHG reduction measures
•
Budget Law 2008 – – – – –
•
EE incentives, continuing incentives, widening eligibility for building sector Review of green certificate system for larger than 1MW capacity Introduced FITs for small-scale plants Green certificates – period extended to 15 years, certificates vary depending on RE source Green certificate capped at 180 Euro/MWh
Law 99/2009 new measures
– From 2011, green certificate obligations transferred from producers and importers to electricity traders Source: OECD/IEA, 2010
Helping Utilities Make Smart Solar Decisions
Key Incentives for Solar •
Tradable Green Certificates – cap-and-trade – based on requirement that energy companies exporting at least 100GWh/yr supply a set percentage by RE via green certificates. – Average TGC price between 2003-2007 was 101. Euro/MWh. – TGCs are traded on a GME market. – Cost: 306M Euro in 2007, 400M in ‘08 and will pass 1B Euro in ‘13.
•
Conto Energia – Feed In Tariff – since its start in 2005, PV market has gone from almost zero to 3GW installed 2010 (Source: IEA PVPS Italy Annual Report)
– “Feed-in Premium” for PV and solar thermal sources. – Adds premium for 20 years – For PV plants after 1/1/2009 FIT rates were between .35 and .48 (Euro/kWh) depending on plant type and capacity
•
CIP-6 – resolution by the Interministerial Committee on Prices.
– GSE purchases electricity generated by RE plants. (GSE is the “dispatching user” of the generating units and pays the grid operators the balancing and transmission charges associated with trading in the market) (Source: GSE) – The capacity – based on volume GSE plans to buy – shared between open operators and AU – Ministry of Economic Development sets yearly price by Decree – Assignees have “contracts for difference” with GSE – they receive or pay the difference between average market price
•
Other incentives include simplified purchase for small RE source operators and net metering Helping Utilities Make Smart Solar Decisions
Other Measures: Two Tier Pricing • By end of 2010 20M households were receiving electricity bills based on two-tier pricing. (AEEG) • Households fitted with smart meter that reads electricity consumed at different times in the day. • Time-of-use pricing applied – more expensive from 8am-7pm on work days. (times of higher demand) • Effort to get public to shift to smart electricity use and conservation Helping Utilities Make Smart Solar Decisions
22
Current level of Solar in Italy? • As of March 24, 2011 the total installed power of all grid-connected PV systems registered by GSE under the incentive programs reached 4 GW • In addition there remains 3.22 GW of PV systems built before the end of 2010 but waiting to be connected. • However, only 7 MW have been connected up to now under the most recent (3rd) program (which runs from Jan-May 2011) indicating that the uncertainty of the incentive schemes is beginning to impact future solar market. (Source: GSE via Photon) Helping Utilities Make Smart Solar Decisions
23
Italy’s Challenge • Responding to the solar ‘boom’ • Meeting EC and EU mandates for RE • Improved authorization and interconnection processes
Source: OECD/IEA, 2010
Helping Utilities Make Smart Solar Decisions
Itinerary Review • Milan • Venice – Rovigo • Rome – Vatican City – Montalto di Castro
Helping Utilities Make Smart Solar Decisions
25
Itinerary Highlights Sunday, May 8th: Milan • Welcome Dinner Hosted by the Italian Trade Commission Monday, May 9th: Milan Meeting at US Consulate (*Passport needed to pass security) • IDC-Energy Insights • Consulate representative will give an overview of Italy. • Joint meeting with Assolombarda , Assosolare, GIFI and Assoelettrica • Lunch Hosted by Assolombarda Tuesday, May 10th: Venice/Rovigo • SunEdison site visit: PV Power Plant, Rovigo • Lunch Hosted by SunEdison • SunEdison - Hosted Tour and Dinner in Venice. Helping Utilities Make Smart Solar Decisions
