Renewable energy in Italy

In 2015 renewable electricity provided around 37.9% of Italy's total gross electricity production, a fall from around 43.1% in the previous year due to large yearly variations in hydroelectric production. Hydroelectric power continued to provide the largest single source of renewable energy generated electricity in 2015 at around 15.6% of national production. Solar generation provided the next largest share at around 8.1%, a figure which is remarkable given that most solar installations have occurred since 2010. Bioenergy provided around 6.7% followed closely by wind power at 5.3%. Geothermal power provided the smallest share at an estimated 2.2%.

Between 2005 and 2011 a surge in renewable energy investments and production took place in Italy, particularly in wind and solar energy during the latter years. Total electricity produced from solar PV quintupled in 2011 compared to the previous year.[15] This was mainly due to a drop in costs and to high incentives introduced since 2005.[16] The Italian fossil fuel electricity generation sector underwent a profound crisis.[17] Many Italian power plants burning fossil fuels were running at half capacity and others were in the process of being shut down.[18]

Generation by renewables grew from 76,965 GWh in 2010 to 106,686 GWh by 2015. Non hydroelectric renewable electricity more than doubled during the period growing from 25,848 GWh in 2010 to 62,748 GWh in 2015, a rise from around 9.3% to 22.3% of total gross generation. The largest increase in production took place in solar generated electricity followed by bio energy production. Wind power rose by a little over 60% during the period whilst geothermal production rose by a little under 15%. Normalised (averaged) hydroelectric statistics suggest a slight upward trend in generation despite wet and dry years influencing the overall production in any given year. Bio energy includes production from biomass, biogas, bioliquids and the renewable share of municipal waste used as fuel in waste-to-energy generation. Further information on bioenergy production is available under the heading "Sources" below.

Electricity production potential from renewables has been rising, however hydroelectric production figures vary considerably from one year to the next and accounts for the fall in 2015. Production of electricity from renewable sources reached a record in 2014 of around 43% of total gross electricity generation. In 2015 production from Wind, Photovoltaic and Geothermal sources almost matched Hydroelectric production for the first time.

The total installed capacity of renewable electricity sources grew from 30,284 MW in 2010 to 53,259 MW by 2017. The greatest increase was in solar power which has been strongly supported by government incentives. Wind power grew fairly strongly over the period but was over taken by solar in 2011. Bio energy has also grown significantly from a low base in 2010 almost doubling in capacity by 2015. Hydroelectricity is a mature technology in Italy and already highly developed yet its capacity still grew by 3.6% during the period.

Every two years all EU countries as well as Iceland and Norway submit Progress Reports[23] outlining their renewable energy development and movement towards meeting their 2020 renewable energy targets. Between 2009 and 2014 renewable energy share in the heating and cooling sector grew from 16.43% to 18.89%. In 2014 Biomass provided the largest share of RE in the heating and cooling sector at 13.4% of the total, equating to just over 7 million tonnes of oil equivalent. RE from heat pumps provided almost 5% of the total sector, an area in which Italy is more developed than most countries. Solar and geothermal power provided a contribution of 0.3% and 0.2% respectively.

The Italian government has identified measures to increase the use of renewable energy and energy efficiency in the heating and cooling sector as outlined in the 2009 Italian National Renewable Energy Action Plan.[11] These include an energy efficiency credits scheme which was expected to save 6 Mtoe by 2012. A 55% tax relief for building and refurbishment projects due to be reviewed by 2010. The report outlined a plan for regulating a minimum quota of 50% (20% for buildings in historic centres) of domestic hot water being produced by renewable energy targeting newly constructed buildings or buildings to be refurbished. From 1999 tax credits were made available for district heating using either geothermal or biomass energy. Tax relief for specific measures is included to encourage the replacement of old boilers and chimneys with high energy efficiency and low-emission biomass boilers. Legislation in Italy allows biogas to be injected into the natural gas system where there are no technical issues.

The report identified the possibility of boosting the development of district heating and cooling by making use of biomass from agriculture and forestry, through heat extracted from cogeneration, and utilizing sorted waste. It also seeks to promote the use of biomass in agricultural and industrial areas and the provision for geothermal heat transport networks serving manufacturing and residential areas.

Renewable energy use in the heating and cooling sector 2010-2015 (Mtoe)[1]

• Provisional data.

Total renewable energy use grew in the thermal sector by just a little over 5% between 2010 and 2015 from 10.02 Mtoe to 10.59 Mtoe. The main areas of growth were in solar thermal and renewable energy from heat pumps.

According to the Italian Progress Report submitted to the European Commission between 2009 and 2014 renewable energy share in the transport sector grew slightly from 3.68% in 2009 to 4.48% in 2014. As of 2016 the use of renewable energy in the transport sector remains well behind the other energy sectors in most countries. Biodiesels provided the largest share of RE in the transport sector at 4% of the total. Renewable electricity provided 0.45% of the sector's requirements, most of it in public transport uses. Bioethanol also provided a small contribution at 0.03% of the total.

