Dario Di SantoDirettore FIRE

TEE e incentivi in Italia e in Europa

www.fire-italia.org

The Italian Federation for the Rational use of Energy is a no-profit association that promotes energy efficiency, supporting energy manager, ESCos and other companies dealing with energy.

Besides the activities directed to its nearly 500 members, FIRE operates under an implementing agreement with the Ministry of Economic Development to manage the Italian energy manager network since 1992.

In order to promote energy efficiency FIRE cooperates and deals with public authorities, energy technology and service companies, consultants, medium and large consumers, universities and associations to promote best practices and improve the legislation.

FIRE

www.fire-italia.org

EGE certification Energy Management Experts

UNI CEI 11339

www.secem.eu Gestione Energia magazine

www.fire-italia.org

FIRE activities and projects

3

www.hreii.eu/demo www.enforce-een.eu

www.ener-supply.eu

www.soltec-project.eu

www.esd-ca.eu

Among closed projects:- www.e-quem.enea.it - www.eu-greenlight.org- www.enerbuilding.eu- Eurocontract- ST-Esco

Besides to dedicated meetings, FIRE organises the Enermanagement conference, workshops, and training courses. It implements dissemination campaigns, surveys, market analysis and studies. Among the subjects with which FIRE has cooperated there are ENEA, GSE, RSE, large companies, universities, associations, agencies and trade fairs organizers.

www.fire-italia.org

Incentives

White certificates

Conclusions

Incentives: when and how

Source: IEA 2010.

4

50 EXECUTIVE SUMMARY

Technology policy

Many of the most promising low-carbon technologies currently have higher costs than the fossil-fuel incumbents. It is only through technology learning from research, development, demonstration and deployment (RDD&D) that these costs can be reduced and the technologies become economic. Thus, governments and industry need to pursue energy technology innovation through a number of parallel and interrelated pathways. Most new technologies will require, at some stage, both the “push” of RD&D and the “pull” of market deployment.

The role of governments in developing effective technology policy is crucial: policy establishes a solid foundation and framework on which other stakeholders, including industry, can build. Where appropriate, policies will need to span the entire spectrum of RDD&D. In this way, governments can reduce the risk for other actors in the early phases of technology development and then gradually expose the technology to greater competition, while allowing participants to realise reasonable returns on their investments as a low-carbon economy takes hold.

Governments will need to intervene on an unprecedented level in the next decade to avoid the lock-in of high-emitting, inefficient technologies. They must take

Figure ES.2 � Policies for supporting low-carbon technologies

Mar

ketd

eplo

ymen

t

2. Stable, technology-specific incentives

1. Technology developmentand demonstration

Prototype and demo stage( fuel cells, 2 generation

biofuels, electric vehicles, CCS)e.g. nd

High cost gap(solar CSP, solar PV,

hybrid vehicles)

Low cost gap(onshore wind, biomasspower in some markets)

Mature technology(energy efficiency,industrial CHP)

Green certificates, GHG trading

Feed-in tariffs, tax credits, loan guarantees

Building codes, efficiencystandards, information campaigns

1. Developmentand infrastructure

planning

RD&D financing,capital cost support

for large-scaledemonstration

3. Technology-neutralbut declining support

4. Accelerate adoption byaddressing market barriers

Time

4. Mass market3. Achieving

competitiveness2. Niche markets

Note: The figure includes generalised technology classifications; in most cases, technologies will fall in more than one category at any given time.

Key point

Government support policies need to be appropriately tailored to the stage(s) of development of a technology.

�����������

WhC White certificates

65% fiscal deduction(until 31 December 2013 or 30 June 2014)

www.fire-italia.org

Incentives

White certificates

Conclusions

Incentives in Italy

Energy efficiency Thermal renewables Electrical renewables

RES incentives(D.M. 6 luglio 2012)

Conto energia termico(D.M. 28 dicembre 2012)

Other options (Elena, Jessica, EEEF, structural funds, local incentives, etc.)