26
Itinerary Highlights (cont’d) Wednesday, May 11th: Rome • Vatican City BIPV on Papal audience hall. • Site visit to the Archimede/ENEA CSP demonstration project. Thursday, May 12th: Rome • Utility Workshop hosted by E.ON with GSE and Terna participating. Friday, May 13th: Rome • Meeting with ENEL Green Power and Meeting with ENEL
Helping Utilities Make Smart Solar Decisions
27
Helping Utilities Make Smart Solar Decisions Cynthia Hunt Jaehne, Education Manager, +1.202.595.1148, [email protected]
SEPA International Fact Finding Mission to Italy 7-14 May 2011
Pre-Mission Webinar
SEPA’s Fact Finding Missions
This is the 4th annual International Fact Finding Mission • Germany - 2008 • Spain - 2009 • Japan - 2010 • Italy - 2011 Helping Utilities Make Smart Solar Decisions
Mission Objectives • Learn about the Italian electricity market and about the impacts of solar on the market • Visit innovative solar sites and hear about the motivating factors behind them and the results • Meet and share with your Italian colleagues and utility and solar market stakeholders
Helping Utilities Make Smart Solar Decisions
Why Italy Now? • 300% solar market growth spurred by attractive tariffs and government support. • The government is working to adjust incentives to provide a sustainable market. • Italy’s combined wind and solar capacity is about equal to their peak load and both MV and HV grid upgrades are required. Italy is a singular laboratory and the experiment is reaching an interesting phase….
Helping Utilities Make Smart Solar Decisions
Overview of Italy Parliamentary, democratic Republic with a multi-party system Founding member of EU One of G8, G20 and NATO Population: 60.4 Million Very high standard of living – 23rd most developed country (UNDP) Last 10 years annual GDP of 1.23% (less than European annual growth rate of 2.28%) Helping Utilities Make Smart Solar Decisions
Italian Government • Bicameral national legislature includes a Senate and a Chamber. • Council of Ministers (headed by the Prime Minister) • 20 Regions (including 4 autonomous) • Rapid transfer of legislative and regulatory powers from national to regional. New constitutional amendments (2001) provided a new structure for power sharing between the State and the Regions Helping Utilities Make Smart Solar Decisions
Market Liberalization • Monopoly Liberalization – From vertical state-owned ENEL – Legislation directing operators can trade electricity through 2 contracts: Offer/bids within the power exchange and bilateral contracts • Process (by EU and Italy): – 1992 – ENEL limited co. – 1995 – AEEG new, independent energy regulator
• Promote competition, set standards for service, set tariffs for T&D, grid access regulation
– 1999 – ENEL privatization – 1999 – Supply and demand liberalization • Bersani Decree – Supply & demand liberalization
Source: Autoritá per l’energia elettrica e il gas
Helping Utilities Make Smart Solar Decisions
Electricity Market Players • Parliament and Government including the Ministry of Economic Development (MSE) whose role includes defining strategy and guidelines for the national power system security and cost-effectiveness. • Terna – Transmission system operator - Started 1999 - owns, develops and maintains electricity grid
– T&D and balancing services – Congestion management and network upgrades – Owns 98.3% of transmission infrastructure (>62,000 km of lines, transformer and switching stations and 3 remote stations) – Distribution companies are reducing in number but many of them are municipal/local authority companies.
