The Italian White Certificate Scheme

Cost of EEO scheme & cost recovery mechanism

ALBERTO PELA Regulatory Affairs Unit

 

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Non solo energia elettrica

Agenda  

ü  GSE’s role & Italian White Certificates Scheme

ü  Cost of EEO scheme & cost recovery mechanism

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Ownership  100%  

MEF  Ministry  of  

Economy  and  Finance  

MSE  Ministry  of  Economic  

Development  (with  others  Ministries)  

AEEGSI  Regulatory  Authority    

for  Electricity,  Gas  and  Water      

Decisions  Guidelines  

MISSION:  GSE  promotes  the  development  of  renewable  energy  sources  and  energy  efficiency  in  Italy,  by  gran9ng  economic  incen9ves  and  suppor9ng  the  policy  makers    

About  Energy  Services  Operator  -­‐  GSE  

Electricity  market,    natural  gas  market  and  environmental  markets    

Research  on  the  energe9c  system  

Purchase  of  electricity  for  small  customers  

Ownership  100%  Ownership  100%  Ownership  100%  

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Managing   of   different   systems   for   the   promoHon   of   RES,   CHP   and   Energy   Efficiency  (qualifying   plants,   carrying   out   technical   inspec9ons   on   plants,   issuing   incen9ves,   re-­‐selling   in   the  market  of   the  RES-­‐electricity  purchased,  collec9ng  different   types  of  data  from  plants  through  �a  satellite  system,  etc.)    

§  Support  schemes  for  RES  electricity  

•  Green   CerHficates:   issuing   GC   and   monitoring   compliance   of   producers   and  importers  obligated;  

•  Feed-­‐in  Tariff  (incen9ve  +  compensa9on  for  the  energy  sold)    

•  Energy  Services  for  RES  and  CHP  electricity  

§  Support  schemes  for  thermal  RES  and  Energy  Efficiency  

•  White  cerHficates  and  other  specific  incenHves  (i.e:  Hea9ng  Account).  

GSE  –  OUTLOOK  AND  MAIN  ACTIVITIES            

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ACTIVITIES  

ON-­‐SITE  &  ADMINISTRATIVE    INSPECTIONS:    THE  ONLINE  DATABASE  

GSE  REALIZES  TECHNICAL  INSPECTIONS  AND  

VERIFICATION  ACTIVITIES  RELATED  TO  RES  AND  EE  

SCHEMES      

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The  Italian  NaHonal  Energy  Strategy  and  EED  implementaHon  

ReducHon  of  GHG  emissions  Ml  Ton  CO2/anno  

466472

575 -18%

2005 EU target 2020

NES target 2020

RES  Development  Impact  on  total  consumpHons  %  

10

2005 EU target 2020

NES target 2020

Energy  Efficiency  Primary  energy  ConsumpHon  Mtoe  

158

167

209

-20%

2005 EU target 2020

NES target 2020

17

20

-19%

-24%

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Italian  Lgs.  Decree  102/2014:  TransposiHon  of  the  EU  Dir.  2012/27/EU  

47%

3%

33% ArHcle.7-­‐  Energy  efficiency  obligaHon  schemes  

Expected  contribu>ons  from  the  various  incen>ve  mechanisms  2014-­‐2020  

The   Ar9cle   7   of   the   EU   Direc9ve   2012/27/EU   on   Energy   Efficiency   requires   from  Member  States  to  apply  an  energy  efficiency  obligaHon  scheme  or  alternaHve  policy  measures   that   would   deliver   a   certain   amount   of   end-­‐use   energy   savings   over   the  2014-­‐2020  period.  

ImplementaHon  of  the  EE  DirecHve  into  naHonal  law  (Lgs.  Decree  102/2014)  

Sectors WhC Regulation & Standard

Sustainable

Mobility

Tax Relief

Heating Account

Residential X XX - XXX X

Services X XX - XXX X

Public sector

X X - - XXX

Industry XXX X - - -

Transport X XXX XXX - -

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White   CerHficates   or   TEE   Energy   Efficiency   CerHficates,   are   one   of   the  most   relevant   tools   to  promote  the  energy  efficiency  in  Italy:  

q  The   Scheme,   introduced   in   2004   (Decree   July,   20th   2004)   has   been   improved   during  following  years  (Decrees  21th  Dec  2007,  May  30th  2008  and  28th  Dec  2012)  

q  electricity  and  natural-­‐gas  distributors  with  more  than  50000  costumers  are  required  to  achieve   yearly   quanHtaHve   primary-­‐energy   saving   targets,   expressed   in   Tonnes   of   Oil  Equivalent  (TOE)  saved.    

q  White   cer9ficates   are   tradable   instruments   giving   proof   of   the   achievement   of   end-­‐use  energy  savings  through  energy  efficiency  improvement  ini9a9ves  and  projects  

