Paris – 18th March 2005

ITALY

PRESENT SITUATION

ITALY

• Inhabitants: 57.562.000

• GNP

(2003)

: 1.300.926 106 €

• Surface

GENERAL INFORMATION

: 301.000 Km2

APER

APER - Italian Association of Renewable Energy Producers - was born in 1987 as mini-hydro association (APEI).

Since 1998 APER encompass all renewable energy technologies.

It counts about 250 members from hydro, wind, biomass, biogas and PV sources for an installed capacity of approximately 2.000 MW and an electricity production of more than 5 TWh.

APER

APER acts as a no-profitassociation and its finalities are the promotion of a wider culture of renewables, in the respect of the environment and in the view of a fully sustainable development.

In the European context APER is a member of ESHA and EREF.APER is surely a relevant actor in the renewables Italian market.

APER

The privatisation of Italian energy market started up in 1999 with the decree 79/99 (so called “Bersani decree”) but, at present, it isn’t fully completed. The same decree introduces the green certificates support scheme for the renewable energy sources

The 2001/77/CE Directive was introduced in the Italian legislation by means of the decree 387/2003 issued on 29-12-2003

A significant regulation of the whole energy sector comes from the law 239/04, issued on 23-08-2004

AN ENERGY MARKET OVERVIEW

The tariffs and the main technical rules are fixed by Energy and Gas Authority

APER

Energy and Gas AuthorityIt’s the public agency in charge of fixing the rules of the energy market, according to the laws

AU: Unique TraderIt’s the public company in charge of trading the energy for the not eligible consumers (< 100 MWh/year)

GME: Electric Market OperatorIt’s the public company in charged of managing the energy market (electric bourse)

DistributorsCompanies allowed to distribute energy in reserved areas (for examples ENEL S.p.A., municipalities, etc.)

ProducersPublic and private energy producers

MAIN ACTORS of the ENERGY MARKET

GRTN: National Transmission Grid OperatorIt’s the public company in charged of the energy transmission

ENERGY CONSUMPTION

GWh %Total demand 320.658,4 100,00

Power grid losses 20.869,8

299.788,65.162,2

152.720,976.889,7

65.015,8

Total consumption

6,51

93,49

1,6147,6323,98

agricultureindustryservices

domestic uses 20,28

ITALY(2003)

Gross generation 293.865,0Auxiliary services consumption 13.681,8

Pumping consumption 10.492,4Net generation 280.183,2

Available for use 269.690,8Imported from other countries 51.485,9

Exported to other countries 518,3

ENERGY GENERATION (GWh)

ITALY(2003)

ITALY(2003)

ROLE of RENEWABLES in ENERGY GENERATION (GWh)

Gross Net* %

Hydropower 44.276,8 36.674,3** 13,09

Total RES 55.573,70 47.412,00 16,92

Wind 1.458,4 1.456,8 0,52

Photovoltaic 5,0 4,9 0,002

Geothermal 5.340,5 5.036,0 1,80

4.240,0

280.183,2

Biomass & waste 4.493,0 1,51

293.865,0Total generation

* Without the auxiliary consumption: delivered to the distribution grid

** Only from natural contribution (excluding pumped storage)

ROLE of DIFFERENT HYDROPOWER SCHEMES

(GWh)

ITALY(2003)

Natural contribution

With pumping

Total

Storage schemes 9.767,6 7.578,0 17.345,6Basin schemes 12.323,3 23,5 12.346,9

Run-off river plants 14.583,4 0,9 14.584,3

Total 36.674,3 7.602,5 44.276,8

15,6%0,5%

81%

1,8%

0,002%1,5%

Wind

Hydropower

Geothermal

Biomass &WastePhotovoltaic

Other

ROLE of RENEWABLES in ENERGY GENERATION

ITALY(2003)

ITALY(2003)

ROLE of HYDROPOWER AMONG RENEWABLES

GWh %

Hydropower 36.674,30 77,35

Wind 1.456,804,9

5.036,004.240,00

47.412,00

3,07Photovoltaic 0,010Geothermal 10,62

Biomass & waste 8,94Total 100,00

ITALY(2003)

ROLE of HYDROPOWERAMONG RENEWABLES

0,01%11,13%

9,37%

76,45%

3,04%

HydropowerWindPhotovoltaicGeothermalBiomass & waste

ITALY

HYDROPOWER GENERATION in the LAST YEARS (GWh)