The 2009 Italian National Renewable Energy Action Plan[11] outlined existing and planned developments for encouraging renewable energy use in the transport sector. From 2007 Italy introduced a minimum quota of 4.5% of biofuels to be fed into the network by 2012. A reduction in the tax on biofuels was also introduced prior to 2010. Plans were also outlined to increase the minimum quota and to promote second and third generation biofuels and to make use of biofuels obtained from waste and raw material of non-food origin. Promoting biomethane and electricity to power transport is also included in the report. Biodiesel in Italy is produced from rape seed, soy beans and sunflower seeds.

The country has planned to subsidize electric cars.[24] Transport accounts for a large amount of fossil fuel use so a quick transition to electric cars and public transport will be a key element of transition to renewable energy use.[25]

Sales of electric and hybrid cars in Italy totalled 1,110 units in 2014 and 1,460 units in 2015 corresponding to just 0.1% of total car sales in each year.[26] Incentives for electric vehicles have been criticised for being ineffective and many Italian households still have electricity contracts that stipulate peak consumption limits.

Italy's biodiesel production totalled approximately 2.5 Million Metric Tons in 2015.[27] Biodiesel is produced mainly from imported rape seed (40%), soybean (30%) and palm oil (25%). The small amount remaining is made from recycled vegetable oils, sunflower oil and vegetable fat. Rapeseed oil is mostly imported from EU countries, and soybean oil is imported from the EU or made from imported beans. Palm oil is mainly imported from Malaysia and Indonesia. Biodiesel is blended with standard diesel for transport use or used for heating.

Italy also produces bioethanol and production in 2014 was approximately 215,000 Metric Tons per year.[27] Bioethanol is made from corn and wheat, wine and wine by-products. Most of the bioethanol is used for industrial chemicals but a small portion is used for transport use.

Production of Electricity (GWh) from Hydroelectrictiy 2010-2015[1]

Installed capacity of Hydroelectricity in 2015 was 18,531 MW. Hydroelectric production varies considerably from year to year. 2014 saw a record year in production at 58,545 GWh. From the turn of the century to the beginning of the 1960s hydroelectricity dominated the share of electricity production in Italy and this source has a long history in the peninsula and reflects Italy's mountainous geography and high water runoff. Some of Italy's largest hydroelectric plants operate pumped storage providing the country with a means of balancing and storing the variable output from the countries growing solar and wind power facilities.

Production of Electricity (GWh) from Solar Power 2010-2015[1]

The installed capacity of solar PV power was 18,910 MW in 2015 having risen from just 1,906 MW in 2010. In 2014 Italy was the world's leading country in terms of solar power coverage of domestic electricity supply, with around 8% of total electricity generation being sourced from solar. With an installed capacity of 18,609 MW the country was second only to Germany (38,301 MW[28]) in the EU in terms of total capacity and fourth in the world behind the other leading countries China and Japan. Its capacity was greater than the United States in 2014 (18,280 MW) ranked fifth in the world at that time. The speed of development of solar power in Italy has been influenced by a government incentive scheme, the "Conto Energia", designed as a feed in tariff for solar PV generated electricity. Since the ending of the Conto Energia incentive scheme in 2013 installations of solar PV have continued but at a slower rate. The government has indicated that it intends to focus funding incentives more on other sources of renewable energy in the future. Several sources believe that solar power has reached grid parity in Italy.

Production of Electricity (GWh) from Wind Power 2010-2015[1]

The installed capacity of wind power was 9,126 MW in 2015. Growth in windpower has not been at the breakneck speed of solar power and the developed potential in Italy remains somewhat moderate. It is far behind its western Mediterranean neighbour Spain ( 23,003 MW) and behind other wind pioneering countries such as Germany and record breaking Denmark in terms of realised potential. Installed capacity grew in 2015 whilst production fell slightly in that year, demonstrating that wind power can vary somewhat from year to year but not as dramatically as hydroelectric power.

Production of Electricity (GWh) from Geothermal Power 2010-2015[1]

Italy was the first country in the world to exploit geothermal energy to produce electricity.[29] The high geothermal gradient that forms part of the peninsula makes it potentially exploitable also in other regions; research carried out in the 1960s and 1970s identified potential geothermal fields in Lazio and Tuscany, as well as in most volcanic islands.[29] Production is based in Central Italy particularly around the iconic city of Pisa. Installed capacity grew from 772 MW in 2010 to 824 MW by 2015. Geothermal power production has been on a slow upward trend since 2010 and produced an estimated 6,160 GWh of electricity in 2015. According to industry sources Italy was the world's sixth largest producer of geothermal electricity.

Production of Electricity (GWh) from Bio Energy 2010-2015[1]

The production of electricity from bio energy more than doubled between 2010 and 2015 rising from 9,440 GWh to 18,894 GWh. Production from Bio Energy rose most rapidly in the years to 2014. Electricity from bio energy makes a considerable contribution in Italy, producing more electricity than wind power in each year shown above. A small increase in production was estimated for 2015.

