Renewable Energy Report - Executive Summary 2011

Renewable Energies: State of the Art Technological Solutions, Environmental Impact,

Legislative Framework and Future Development

Executive Summary

Renewable Energies: State of the Art – Executive Summary

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This booklet offers a summary of the themes that are dealt with in the book Le

energie da fonti rinnovabili: lo stato dell'arte published in November 2011 and

presented in Palazzo Marini in Rome (the Italian lower house of parliament).

The idea of extracting a brief summary from the longer document arose out of a

desire to make available to a wider public an insight into the extensive and detailed

investigation that the Milan-based Foundation EnergyLab has been carrying out in

relation to the theme of renewable energies in Italy. The work is the product of the

combined efforts of a group of experts that gravitate around the Laboratorio Energie

Rinnovabili (Renewable Energies Laboratory), a project conceived of, developed and

promoted by Foundation EnergyLab. The contents of the booklet fully express the

multi-disciplinary approach characteristic of the work of the laboratory. The research

in question lasted for over a year and the final result is the fruit of a highly articulated

and carefully orchestrated effort that engaged a range of figures from various areas of

the academic, government and business worlds. In particular, the protagonists

included professors from Milan’s five universities and various research centres –

members of the foundation – as well as a range of people from the government and

business world.

Editor

Silvana Stefani Università degli Studi di Milano–Bicocca

Authors

Maurizio Acciarri Università degli Studi di Milano-Bicocca

Laura Ammannati Università degli Studi di Milano

Antonio Ballarin Denti Università Cattolica del Sacro Cuore

Paola Bombarda Politecnico di Milano

Allegra Canepa Università degli Studi di Milano

Aurora Caridi Ricerca sul Sistema Energetico–RSE SpA

Claudio Casale Ricerca sul Sistema Energetico – RSE SpA

Andrea Cerroni Università degli Studi di Milano-Bicocca

Maria Chiesa Università Cattolica del Sacro Cuore

Niccolò Cusumano IEFE – Università Commerciale L. Bocconi

Daniele Felletti Università degli Studi di Milano-Bicocca

Nicola Fergnani Politecnico di Milano

Marzio Galeotti Università degli Studi di Milano

Ettore Lembo Ricerca sul Sistema Energetico – RSE SpA

Arturo Lorenzoni IEFE – Università Commerciale L. Bocconi

Ennio Macchi Politecnico di Milano

Giampaolo Manzolini Politecnico di Milano

Paolo Silva Politecnico di Milano

Federico Viganò Politecnico di Milano


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The EnergyLab Foundation was founded

in Milan in 2007 with the goal of creating

a network of actors in the energy field

including universities, the business world

and regional and local government. It is a

non-profit organization whose members

include Milan’s 5 major universities. The

foundation promotes research and

innovation in all areas of the energy

sector, operating by way of 6 laboratories

focusing on different themes:

Renewable Energies, Smart Grids,

Nuclear Security, Electric Mobility,

Energy Efficiency and Access to

Energy in Developing Countries.

The foundation’s legal status as a

participatory foundation makes it possible

for it to undertake non-profit activities,

furnishing support to its members and

present and future partners.

The Scientific Members

Università Commerciale “L. Bocconi”

Università degli Studi di Milano Bicocca

Università Cattolica del Sacro Cuore

Politecnico di Milano

Università degli Studi di Milano

RSE – Ricerca sul Sistema Energetico

To Contact Us:

The EnergyLab Foundation Piazza Trento, 13 20135 Milan (Italy) Phone +39 02 7720.5265 Fax +39 02 7720.5060 [email protected] www.energylabfoundation.org


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Executive Summary

At present climate change, environmental pollution and supply uncertainty are some of

the main problems to be solved. Search for possible solutions is difficult and needs big

investments and deep transformations in infrastructures for energy generation.