CHP-DH

5

Source: FIRE.

!"!!!!

!5.000!!

!10.000!!

!15.000!!

!20.000!!

!25.000!!

2005! 2006! 2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014! 2015! 2016! 2017! 2018! 2019! 2020!

Na#onal'energy'efficiency'targets'and'WhC'targets'

Na0onal!targets! WhC!targets!

Fonte:!elaborazioni!FIRE!

www.fire-italia.org

Incentives

White certificates

Conclusions

WhC and 20-20-20 Programme

WhC play an important role within the Italian 2020 target strategy.

Italian 2010 RES Plan target in 2020

2006/32/EC directive EE target in 2016Mto

e

Yearly increment in the range 0,4-1,6 Mtoe

www.fire-italia.org

Incentives

White certificates

Conclusions

7

AEEG asks for WhC

Energy savings

End-user

GME

AEEG

WhC obliteration

Distributor

Authorises WhC emission

Tranfers WhC

1st step obtaining WhC

2nd step: target complaiance

Voluntary parties: companies connected with obliged DSOs, small distributors, SSE and ESCOs, large consumers with appointed energy manager

Voluntary player

Voluntary company

GME market

WhC trading

Direct contracting (OTC)

Italian white certificates scheme (voluntary parties)WhC flows

cash flows

relations between parties

project implementation agreement

ENEA

WhC project evaluation

Source: FIRE.

www.fire-italia.org

Incentives

White certificates

Conclusions

The shift towards the industrial projects Rapporto GSE febbraio 2013 - luglio 2013

1.964

Titoli rilasciati per RVC analitiche

Titoli rilasciati per RVC standard

Titoli rilasciati per RVC a consuntivo

TEE rilasciati per metodi di valutazione, di cui alle Linee Guida dell'AutoritàDati in kTEE

2.122

2.122

TEE totali certificati dal GSE

TEE suddivisi per meto di di valutazione

TEE rilasciati [kTEE]

RVC standard 65

RVC analitiche 93

RVC a consuntivo 1.964

Principali categorie di intervento

TEE emessi [TEE]

IND-T 1.227.925

IND-FF 449.488

IND-GEN 138.841

IND-E 89.445

CIV-T 104.471

CIV-FC 48.389

IPRIV-NEW 14.365

Altro 49.467

1.964

Titoli rilasciati per RVC analitiche

Titoli rilasciati per RVC standard

Titoli rilasciati per RVC a consuntivo

TEE rilasciati per metodi di valutazione, di cui alle Linee Guida dell'AutoritàDati in kTEE

2.122

2.122

TEE totali certificati dal GSE

TEE suddivisi per meto di di valutazione

TEE rilasciati [kTEE]

RVC standard 65

RVC analitiche 93

RVC a consuntivo 1.964

Principali categorie di intervento

TEE emessi [TEE]

IND-T 1.227.925

IND-FF 449.488

IND-GEN 138.841

IND-E 89.445

CIV-T 104.471

CIV-FC 48.389

IPRIV-NEW 14.365

Altro 49.467

90% of new projects are in

industry

STEEL%METALLURGICAL%

38%%

PETROCHEMICAL%PHARMACEUTICAL%

CHEMISTRY%16%%

BUILDING%MATERIALS%

12%%

AGRO:FOOD%7%%

ENERGY%/%SERVICES%/%WASTE%TREATMENT%

7%%

RESIDENTIAL%COMMERCIAL%

6%%

GLASS%4%%

PAPER%AND%PRINTING%

3%%ICT%2%%

AUTOMOTIVE%MECHANICS%

2%%

WOOD%2%%

TEXTILE%AND%TANNING%1%%

STEEL%METALLURGICAL%9%%

PETROCHEMICAL%PHARMACEUTICAL%

CHEMISTRY%17%%

BUILDING%MATERIALS%14%%

AGRO9FOOD%13%%

ENERGY%/%SERVICES%/%WASTE%TREATMENT%

7%%

RESIDENTIAL%COMMERCIAL%

17%%

GLASS%4%%

PAPER%AND%PRINTING%4%%

ICT%3%%

AUTOMOTIVE%MECHANICS%

6%%

WOOD%2%%

TEXTILE%AND%TANNING%4%%

www.fire-italia.org

Incentives

White certificates

Conclusions

WhC breakdown: PPPM (above) and WhC (below)

Source: FIRE commissioned by ENEA.

