Energy Efficiency in Italy Rino Romani -Walter Cariani ENEA ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT The “White Certificates” scheme

Implementing EEP: National and International opportunities Sofia 29 Oct Contents  Energy consumption  Legislation on energy efficiency  previous  present  EE decrees April July December 2007  M&V  Main results  NEEAP (National Energy Efficiency Action Plan) ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Italian energy consumption, energy and electricity intensity ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Italian energy consumption in end-uses ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Italian legislation framework  Law 30 April 1973, n. 373  Law 28 May 1982, n. 308,  Law 9 January 1991, n. 10  Lgs Decree 16 March 1999, n. 79,  Lgs Decree 23 May 2000, n. 164,  Lgs decrees (energy efficiency) April July December 2007  Lgs Decree 19 August 2005 n. 192  Budgetary law 2007 “energy package” ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Energy efficiency decrees  Issued for the first time in April  Innovative strategy that combines a command and control approach with a market based instrument  Distribution System Operators (DSO), with more than customers, are required to achieve quantitative targets of energy efficiency improvements in end-uses  The way to achieve these objectives is left to DSO’s free enterprise and market forces (energy efficiency titles or white certificates). ESCOs are part of the scheme as well. ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Energy efficiency decrees  On July 2004 an amended version of the two decrees was issued with the following main changes: Modifications in the distribution of annual quantitative targets; Extension of the implementation period (from 2005 to 2009) Introduction of a flexible mechanism in the deadline for achieving the annual savings ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Energy efficiency decrees  On December 2007 a further amended version of the two decrees was issued with the following main changes: Increase of the annual quantitative targets; Obligation for DSO with more than customers; Extension of the implementation period (from 2009 to 2012) Companies with an appointed energy manager are authorised to operate in the scheme ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Energy efficiency decrees Annual Targets (Mtoe) electricitygas yearannualcumulativeannualcumulative 20050, ,10,20,10, ,20,40,20, ,81,20,61, ,61,80,41, ,72,40,61, ,83,10,42, ,63,50,52,5 ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Energy efficiency decrees  Energy saving targets can be achieved through projects/activities implemented by DSO, directly or via controlled companies Energy Service Companies (ESCOs) Companies who have appointed Energy Managers  Eligible projects All energy efficiency projects ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Energy Efficiency Titles (TEE) or White Certificates (WhCs) 1 WhC for 1 toe of saved primary energy  Type 1: certificates savings of electricity  Type 2: certificates savings of natural gas  Type 3: certificates savings of other fuels WhCs are issued by the Electricity Market Operator (GME) once it has been certified that a defined amount of energy saving will be attained by project implementation ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Sanctions  proportional and in any case greater than the investment needed to compensate the non- compliance  established and applied by the Authority for Electric Energy and Gas (AEEG) ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Process to recognize energy saving Implementation of the project Request of verification Assessment and certification Issue of WhC Exchange of WhC Transfer of WhC to AEEG Economic contribution DSO and ESCO Entitled project AEEG/ENEA GME DSO and ESCO DSO AEEG to DSO Phases and Actors ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct What political drivers and obstacles did the evaluations face?  Previous Italian laws on energy efficiency (82/308 and 91/10 acts) granted subsidies for energy efficiency projects: based on a global national budget available for the requests economic lever to encourage the operators but no targets not enough subsidies to allow the implementation of the projects ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct What political drivers and obstacles did the evaluations face?  The WhC mechanism, based on a Command & Control approach, fixes targets to reach, identifies the obliged subjects and creates a market scheme to close the circuit thanks to which a number of energy efficiency projects are implemented. ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Measurements and Verification of energy savings (M&V)  The definition of technical rules, the implementation, monitoring and enforcement of the whole mechanism are under the responsibility of the Authority for Electric Energy and Gas (AEEG)  The AEEG developed three evaluation methods:  a default (deemed savings) method: no on-field measurement;  an engineering method, partial field measurement;  energy monitoring plan, subject to AEEG/ENEA pre- approval ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Measurements and Verification of energy savings (M&V)  Deemed savings and engineering methods are developed by AEEG following consultation of all interested parties  Energy monitoring plans have to meet criteria pre- defined by AEEG and are subject to AEEG pre-approval. They can be proposed only for measures for which no deemed savings or engineering methods have been adopted by AEEG  Only “additional savings” are considered, i.e. savings over and above spontaneous market trends and legislative requirements ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Measurements and Verification of energy savings (M&V)  Projects validation as well as energy savings certification are under AEEG’s responsibility  Verification is carried out via: control of projects documentation prepared according to a predefined reporting format and sent to AEEG by interested parties. B oth quantitative and qualitative project characteristics are checked for validation random on-site audits (i.e.: control of more detailed project-related documentation as well as audit at customers’ premises)  The certification of the energy savings produced by each project is made via the issuing of Energy Efficiency Certificates (EECs) ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Measurements and Verification of energy savings (M&V) ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT Project threshold (Mtoe/year) Method DefaultEngineeringEnergy monitoring DSO/ESCOs25 ESCOs50100 DSO100200

