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Renewable Energy and Conservation - Overview

October 2017 - Projects, Energy & Natural Resources. Legal Developments by Villata, Degli Esposti e Associati.

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The article concerns the regulation of the Renewable Energy Market in Italy, providing a brief overview on the matter at hand. 

Although Italian policy on renewable energy is greatly influenced by EU policy, in Italy there are financial motivations such as the feed-in tariff[1] and the feed-in premium[2] that provide incentives for the installation of renewable energy plants and therefore the development of renewable energy.

In addition, the, as of 2015, abolished Green Certificate mechanism[3] provided an incentive for the production of energy from renewable sources. The certificates supplied the producer with a double economic advantage as they were assigned independently of the income associated with the sale of electricity.

New measures have been introduced to promote the use of renewable energy sources. For example, the production of electricity from renewable sources was addressed by and implemented in Legislative Decree No. 387/2003, which included a simplified single authorisation procedure issued by regions or provinces to adapt town-planning regulations.

Furthermore, Decree No. 28/2011 details legislation in relation to the frameworks necessary to reach the targets outlined for 2020 by the Italian National Renewable Energy Plan. Moreover, the decree implemented the simplified authorisation procedure, replacing the declaration of commencement of activity. Additionally, for installations that do not entail a building permit, only a notice to the Public Administration is mandatory.

The development of Renewable energy is aided by the, in comparison with conventional production plants, lower connection fees which are granted for renewable energy sources that produce electricity. The AEEGSI Resolution No. 281/2005 outlines that the renewable energy producer may also choose to construct by themselves, free of charge, all the necessary components for the connection to the network. In addition, renewable energy sources that produce electricity are provided with priority access to the transmission and distribution grid.

The Italian Energy efficiency and conservation system consists of a number of mechanisms. Of particular note are:

i) ‚ÄėWhite Certificates‚Äô within the energy saving sector which certify energy saving accomplishments as a result of energy efficiency initiatives;

ii) Funds for energy redevelopment interventions administered by the Ministerial Decree of 16 February 2016, including thermal insulation of matt surfaces and the replacement of traditional air-conditioning systems with the installation of condensation heat generators or amending the type of windows used;

iii) The period of tax deductions for energy redevelopment projects has been extended up to 31 December 2017. Law No 232/2016 implemented this incentive mechanism whereby owners of buildings can reduce the expenses by 65 per cent and owners of apartments can reduce the expenses by 70 per cent;

iv) The European Directive 2004/08/EC was implemented by Legislative Decree No. 20/2007 regarding cogeneration. The Decree introduced the CAR qualification ‚ÄėCogenerazione ad Alto Rendimento‚Äô (high-yield cogeneration) which guarantees that the electricity produced through high-yield cogeneration can be certified by GSE if the energy production reaches at least 50MWh/year. The Ministerial Decree dated 5 September 2011 outlines the circumstances in which the CAR qualification provides access to the White Certificates.

Since 2011, various operators in Italy have executed smart grid pilot projects under Resolution No. ARG/elt 39/10 and Consultant Document No. 255/2015/R/EEL. More recently, the MISE commenced a state aid programme to advocate investments for the building of intelligent electricity distribution networks. For the advancement of smart grids in Basilicata, Calibria, Campania, Puglia and Sicily, the Ministerial Decree issued on 19 October 2016 assigned ‚ā¨321,620,225.

The AEEGSI has made recent technological developments regarding second generation smart metering, enabling the remote control of electricity, gas and water meters.  Firstly, in the electricity sector, the AEEGSI has supported the expenses for low voltage electricity metering and has furthermore commissioned provisions under AEEGSI Resolution No. 646/2016/R/EEL and functional specifications under AEEGSI Resolution No. 7/2016/R/EEL. Secondly, in the gas sector, the commissioning requirements of gas meters has been updated up to 2018 under AEEGSI Resolution No. 554/2015/R/gas.

Regarding the outlook and development prospects of the energy market it is essential to refer to the AEEGSI Resolution No. 3 dated 15 January 2015, whereby the progression of the energy sectors between 2015-2018 specifically requires the establishment of adept and unified electricity markets, in addition to adaptable gas markets that work within a European framework. The Resolution requires the creation of competitive retail markets, an increased accountability of the network operators for infrastructures and the management of the water sector.

[1] See AEEGSI Resolution No. 369/2016

[2] Feed-in premium tariffs that apply to the electricity produced by solar thermal plants, in addition to photovoltaic plants that were established and operating prior to 26 August 2012.

[3] The certificates were introduced by Legislative Decree No. 79/1999. From 2015 the current Green Certificate mechanism no longer applies. From 1 January 2016, the producers eligible to benefit from the mechanism have received a ‚Äėreplacement‚Äô incentive provided by the GSE.