0"

10"

20"

30"

40"

50"

60"

70"

80"

90"

100"

110"

120"

07/03/2006"

16/05/2006"

25/07/2006"

24/10/2006"

16/01/2007"

27/03/2007"

05/06/2007"

28/08/2007"

06/11/2007"

29/01/2008"

08/04/2008"

17/06/2008"

09/09/2008"

18/11/2008"

17/02/2009"

28/04/2009"

01/07/2009"

22/09/2009"

01/12/2009"

02/03/2010"

11/05/2010"

20/07/2010"

19/10/2010"

11/01/2011"

22/03/2011"

31/05/2011"

30/08/2011"

15/11/2011"

07/02/2012"

17/04/2012"

31/05/2012"

07/08/2012"

06/11/2012"

05/02/2013"

16/04/2013"

25/06/2013"

17/09/2013"

WhC

's&price&(Euro)&

Market&session&data&

WhC&price&trend&

"May"31st"session"" "DSO's"reimbursement"" "Type"III"" "Type"II"" "Type"I""

Source:"FIRE"evaluaIon"based"on"AEEG"and"GME"data"

www.fire-italia.org

Incentives

White certificates

Conclusions

10

Price trends

Source: FIRE.

WhC oversupply

WhC shortage

www.fire-italia.org

Incentives

White certificates

Conclusions

11

Issued certificates VS targets

In the first phase there has been an excess of WhC on the market. Then it came a change that has taken the market on the opposite situation. The main drivers of these changes have been: CFL and other deemed saving files no more available, the completion of the 5 years cycle for the first projects, the introduction of the tau coefficient, the rapid growth of monitoring plans for industrial projects since 2012.In the future the limitation to “new” projects for monitoring plans and the information campaign from ENEA will play a role on the equilibrium between supply and demand.

!40%%

!20%%

0%%

20%%

40%%

60%%

80%%

100%%

!4.000%%

!2.000%%

%!%%%%

%2.000%%

%4.000%%

%6.000%%

%8.000%%

%10.000%%

2005% 2006% 2007% 2008% 2009% 2010% 2011% 2012% 2013% 2014% 2015% 2016%

%"

ktoe

"

Italian"WhC"targets"and"results"(data"updated"to"30"September"2013)"

Primary%energy%saving%targets%(ktoe)% Issued%WhC%from%June%1st%to%May%31st%(ktoe)%

Eccess%%or%missing%WhC%(ktoe)% (issuedWhC!targetWhC)/targetWhC%(%)%

Source:%FIRE%based%on%AEEG%and%GME%data%

www.fire-italia.org

Incentives

White certificates

Conclusions

EEOs around the world Source: IEA Best Practices in Designing and Implementing Energy Efficiency Obligation Schemes 2012.

12

118

Best Practices in Designing and Implementing Energy E!ciency Obligation Schemes

Design Parameter Denmark France Italy

Policy Objectives

Legal Authority

Fuel Coverage

Sector and Facility Coverage

Energy Saving Target

Sub-targets and Portfolio Requirements

Obligated Parties

Compliance Regime

Penalty

Performance Incentives

Eligible Energy Savings

Eligible Energy Efficiency Measures

Measurement, Verification, and Reporting

Trading of Energy Savings

Funding

To decrease total energy consump-tion by 2% in 2012 and 4% in 2020

Voluntary agreements by obligated parties within a legislative framework

Electricity, natural gas, district heating; and heating oil

Residential, public, private business, and energy-intensive industry end-users

2.95 PJ for 2006-2009 (0.7% of consumption); 6.1 PJ for 2010-2012 (1.2% of consumption)

None

Distributors of electricity, natural gas, district heating, and heating oil

Energy savings must be well documented and they must be verifiable by an independent party