1996 1997 1998 1999

Hydropower* 42.035,6 41.599,8 41.213,6 45.358,0

2000 2001 2002 2003

Hydropower* 44.204,9 46.810,3 39.519,4 36.674,3

* Only from natural contribution (excluding pumped storage)

NB. 2003 was an extraordinary dry year in Italy

HYDROPOWER GENERATION in the LAST YEARS

ITALY

25.000,00

30.000,00

35.000,00

40.000,00

45.000,00

50.000,00

1996 1997 1998 1999 2000 2001 2002 2003

GW

h

ITALY

CLASSIFICATION of HYDROPOWER PLANTS

Name CapacitySMALL 10 MW ≥ X > 1 MW

MINI 1 MW ≥ X > 100 kW

MICRO 100 kW ≥ X

Classification adopted by the European Commission

ITALY

Classes Plants(nr.)

Nominal capacity(MW)

Real capacity (MW)

> 100 39 1,9% 12.117,5 52,8% 11.178,47.477,81.924,0

406,520.986,6

13,0%

53,2%

35,8% 35,6%

9,2%29,1%

1,9%56,0%

100%

9,2%

100%

2,2%

100%

10 – 100 261 8.202,81 – 10 583 2.103,7

< 1 1.122 509,3Total 2005 22.933,4

NUMBER of POWER STATION and GENERATION CAPACITY

(2003)

NUMBER of PLANTS for GENERATION CAPACITY

ITALY

56% 29%

13%

2%

> 100 MW10-100 MW1-10 MW< 1 MW

(2003)

GENERATION of PLANTS for CLASSES

ITALY

89,7%

8,3%

1,6%0,4% >100

10-100 MW1-10 MW< 1 MW

(2003)

ITALY

2001 2002 2003

< 1 MW 1.667,8 1.603,6 1.455,31 – 10 MW 6.988,8 6.443,9 5.736,2> 10 MW 38.153,8 31.471,8 29.482,8

Total 46.810,3 39.519,4 36.674,3

GENERATION of the DIFFERENT CLASSES in the LAST 3 YEARS

(GWh)

ITALY

GENERATION of the DIFFERENT CLASSES in the LAST 3 YEARS

0,005.000,00

10.000,0015.000,0020.000,0025.000,0030.000,0035.000,0040.000,0045.000,00

< 1 MW 1-10 MW > 10 MW

GW

h 200120022003

ITALY

Power stations

(n.)

Nominal capacity

Actual capacity

(net)

Actual capacity (gross)

1.567

270168

2.005

Northern Italy 16.361,5 14.749,9 15.131,2

Central ItalySouthern Italy &

IslandsTotal

1.673,3 1.404,2 1.424,84.898,6 4.359 4.430,6

22.933,4 20.514,0 20.986,6

GEOGRAPHIC DISTRIBUTION of HYDROPOWER PLANTS and CAPACITY

(2003)

ITALY(2003)

GEOGRAPHIC DISTRIBUTION of HYDROPOWER GENERATION (GROSS)

Northern Italy 34.747,1 GWh

Central Italy 2.971,4 GWh

Southern Italy & Islands 6.558,3 GWh

Total 44.276,8 GWh

ITALY(2003)

7%

15%

78%

Northern Italy

Central Italy

Southern Italy &Islands

GEOGRAPHIC DISTRIBUTION of HYDROPOWER GENERATION (GROSS)

ITALY

Source 1997 2002 2006 2008-2010

MW PJp MW PJp MW PJp MW PJp

Hydro > 10 MW 13.942 309 14.200 312

2.300 87

42

13

0

28

16

Biofuels 3 12 23 39

Waste (th) 4 5 7 8

Biomass and biogas (th)

45 59 67 73

Solar Thermal 0 2 5 9

Geothermal (th) 9 10 13 17

586

620

700

25

500

350

75

36

1

0

5

2

489

2.187

559

119

16

192

89

Hydro < 10 MW

Geothermal (el.)

Wind

PV

Biomass and biogas (el.)

Waste (el.)