White  CerHficates  Scheme  –  Regulatory  framework    

Only  addi.onal  savings  are  considered  i.e.  “over  and  above  spontaneous  market  trends  and/or  legisla>ve  requirements”  

WC  Htle  cerHfies  that  a  certain  reducHon  of  energy  consumpHon  has  been  obtained    1  WhC  =  1  saved  toe  (tonne  of  oil  equivalent)    1  WhC  =  100€  (originally,  they  are  tradable)    WhCs  hold  up  5  o  8  years,  depending  from  the  type  

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Par9es  eligible  to  submit  projects  for  accruing  white  cer9ficates  are:    -­‐  electricity  and  gas  distributors  with  more  than  50,000  final  customers  (“obliged  

parHes”)  and  their  controlled  companies;    -­‐  non-­‐obliged  distributors;  -­‐  companies  operaHng  in  the  sector  of  energy  services  (ESCOs);  -­‐  companies  or  organizaHons  having  an  energy  manager  or  an  ISO  50001-­‐cer9fied  

energy  management  system  in  place.       Market   (na9onal   energy   stock   exchange   or   bilateral  

agreements)  defines  WhCs  price.  

White  CerHficates  Scheme  –  Regulatory  framework    

The   na9onal   Decree   of   28  Dec.   2012   have   set   naHonal  quanHtaHve   energy-­‐saving  targets   -­‐   incremental   over  Hme   -­‐   for   electricity   and   gas  distributors   for   the   years  from  2013  to  2016.          

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Italian  White  CerHficates:  fulfilment  of  the  obligaHons    

Distributors    can  fulfill  their    

obliga9ons  of  Whc    (each  year  by  31  May)  

by  

Obtaining  WhC  from  GSE,    through  the  implementa9on  of    

energy  efficiency  projects    

Purchasing  WhC    from  third-­‐party  

Spot  Market,  managed  by  GME,    

and  regulated  by    AEEGSI  

Bilateral  Agreements    with  eligible  par9es    (voluntary  or  obliged)  

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Italian  White  CerHficates:  eligible  subjects  

Non-­‐obliged    electricity  and  natural  gas  distributors  

E.S.Co    Energy  Services  Company  

Companies  with  an  energy  manager,    appointed  according  to  Law  10/1991  

Companies  with  an  energy  manager,  appointed  on  a  voluntary  basis  

Companies  cerHfied  ISO  50001  

Obliged    electricity  and  natural  gas  distributors  

Obliged Parties - (Demand) Volunteer Parties (Supply)

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ENEL  S.P.A.  3,64  M.WhC  

85%  

ACEA    S.P.A.  0,20  M.WhC  

5%  

A2A  S.P.A.  0,17  M.WhC  

4%  

Other  10  Distributors  0,25  M.WhC  

6%  

13  Electrical  Distributors:    4.26  Million  of  WhC  

ITALGAS  S.P.A.  

0,82  M.WhC  23%  

2i  RETE  GAS  S.P.A.  

0,67  M.WhC  19%  

HERA  S.P.A.  0,26  M.WhC  

7%  

A2A  RETI  GAS  S.P.A.  0,23  M.WhC  

7%  

OTHERS  44  Distributors  1,52  M.WhC  

44%  

48  Natural  Gas  Distributors:    3.49  Million  of  WhC  

1  distributor  has  almost  50%  of  the  obligaHon    6  distributors  have  75%  of  the  obligaHon  

61  

Italian  White  CerHficates:  obliged  distributors  (2015)

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Italian  White  CerHficates:  acHve  subjects  on  scheme  (2015)  

2,48  

3,04  3,49  

4,28  

17   39  

967  

117  89  

4  

0  

200  

400  

600  

800  

1000  

1200  

Electrical    Distributors  

Natural  Gas    Distributors  

E.S.Co.   Energy  Manager  (Obliged)  

Energy  Manager  (Volunteer)  

ISO    50001  

-­‐  1233  acHve  subjects,  78%  E.s.co.  

-­‐  Distributors  generate  only  4,7%  of  WhC  

-­‐  96%  of  WhC  have  to  be  traded  

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White  CerHficate  Trading  System:  spot  market  &  bilateral  agreements  

Demand  

3,04  3,49  

Regulated  Spot  Market  

Supply  

Obliged  ParHes  

Volunteer  ParHes  

Bilateral    Agreements  

Par.es  have  to  communicate  to  

GME  •  N°  of  WhCs    •  price  of  each  

agreement    

WhC

WhC €

€

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White  CerHficate  Trading  System:  cumulaHve  volumes  traded    

2,48  

16,6

31,4

0

10

20

30

40

50

60

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bilateral  Agreements

Regulated  Market

•  48  millions  of  WhC  traded  •  35%  on  regulated  market  -­‐  65%  by  bilateral  agreements  

•  36  millions  of  WhC  emiKed  

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White  CerHficate  Trading  System:  Prices  (year  2015)  

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WC  issued   2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2006-­‐2015  