EUR 0.1 per kWh of shortfall; pos-sibility for distributor to lose license

Weighting factors for longer lifetime energy efficiency measures

Distributors must engage third parties to achieve energy savings within own or any other energy type except for transport

Many types, including energy audits, targeted information, subsidies for efficient appliances and equipment; also small scale renewables

Distributors verify and report savings; can be calculated or deemed savings

Energy savings may only be traded among obligated energy distributors

Cost recovery through tariffs

To realise the available potential of energy efficiency in France

Combination of legislation and regulation

All fuels, including district heating and cooling and transport fuels

Residential and commercial buildings, manufacturing industries, networked industries, transport, and agriculture

54 TWh cumac for July 2006 to June 2009; 345 TWh cumac for January 2011 to December 2013

90 TWh cumac for transport fuels

Energy retailers that sell the covered fuels to end consumers

Surrender of energy efficiency certificates; banking is allowed for up to nine years

EUR 0.02/kWh lifetime final energy shortfall

None

Savings can be produced by obligated parties, local authorities, and social housing landlords

Standardised and non-standardised measures plus contributions to programmes targeting fuel poverty, education, or innovation

Deemed savings for standardised measures; regulatory approval required for others

Over-the-counter trading of energy efficiency certificates

Cost recovery through tariffs is possible but has yet to be allowed

To serve as the primary driver for end-use energy efficiency

Combination of legislation and Ministerial Decrees

Electricity and natural gas

All sectors including transport, and all end-uses including small-scale co-generation and photovoltaics

2.2 Mtoe cumulative in 2008; increasing to 6.0 Mtoe cumulative in 2012

None

Distributors of electricity and natural gas

Surrender of energy efficiency certificates; one-year grace period before penalty is assessed if at least 60% of target is met

EUR 25,000 to 155 million assessed on case-by-case basis

Possible 5% premium over achieved savings

Savings can be produced by obligated distributors and accredited energy service providers

Preapproved list of measures with deemed energy saving values plus other measures assessed on a case-by-case basis

Deemed savings, partial on-field measurement, or measures subject to preapproval

Trade of energy efficiency certificates through over-the-counter market or spot market

Fixed contribution to cost recovery through a tariff contribution; transport measures not eligible for cost recovery

118

Best Practices in Designing and Implementing Energy E!ciency Obligation Schemes

Design Parameter Denmark France Italy

Policy Objectives

Legal Authority

Fuel Coverage

Sector and Facility Coverage

Energy Saving Target

Sub-targets and Portfolio Requirements

Obligated Parties

Compliance Regime

Penalty

Performance Incentives

Eligible Energy Savings

Eligible Energy Efficiency Measures

Measurement, Verification, and Reporting

Trading of Energy Savings

Funding

To decrease total energy consump-tion by 2% in 2012 and 4% in 2020

Voluntary agreements by obligated parties within a legislative framework

Electricity, natural gas, district heating; and heating oil

Residential, public, private business, and energy-intensive industry end-users

2.95 PJ for 2006-2009 (0.7% of consumption); 6.1 PJ for 2010-2012 (1.2% of consumption)

None

Distributors of electricity, natural gas, district heating, and heating oil

Energy savings must be well documented and they must be verifiable by an independent party

EUR 0.1 per kWh of shortfall; pos-sibility for distributor to lose license

Weighting factors for longer lifetime energy efficiency measures

Distributors must engage third parties to achieve energy savings within own or any other energy type except for transport

Many types, including energy audits, targeted information, subsidies for efficient appliances and equipment; also small scale renewables