Nevertheless, a solution in the direction of a large scale conversion towards clean,

affordable and renewable energy sources (RES) must be found. In this environmental

framework, the world is progressively moving towards new technologies for energy

production: in 2008 electricity produced by renewables was about 18% with respect to

global electricity production (Fig. 1); in 2009, for the second consecutive year, United

States and Europe installed more renewable plants than conventional ones (based on

fossil fuels like carbon, oil and natural gas). In Europe about 60% of the new installed

capacity is renewable and more than 50% is located in the United States. Some scenarios

foresee that from 2012 the rest of the world will follow the same trends and new

renewable plants will overwhelm the conventional ones in capacity installed (REN21,

2010). Despite the crisis of other economic sectors, just in 2009 renewable plants capacity

extraordinarily increased (Fig. 2), in particular, PV (+53%), wind (+32%) and solar

thermal (+41%). Recent studies even foresee energy generation from renewable energy


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sources by 100% (De Lucchi and Jacobson, 2011; Jacobson and De Lucchi, 2011).

Security of supply and external dependence are some other critical issues. In 2007 China

imported oil by 47% while the United States and Europe by 94%.

Fig. 1 Electricity production from renewables in the world (year 2008): 3782TWh (Total production 20260 TWh). Source: IEA

60%

102%

27%

19% 20%

12%

4%

51%

41%

4%9%10%

21%

32%

44%

53%

0%

20%

40%

60%

80%

100%

120%

Solar P

V (grid

-tied)

Solar P

V (uti l

ity sc

ale)

Win

d pow

er

Solar h

ot wate

r/heatin

g

Ethanol p

roduct

ion

Solar t

hermal p

ower

Geotherm

al pow

er

Biodie

sel p

roduct

ion

end-2004 to 2009 Five Year Period

2009 only

Fig. 2 – Worldwide average increase of renewable energy sources capacity from 2004 to 2009 Source: REN21


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Worldwide, in 2009 Italy has gained the fourth position for new investments and the

second position after Germany in the PV grid-connected sector (Tab.1). At the end of

2009 Italy got a fifth position for installed capacity for both geothermal and PV energy

(Tab. 1 and Fig. 3) and the sixth position for wind energy (Fig. 4).

Tab.1 Renewable energy sources. The first 5 Countries (2009)

Existing capacity as of end-2009

Renewables power capacity

(including only small hydro)

China United

States

Germany Spain India

Renewables power capacity

(including all hydro)

China United

States

Canada Brazil Japan

Wind power United

States

China Germany Spain India

Biomass power United

States

Brazil Germany China Sweden

Geothermal power United

States

Philippines Indonesia Mexico Italy

Solar PV (grid-connected) Germany Spain Japan United

States

Italy

Solar hot water heat China Turkey Germany Japan Greece

TOP FIVE COUNTRIES #1 #2 #3 #4 #5

Annual amounts for 2009

New capacity investment Germany China United

States

Italy Spain

Wind power added China United

States

Spain Germany India

Solar PV added (grid-

connected)

Germany Italy Japan United

States

Czech

Republic

Solar hot water/heat added China Germany Turkey Brazil India

Ethanol production United

States

Brazil China Canada France

Biodiesel production France/Germany United

States

Brazil Argentina


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Global Total = 21 GWSpain

16%

Italy

5%

South Korea

2%

Other EU

7%

United States

6%

Other

4%

Germany

47%

Japan

13%

Fig. 3. PV installed capacity in 2009– The first Countries

Source: REN21

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13,8 1,9

2,5

1,3

1,1 1,1 1,1 0,6 0,3

0

5

10

15

20

25

30

35

40

Unite

d Sta

tes

China

Germ

any

SpainIn

diaIta

ly

France

Unite

d Kin

gdom

Portugal

Denmark

Gig

awat

ts

Existing in 2009 Added in 2009

Fig. 4 - Wind installed capacity in 2009- The first 6 Countries Source: REN21

An incentive policy is central to launch new technologies. So far this system has been

adopted in more than 100 countries (Fig.5) RES represent an economic area with

enormous potentials, able to attract huge public and private capitals for financing energy

plants of different capacity, from roof PV panels till concentration solar plants.