In 2005 the Italian government introduced the first Conto Energia scheme, a feed-in tariff (FIT) system granting incentives specifically for electricity generated by photovoltaic (PV) solar systems and plants connected to the grid. The payments for these were designed to be made over a 20-year period and to incentivise both smaller and larger producers to invest in the installation of photovoltaic plants and systems. Between 2005 and 2013 five different Conto Energia schemes were introduced by ministerial decree. Each scheme had differing terms and conditions and tariffs provided to producers.

The first Conto Energia resulted in the relatively small amount of 163 MW of new PV power installations, perhaps because solar power was still in its infancy in 2005.

The second Conto Energia introduced in 2007 resulted in a massive increase of 6,791 MW of new PV power at an annual cost of €3.27 billion and was the most costly scheme. Almost half of the total cost of the scheme is accounted for by Conto Energia 2.

Conto Energia 3 ran briefly resulting in 1,567 MW of installed power at an annual cost of €0.65 billion. This was succeeded by Conto Energia 4 which resulted in the largest increase in solar capacity so far at 7,600 MW of installed power at the annual cost of €2.47 billion. More solar capacity was added under Conto Energia 4 then took place even under Conto Energia 2 and at a lower cost.

The final Conto 5 was introduced by ministerial decree in 2012 and it was announced that the feed in tariff would end once the total annual costs of cumulative Conto Energia reached €6.7 billion.[31] This figure was reached in 2013 and the final Conto Energia scheme was ended on 6/7/2013. The final scheme resulted in a further 2,095 MW of installed capacity at a cost of €0.22 billion. Under the Conto Energia incentive scheme a total of 18,217 MW of installed solar PV power was added at annual cost of €6.7 billion.

In addition to the Conto Energia scheme, which provides incentives solely for solar photovoltaic generated electricity, there are a range of different incentive schemes for other sources of renewable energy generated electricity as well. Incentives typically last between 15 and 30 years.[32] These are listed as follows:[33]

1. CIP 6
2. Green Certificates
3. All inclusive feed in tariffs
4. Solar thermodynamic feed-in scheme
5. Incentives introduced by the ministerial decree dated 6/7/2012

The total cost of these schemes is updated on the GSE.it website under the RES-E counter. The maximum total cost of the schemes has an upper limit of €5.8 billion annually[33] (established in the ministerial decree dated 6/7/92) and the RSE E counter updated to 31/1/16 stood at €5.634 billion. As of the end of January 2016 this effectively means that the funding applying to the schemes above is nearing its end with around €166 million of funding remaining. The following table shows the distribution of funding across different categories of renewable energy and by scheme:

Gathering together the total annual costs of incentives applied to each renewable energy source the following table and chart show these in order of size:

By 31 January 2016 incentives for renewable electricity energy production under the above schemes were running at around total of €12.334 billion per year. These were distributed as follows:

Solar PV production accounted for over half of the total figure at an annual cost of €6.7 billion. Next came Wind at €1.554 billion, Biogas at €1.536 billion and Hydroelectricity at €1.210 billion. Biomass received €760 million, Bioliquids €430 million and Geothermal power €141 million. Solar Thermal received an annual incentive of €1.3 million whilst wave power registered no incentive.

With the incentives for Conto Energia now closed and the incentives for other forms of renewable energy nearing their limit of €5.8 billion per year at €5.634 billion as of 31 January 2016, a further €166 million per year remained to be distributed amongst non solar PV renewable energy sources.

The conto termico was introduced by ministerial decree on 28/12/12.[35] It provides incentives for renewable energy production as well as efficiency savings in the heating and cooling sector. The total value of the incentives available are €900 million per year with payments lasting 2–5 years. The fund is divided into €200 million available to the public sector and €700 million available to the private sector. The size of the fund allocated is updated on the GES website Conto Termico Counter.[36]

The Italian National Renewable Energy Action Plan (NREAP) has a target to bring the total share of renewable energy in the final total energy consumption to 17%. In order to achieve this RE is targeted to account for 26% in the electricity sector, 17% in the heating/cooling sector and 10% in the transport sector by 2020. The precise targets for each sector agreed in the energy plan are shown in the table below.

The following table shows the actual progress achieved in terms of renewable energy use in the years 2010–2015.Information is provided on the electricity sector, the heating and cooling sector, the transport sector and the overall share of renewable energy use as a percentage of total energy use in Italy.

Italy had a 17% renewable energy target in its total energy use set by the European Union for 2020 and had already exceeded this target by 2014, reaching 17.1%.[3] Gross final energy consumption from renewables rose from 17.36 Mtoe in 2010 to 21.14 Mtoe by the end of 2015. Most of the growth occurred in the electricity sector which increased by 58.3%. The thermal sector registered a much smaller rise of 5.7% whilst the transport sector showed a fall of 16.9%. Italy's overall renewable energy target for 2020 was effectively met by 2014. However this is partially due to a reduction in total gross energy consumption from all sources and if it were to rise again the overall percentage target of renewable energy could fall short without some further expansion in sources. There is still a shortfall in the target for the transport sector which has performed poorly compared to the other sectors.

On June 16, 2013, renewables covered 100% of the entire Italian electricity demand for 2 hours.[37]