• GSE – Electricity services operator (state-controlled under the Ministry of Finance) - Responsible for promoting and developing RE resources
– Owns GME (Electricity Market Operator that organizes and manages electric power exchange and Green & EE Certificates and GHG Emission Units) – Buys electricity generated by RE and sells it in the market. – Issues Green Certificates, certifies RE and co-gen plants, and monitors compliance with RE – Manages PV incentives Sources: GME and AEEG Helping Utilities Make Smart Solar Decisions
Market Players cont’d • AU – Single buyer (procures electricity for households and small
businesses (‘vulnerable consumers’), and buys electricity in the market and resells it to distributors)
• AEEG – Regulates electricity and natural gas sectors and T&D • AGCM – Antitrust authority • ENEA – the National Agency for New Technologies, Energy and the Environment - Promotes and carries out research and technological innovation – Develops prototypes, disseminates and encourages use of research results. Sources: GME, AEEG and OECD/IEA
Helping Utilities Make Smart Solar Decisions
9
IPEX – The Italian Power Exchange • The Ministry of Economy and Finance owns GSE and GSE owns GME – the company that organizes and manages the regulated wholesale electricity market. – GME manages the various energy markets: • Spot electricity (MPE) incl. day ahead, intra-day, forward
• GME’s mission is to help development of a competitive national power system. • GME also implements environmental policy, managing the Environmental Markets – Green Certificates, EE Certificates, Emissions Trading Source: Gestore Mercati Energetici (GME)
Helping Utilities Make Smart Solar Decisions
Electricity Market Diagram
Source: Gestore Mercati Energetici
Helping Utilities Make Smart Solar Decisions
Italy is now the second largest solar market Italy as compared to US
Italy • PV Market 2009 - 720 MW 2010 - 2300 MW • About ¾ the land mass of CA, similar size economy • Avg. Residential costs – 17 €¢/kWh (22 ¢/kWh) – Annual consumption 2400 kWh
US/CA • PV Market 2009 - 435 MW 2010 - 900 MW • CA installs the same amount of solar annually that Italy installs in 1 year • Avg. Residential costs – 13.5 ¢/kWh – Annual consumption 7000 kWh Helping Utilities Make Smart Solar Decisions
12
Solar Maps: Italy, CA and US
Helping Utilities Make Smart Solar Decisions
Energy Demand
Helping Utilities Make Smart Solar Decisions
14
Generation
Helping Utilities Make Smart Solar Decisions
15
Some Generation Facts • Since 2007 electricity consumers have been able to choose their supplier (still limited market) • Retail prices are very high – even compared to other European countries. • Complicated National/regional relationships cause delays in new generation projects as local authorities can delay or block. • PV capacity grew by ~250% from 1995 – 2007 (38GWh) • Additional PV projects in the pipeline may bring capacity to 7k MW – Italy’s target for 2020 is 8k MW
Incredible Growth of PV Installed in Italy Year | Amount (from GSE) 2007
60 MW
2008
340 MW
2009
711 MW
2010
2,300 MW
Helping Utilities Make Smart Solar Decisions
More Italy Facts • 4th largest electric consumer in Europe • Electric production in 2007 was 301.3 TWh and consumed 309.3 TWh • ~88.9 GW of installed capacity (end 2007) – Oil and gas generation 63% – Hydro-electric 24% – Coal 9% – RE 4% Helping Utilities Make Smart Solar Decisions
Italian Transmission System Overview
(720MW)
Map above: Transmission zones – both geographical (within Italy) and virtual
Source: GME
Helping Utilities Make Smart Solar Decisions
Motivations for RE in Italy • Continued and growing dependence on electricity imports • Improve energy diversification and security • Encourage new generating capacity • Meet EU (including UNFCCC and Kyoto) policies and targets • Energy prices are higher than the rest of Europe – and Italy adds VAT to energies. (10% VAT for residential + excise tax if over X amount used) • Total GHG emissions (CO2) increased by 12.13% from 1990 to 2006. Helping Utilities Make Smart Solar Decisions
Legal Framework for RE •
Legislative decree 387/03, 2004, national framework for the promotion of renewable energy sources.
– Est. a .35% annual rate increase for RE. (Finance Law 2008 increased this to .45% from 2007-13 reaching 7.55% in 2013) – 5 Year R&D program for RE and EE – Regional targets as well as national encouraged
•
Budget Law 2007, incentives and financial measure encouraging RE, EE and reduced emissions – Included tax breaks – Revolving fund from 2007-2009 – 200M Euro budget to finance GHG reduction measures
•
Budget Law 2008 – – – – –
•
EE incentives, continuing incentives, widening eligibility for building sector Review of green certificate system for larger than 1MW capacity Introduced FITs for small-scale plants Green certificates – period extended to 15 years, certificates vary depending on RE source Green certificate capped at 180 Euro/MWh
Law 99/2009 new measures
– From 2011, green certificate obligations transferred from producers and importers to electricity traders Source: OECD/IEA, 2010
Helping Utilities Make Smart Solar Decisions
Key Incentives for Solar •
Tradable Green Certificates – cap-and-trade – based on requirement that energy companies exporting at least 100GWh/yr supply a set percentage by RE via green certificates. – Average TGC price between 2003-2007 was 101. Euro/MWh. – TGCs are traded on a GME market. – Cost: 306M Euro in 2007, 400M in ‘08 and will pass 1B Euro in ‘13.