Implementing EEP: National and International opportunities Sofia 29 Oct Projects evaluated by Default Method (examples of 22 developed formats)  Replacement of incandescent lamps by CFL;  Replacement of electric boilers by gas boilers for heating sanitary water;  Installation of high efficient boilers;  Thermal insulation systems in buildings;  Photovoltaic plants (<20 kW power);  Variable speed drivers  High efficiency electric motors;  Etc… ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Tariff contribution  The WCh mechanism is supported by a yearly determined “tariff contribution”, from the AEEG.  For each “toe” of certified energy saving, the obliged Distributors will receive a “tariff contribution”, presently, valued at 100 €  “tariff contribution” is a component of the electric and gas bill, paid by all end users. ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Main results (July 2008)  Several ESCOs authorised (1,100 till now), of whose 140 actually implemented projects;  Over 3,200 projects implemented;  2.0 Mtoe of energy saving achieved (with respect to the 2008 cumulative target of 2.2 Mtoe);  Avoided emissions over 5.5 million tons of carbon dioxide;  Benefit for end users significantly outweighted (in a ratio of roughly 1 to 8) the tariff contribution. ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Main results (July 2008) ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Costs borne by “Obliged DSOs”  No information yet available about the costs borne by DSOs to implement energy efficiency measures.  A preliminary estimation carried out on two main assumptions: Four different percentage subdivisions between titles bought on the market and titles achieved for projects directly implemented by the DSOs Savings achieved mainly through projects implemented by DSOs in the residential sector, where a pay-back time for the investment of 4 years it is deemed reasonable ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Outcome from the preliminary estimation  Costs borne by “Obliged DSO” (M€) ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Costs for the Government Costs associated with tariff contribution 2Mtoe * 100 €/toe = 200 M€ Costs associated with M&V 1,5 M€ per year € per GJ saved 2,5 €/GJ ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Costs for the Government Source ECOFYS ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Does it work?  Advantages it combines the guaranteed results of regulation with the economic efficiency of market-based instruments it promotes the development of a market for energy efficiency products and services it fosters the entrance of new market actors  Features progressive approach in implementation credibility and transparency of the policy approach flexibility for market operators to meet their goals simplicity and accurateness of rules ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct NEEAP-The national indicative energy saving targets GWhMtoe Average over 5 year period1,316, % energy saving target in , Energy saving target adopted (9% or higher) 126,327 (9.6%)10.86 Intermediate target in 2010 adopted 35,658 (3%)3.39 ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT

Implementing EEP: National and International opportunities Sofia 29 Oct Programs of EE improvement and other measures for achieving the national targetsEn. Sav. Target GWh En. Sav. Target GWh Measures in the Residential sector: 1) Thermal insulation improvement of ante 1980 residential buildings 2) Substitution of simple glazing of windows with double glazing 3) Replacement of incandescent bulbs with CFL 4) Substitution of dish-washing machine with class A equipment 5) Replacement of refrigerators and freezers with equipment of A+ e A++class 6) Substitution of washing machines with superlative class A equipment 7) Installation of efficient electric water heating equipment 8) Installation of efficient air conditioning systems 9) Energy-efficient heating systems 10) High-efficiency wood Boilers and Fireplaces 1) 3,489 2) 233 3) 1,600 4) 305 5) 1,210 6) 31 7) 700 8)180 9)8,150 10)1,100 1) 12,800 2) 930 3) 4,800 4) 1,060 5) 3,860 6) 410 7) 2,200 8) 540 9) 26,750 10) 3,480 Measures in the Tertiary sector: 1) Energy-efficient heating systems 2) Installation of efficient air conditioning systems 3) Efficient bulbs and digital control systems 4) Efficient bulbs and digital control systems (public lighting 1) 5,470 2) 835 3) 1,400 4) 425 1) 16,600 2) 2,510 3) 4,300 4) 1,290 Measures in the Industry sector: 1) Efficient bulbs and digital control systems 2) Substitution of electric motors (1-90kW) from Eff2 class with Eff1 class 3) Inverters for electric motors ( kWh) 4) High-efficiency cogeneration 5) Mechanical vapour compression 1) 700 2)1,100 3) 2,100 4) 2,093 5) 1,047 1) 2,200 2) 3,400 3) 6,400 4) 6,280 5) 3,257 Measures in the Transport sector: 1) Introduction from of a standard of consumption for vehicles of 140 g/km (average of total sold vehicles) 1) 3,4901) 23,260 Total of Expected Energy Saving 35, ,327

Implementing EEP: National and International opportunities Sofia 29 Oct Thanks for your attention ITALIAN NATIONAL AGENCY FOR NEW TECHNOLOGIES, ENERGY AND THE ENVIRONMENT