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Italy

Italy

Strong legislation passed in Italy -- Market boost

A new package of measures to support the development of wind power and other renewable energy sources has been approved by the Italian parliament as part of the 2008 national budget. Among the headline measures is a new purchase price for wind energy. For onshore wind, the reference price, which will be reviewed every three years, has been reduced from EUR 0.20/kWh to EUR 0.18/kWh. Prices paid for wind power in Italy are a combination of revenue from both sales of electricity and the associated green certificates.

Electricity retailers are legally required to demonstrate, through the acquisition and submission of green certificates, that a growing percentage of their power sales comes from renewables. The new law raises the annual increase in that percentage to 0.75% from 0.35% previously. The rising obligation means the renewables share of sales must increase from 3.8% of total supplies in 2007 to 7.5% in 2012.

The package has been welcomed by the wind industry despite the decrease in the reference price. It notes the rate is still high compared to most other countries. "I would say the law is going in the right direction to move ahead with wind and renewable energy in general," says Christof Stork of wind energy consultancy Garrad Hassan. "It is an important first step, although some measures still need to be defined and implemented through further decrees." Yet to be decided is the size of any penalties on retailers for not complying with the law.

The high price for wind in Italy is "largely justified" if Italy is serious about achieving its renewable energy goals, says Stork. "In Italy, we have had regions changing the rules and blocking development from one day to another. That will give you a headache even if you have high tariffs."

Gianni Silvestrini, who advises Italian economy minister Pierluigi Bersani, nonetheless believes the price is too high. "The economic part is not what is lacking," he says. "It is the authorisation part involving local authorities that represents the bottleneck."

The government is all too aware of the problem. The budget plan gives Bersani's ministry three months to work with regions and agree minimum requirements for each region's contribution to achieving Italy's national objective of 25% of electricity consumption from renewable sources by 2012. Regions will be given a further three months to adapt their plans for renewable energy promotion accordingly.

"Within six months, we should have a pro-active attitude in the regions that was missing before," says Silvestrini. "It is very ambitious and it will not be painless but it helps that this requirement is coming along with new, binding commitments." How the regions will be forced to comply with the requirement is not yet clear.

Other significant measures in the renewables package include funding to develop wind technology in the hope of creating a domestic industry and a framework to kick-start offshore wind. The transport ministry is now responsible for authorising offshore projects, with input from both the economic and the environment ministries. Site leases are the responsibility of the relevant maritime authority. Offshore wind plant will receive 1.1 times the number of green certificates received by onshore plant for an equal amount of power. The government hopes offshore wind capacity, which currently stands at zero, could reach 2000 MW by 2020.

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