RVC-­‐C  Final   57.007   70.164   174.155   423.848   781.212   1.151.267   3.708.546   4.845.379   6.155.306   3.123.642      

RVC-­‐S  Standard   412.677   684.242   1.211.331   2.079.341   2.436.148   1.936.610   1.910.538   984.972   1.156.294   1.597.855      

RVC-­‐A  Analy>c   86.928   2.521   2.506   2.888   28.880   245.795   120.396   288.195   217.370   179.327      

Total     556.612   756.927   1.387.992   2.506.077   3.246.240   3.3336.72   5.739.480   6.118.546   7.528.970   5.029.064   36.203.580  

White  CerHficates  issued  –  2006  /2015  

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White  CerHficates  issued,  Regional  distribuHon  and  energy  savings  (2014)  

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Italian  White  CerHficates:  achievements  year  2015  

Civil  32%  

LighHng  4%  

Industrial  64%  

Of  which:  •  1.604.891  (IND-­‐T:  “Industrial  Heat”  -­‐  Industrial  processes:  

genera9on  or  heat  recovery  for  cooling,  drying,  burning,  

mel9ng)  

•  325.896   (IND-­‐E:   “Industrial   Efficiency”   -­‐     Industrial  

processes:   efficient   dry   systems   (motors,   etc.)  

automa9on  and  power  factor  measures)  

•  165.748   (IND-­‐GEN:   “Industrial   Genera9on”   -­‐   Industrial  

processes:   electricity   genera9on   from   renewable  

sources,  heat  recovery  or  cogenera9on)  

•  1.029.566   (IND-­‐FF:   “Industrial   FF”   Industrial   processes:  

interven9ons   other   than   the   above,   for   the   energy  

op9miza9on   of   produc9on   processes   and   plant   layout  

designed   to   achieve   a   las9ng   energy   consump9on  

reduc9on   normalized   by   quan9ty   and   quality   of  

produc9on)  

3.126.101 WhC were issued to the Industrial Sector (64%)

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Cost  of  EEO  scheme  and  cost  recovery  mechanism  

Considering the rate contribution of EUR 105,83 / TEE, the total economic burden on the fulfillment of the objective 2014 (including the 2013 compensation) amounted to EUR 617.725 .693 for obligated parties (distributors of electricity and methane gas).

Pre-arranged contribution it is defined during the beginning of the year (June1)

C PREARRANGED(t+1) = = C DEFINITIVE(t)* [100 + 0,5 *

* E(t+1)]/100

Definitive contribution It is defined at the end of the year (June2) CDEFINITIVE(t) = = CPREARRANGED(t) + k * * [(S(t) – CPREARRANGED(t)]

The EET cost is defined by AEEGSI considering the EET yearly market: •  The TEE definitive contribution on 2014 was 105,83 €/TEE •  The TEE prearranged contribution for 2015 was 108,13 €/TEE •  The TEE definitive contribution on 2015 was 114,83 €

The cost of EET mechanism relapsed on the electricity & gas customer’s bills (see acronym UC7 on Italian electricity bill -spesa per oneri di sistema).

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Cost  of  EEO  schemes  and  cost  recovery  mechanisms  

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GME data

Correlation between the EET market exchange prices of the individual sessions and definitive tariff contribution :

Cost  of  EEO  schemes  and  cost  recovery  mechanisms  

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Penalties/Fines: in case a DSO does not fulfill at least 60% of its annual target, AEEGSI will inflict a fine case by case approach on the basis of the lacking certificates and on the market situation. If 60% of the DSO target is reached, fines are not applied. In both cases the following year target of the defaulting DSO is increased by the amount of lacking WhC.

Proponent costs: Starting from January 2015 GSE’s activities and the evaluation activities carried on by ENEA and RSE are covered by a fee the operators/proponents pay when presenting a project or communicating the measures year by year for simplified monitoring plan and monitoring plan projects. The fees are: Fixed fee in the range 100-2,500 euro depending on the size and type of project and variable fee of 1.1 euro per issued certificate for projects above 100 certificates per year.

Cost  of  EEO  schemes  and  cost  recovery  mechanisms  

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-  WhC Prices are transparent and public

-  High participation from Private Sector thanks to ESCO involvment (defined by a regulatory framework). Positive consequences on SME growth and local development

-  Both WhC market options are useful and considerated by the obliged parties (bilateral agreements: 64%; EET market: 35%)

-  The Industrial sector recognizes in the Whc Scheme a stable investment opportunity

-  No burden on Public finances (difference beetween RES’s schemes)

-  Verification activities are necessary to ensure the WhC scheme operation

-  Most effective support scheme (in term of €/tep saved)

-  It is a market scheme, regulations define categories of the projects and subjects directly eligible, the m a r k e t s e l e c t s t h e technologies and sectors

-  Mechanism evolved over the 10 years of experience (Civil sector -> Industrial sector)

Thank you

Alberto Pela Regulatory Affairs Unit

alberto.pela@gse.it