•
Conto Energia – Feed In Tariff – since its start in 2005, PV market has gone from almost zero to 3GW installed 2010 (Source: IEA PVPS Italy Annual Report)
– “Feed-in Premium” for PV and solar thermal sources. – Adds premium for 20 years – For PV plants after 1/1/2009 FIT rates were between .35 and .48 (Euro/kWh) depending on plant type and capacity
•
CIP-6 – resolution by the Interministerial Committee on Prices.
– GSE purchases electricity generated by RE plants. (GSE is the “dispatching user” of the generating units and pays the grid operators the balancing and transmission charges associated with trading in the market) (Source: GSE) – The capacity – based on volume GSE plans to buy – shared between open operators and AU – Ministry of Economic Development sets yearly price by Decree – Assignees have “contracts for difference” with GSE – they receive or pay the difference between average market price
•
Other incentives include simplified purchase for small RE source operators and net metering Helping Utilities Make Smart Solar Decisions
Other Measures: Two Tier Pricing • By end of 2010 20M households were receiving electricity bills based on two-tier pricing. (AEEG) • Households fitted with smart meter that reads electricity consumed at different times in the day. • Time-of-use pricing applied – more expensive from 8am-7pm on work days. (times of higher demand) • Effort to get public to shift to smart electricity use and conservation Helping Utilities Make Smart Solar Decisions
22
Current level of Solar in Italy? • As of March 24, 2011 the total installed power of all grid-connected PV systems registered by GSE under the incentive programs reached 4 GW • In addition there remains 3.22 GW of PV systems built before the end of 2010 but waiting to be connected. • However, only 7 MW have been connected up to now under the most recent (3rd) program (which runs from Jan-May 2011) indicating that the uncertainty of the incentive schemes is beginning to impact future solar market. (Source: GSE via Photon) Helping Utilities Make Smart Solar Decisions
23
Italy’s Challenge • Responding to the solar ‘boom’ • Meeting EC and EU mandates for RE • Improved authorization and interconnection processes
Source: OECD/IEA, 2010
Helping Utilities Make Smart Solar Decisions
Itinerary Review • Milan • Venice – Rovigo • Rome – Vatican City – Montalto di Castro
Helping Utilities Make Smart Solar Decisions
25
Itinerary Highlights Sunday, May 8th: Milan • Welcome Dinner Hosted by the Italian Trade Commission Monday, May 9th: Milan Meeting at US Consulate (*Passport needed to pass security) • IDC-Energy Insights • Consulate representative will give an overview of Italy. • Joint meeting with Assolombarda , Assosolare, GIFI and Assoelettrica • Lunch Hosted by Assolombarda Tuesday, May 10th: Venice/Rovigo • SunEdison site visit: PV Power Plant, Rovigo • Lunch Hosted by SunEdison • SunEdison - Hosted Tour and Dinner in Venice. Helping Utilities Make Smart Solar Decisions
26
Itinerary Highlights (cont’d) Wednesday, May 11th: Rome • Vatican City BIPV on Papal audience hall. • Site visit to the Archimede/ENEA CSP demonstration project. Thursday, May 12th: Rome • Utility Workshop hosted by E.ON with GSE and Terna participating. Friday, May 13th: Rome • Meeting with ENEL Green Power and Meeting with ENEL
Helping Utilities Make Smart Solar Decisions
27
Helping Utilities Make Smart Solar Decisions Cynthia Hunt Jaehne, Education Manager, +1.202.595.1148, [email protected]