Total

14.500 318 15.000 329

2.600 98 3.000 113

700 47 800 54

1.500 28 2.500 46

50 1 300 3

9.000 50 2.300 127

600 28 800 37

685 855

Targets for RES (Italian White Paper on RES 1999)

CIP 6/92

ITALYSUPPORT SCHEMES: MAIN FEATURE AND PRICES PAID

Type of RES: all, and the so called “assimilated plants” as well, like cogeneration plants and othersType of support: feed-in for the first 8 years; fees are related with the production cost of a standard conventional plant, taking into account also the typical costs of every sourceType of incentive: fees on the produced energy, different for each sourceConditions: to have signed a CIP 6 contract. The admission list was closed on 31-12-1996 and the dead-line for the accepted plants is to have all the authorisations by 31-03-2001.Prices: in the following table only the main items are quoted (year 2004)

Source Price [€/MWh]

SHPs run off the river 102,7

Wind and geothermal plants 127,6

PV, biomass, waste 182,1

Comments: by now the CIP 6 is the most efficient incentive system and the most appreciated by investors, but it was abandoned for the high cost on the final users of the energy, depending only on the fact that the most incentives amount was enjoyed by the “assimilated plants”, usually with big capacity (more then 100 MW each).

ITALY

GREEN CERTIFICATESType of RES: all (waste too)Type of support: obligation of RES production or green certificates acquisition for conventional energy producers in percentage (2% +0,35% every year from 2004 to 2006) on the new productionType of incentive: on the produced energy, the same for every source

Type of plant (source) CIP 6 Green Certificates

(2004)

Small hydro 102,7 ~ 146

Wind 127,6 ~ 146

Biomass 182,1 ~ 146

Photovoltaic 182,1 ~ 146

Comments: new supporting system, theoretically market friendly, actually it need an impressive amount of rules to assure efficiency and no discriminations among the operators.The first period gives good sounds about the support fee to RES, but they aren’t enough to make the system acceptable for the banks (till now).As it is a “market support system”, the price is the same for the different sources: some difference would be introduced on the duration of the support measure (default: 8 years)

Conditions: new plants (running after 31-3-1999) for the first 8 years.Refurbished and repowered plants only in quotapartePrices: the 2004 top-price (green certificates owned by the GRTN) was 97,39 €/MWh for the certificates, decreased of the transaction cost of ~3%, to which the energy value must be added, about 52,00 €/MWh, getting a total price of 146 €/MWh, more or less. See the table for comparison (price expressed in €/MWh)

SUPPORT SCHEMES: MAIN FEATURE AND PRICES PAID

ITALY

ENERGY AUTHORITY DECREE N. 34/05Type of RES: allType of support: feed-in system, with prices stated by the Gas and Energy Authority, taking into account the dynamic of the energy prices (40% is connected to the inflation rate) and the capacity of the plants.

By 500.000 kWh 95,00 €/MWh

From 500.000 to 1.000.000 kWh 80,00 €/MWh

From 1.000.000 to 2.000.000 kWh 70 €/MWh

From 2.000.000 kWh Average price for not eligible consumers (~50 €/MWh)Type of incentive: fees on the produced energy, depending on the annual productionConditions: plants by 1 MW of installed powerPrices: decreasing prices, following the annual energy productionFor example: for 1 MW plant, producing 3.700.000 kWh/year, the average price is 65,74 €/MWhComments: quite satisfactory prices, but only to cover the ordinary maintenance costs, not for refurbishing investments, which need significantly higher prices to be repaid.It’s a decree issued on March 2005,which comes from the positive experience of the 82/99 and 62/02 decrees for the SHPs only. As it’s not considered a form of support, it can be cumulated with the Green Certificates system or other support schemes

SUPPORT SCHEMES: MAIN FEATURE AND PRICES PAID

ITALY

Others support schemes Type of RES: all, but especially the newest technologies, such as electric production by means of biomass and photovoltaic panelsType of support: grants or financing facilities.Type of incentive: funds to cover a significant share of the research and development costs, but also a contribution to the plant costs.Conditions: innovation and/or plants in disadvantaged areasFormal framework: at regional level ( e.g.: structural funds for disadvantaged areas)

SUPPORT SCHEMES: MAIN FEATURE AND PRICES PAID

ITALY

Data source for the production figures:

GRTN – Dati statistici sull’energia elettrica in Italia – 2003

APER P.le R. Morandi, 2 20121 – Milano

Tel. 02-76319199 Fax 02-76397608

www.aper.it segreteria@aper.it