Distributors verify and report savings; can be calculated or deemed savings

Energy savings may only be traded among obligated energy distributors

Cost recovery through tariffs

To realise the available potential of energy efficiency in France

Combination of legislation and regulation

All fuels, including district heating and cooling and transport fuels

Residential and commercial buildings, manufacturing industries, networked industries, transport, and agriculture

54 TWh cumac for July 2006 to June 2009; 345 TWh cumac for January 2011 to December 2013

90 TWh cumac for transport fuels

Energy retailers that sell the covered fuels to end consumers

Surrender of energy efficiency certificates; banking is allowed for up to nine years

EUR 0.02/kWh lifetime final energy shortfall

None

Savings can be produced by obligated parties, local authorities, and social housing landlords

Standardised and non-standardised measures plus contributions to programmes targeting fuel poverty, education, or innovation

Deemed savings for standardised measures; regulatory approval required for others

Over-the-counter trading of energy efficiency certificates

Cost recovery through tariffs is possible but has yet to be allowed

To serve as the primary driver for end-use energy efficiency

Combination of legislation and Ministerial Decrees

Electricity and natural gas

All sectors including transport, and all end-uses including small-scale co-generation and photovoltaics

2.2 Mtoe cumulative in 2008; increasing to 6.0 Mtoe cumulative in 2012

None

Distributors of electricity and natural gas

Surrender of energy efficiency certificates; one-year grace period before penalty is assessed if at least 60% of target is met

EUR 25,000 to 155 million assessed on case-by-case basis

Possible 5% premium over achieved savings

Savings can be produced by obligated distributors and accredited energy service providers

Preapproved list of measures with deemed energy saving values plus other measures assessed on a case-by-case basis

Deemed savings, partial on-field measurement, or measures subject to preapproval

Trade of energy efficiency certificates through over-the-counter market or spot market

Fixed contribution to cost recovery through a tariff contribution; transport measures not eligible for cost recovery

The main consideration is that every country has adopted different incentive strategies, making any confrontation an hard task.

www.fire-italia.org

Incentives

White certificates

Conclusions

Business plan are based on ex-ante consumption knowledge...

cash flow => ex ante energy bill - ex post energy bill

Lack of M&V and KPI

Linked to building uses and

weather

Linked to building uses and weather

Linked to project and design

Linked to management

The direct connection between the cash flows related to energy saving and end-use makes it difficult to assess and manage the risks. Some points:

metering and good design and management (technical part and skills); distribution of risks on numerous projects (financial part); smart regulations and guarantee fund (policy).

www.fire-italia.org

Incentives

White certificates

Conclusions

... and imply the capability to involve small size projects

Small: credit through bank agencies, no project financing; need for a diffused commercial and technical structure; request for turnkey and full service solutions.

Medium: agency or corporate banking; more ordinary commercial and technical structure; request mainly for turnkey and full service solutions.

Large: corporate o project financing; need for a structure capable to manage large projects; customized solutions.

Good opportunities for innovative business models, such as cooperatives, crowdfunding, investment funds, European Investment Bank programs, clustering of small operators and management of diffused partners.

www.fire-italia.org

Incentives

White certificates

Conclusions

Some important points: Energy audits and, even better, the energy management systems are essential to have

reliable baseline data on which to build credible business plan. They are also needed to access some incentives schemes (e.g. white certificates). Why not aiming incentives at their promotion?

Energy efficiency is made in the territory in favor of the territory and of the system. However, there is a lack of structures capable of operating in a distributed manner on small projects (or capable of aggregating them in favor of larger operators). Some support may be needed to promote new business models.

Many opportunities are dropped for lack of information or qualified operators. It is essential that the policy makers support actions to overcome these issues in the interest of the market and the users. The existing incentivated training system lack effectiveness.

No business model grows well in a system where the rules change frequently and with lack of coherence. Well...

Considerations

Incentives are neither subsidies, nor discounts. Incentives must not promote speculation. Incentives require time to bear fruit.

Seeing you in Milano!

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