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Fig. 5 Incentives in 2009 – EU27 Source: ECOFYS, 2010

For the credit area RES are a unique opportunity, taking advantages and contributing to

the growth and showing at the same time a high environmental sensibility. Banks and

financial Institutions should therefore develop internal high qualified skills for projects

evaluation. Actually, uncertainty in the stability of public incentives systems and the

intrinsic risk due to technological innovation assigns a higher risk to renewable

investments than to other investment fields. Furthermore, RES are a challenging research

area, from technological, economic, financial, environmental and sociological points of

view.

On the 12th of December 2008 the Directive Climate and Energy 20-20-20 had been

approved by the European Council. The agreement stated, for EU Countries, the reduction

of greenhouse gases emission by 20% and an increase in energy efficiency and renewable

energy production by 20% by 2020. The Directive 2009/28/CE had stated for Italy the

compulsory target of 17% of final energy consumptions by RES and that consumptions

due to transports would be covered by renewable energy sources by 10%.

Such a target will be reached through the reduction of final energy consumptions and the

increase in energy production from renewable energy sources in the three different areas

dealt with by the Directive: electricity production, heat production and the transport

sector. At the end of July 2010 Italy, as stated by the Directive 2009/28, had sent the

National Action Plan on renewables (National Action Plan) to the European Commission: it

showed the national objectives and trends till 2020 on the one hand and the measures

and actions to be enhanced or adopted in order to fulfill the objectives on the other hand.

The EU 27 situation in 2005 with regard to the 2020 target is represented in Fig. 6.


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0% 10% 20% 30% 40% 50%

Total (EU-27)Malta

LuxembourgHungary

CyprusCzech

BelgiumSlovak

NetherlandsUK

PolandIreland

BulgariaItaly

GreeceGermany

SpainLithuania

FranceRomaniaSloveniaEstonia

DenmarkPortugalAustriaFinland

LatviaSweden

Baseline (actual) 2005 LevelTarget

Target by 2020

Fig. 6 – European targets–Quota of final energy consumptions (2005 compared to 2020) Source:REN21

The main targets of the national energy strategy concern supply uncertainty, the fostering

of innovative technological chains, environmental safety. The opportunities coming from

the fulfilment of such targets, in particular concerning energy renewable sources

development, will be considered by national industry using the resources and

competences already acquired in other manufacturing sectors. At a regional level big

efforts should be done spent in order to respect the European targets assigned to Italy.

The current mechanism under development at regional level is called burden sharing.

There is a shift from the traditional sectors planning to an integrated approach where the

Plan for a Sustainable Lombardy will be transversal and include all the regional

governance sectors.

While the burden sharing is still under definition, the Lombardy Region has adopted the

national targets:

• 20% reduction of greenhouse gases emission;

• Energy saving by 20% with respect to actual consumption ;

• Enhancement (final target:17%) of renewable energy contribution to final energy

consumption ;

• consumption in the transport sector covered by biofuels by 10%.


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The Lombardy Region, with an electricity consumption of 24 Mtep in 2007, covers 20% of

national energy consumption.

The GSE Report (2009) underlines a renewable energy production by 20,4% for the

Lombardy Region with respect to national level , mostly associated to hydroelectric

energy.

Splitting the overall data with respect to each source, it emerges that, with regard to the

complete absence of wind plants installed, the Lombardy Region shows significative

evidence at national level for all the other sources: hydro (25%), solar (10,5%),

biodegradable wastes (56,9%), biogas (17,1%), biomasses and bioliquids (7,4%).

It becomes then essential to plan specific policies in order to define the short to medium

period technologies based on renewable energy sources with a major diffusion potential in

the Lombardy territory, along with non secondary evaluations concerning the potential

impacts on the local industrial chains involved and on the whole system in general.

In this framework, Energy Lab Foundation adopted a “low carbon” energy policy for the

Lombardy Region.

In particular, thanks to its Renewable Energies Laboratory, Energy Lab Foundation

developed a Report on the future-oriented diffusion of Renewable Energies in Lombardy

by 2020, analysing a plurality of aspects, in order to define the real development

opportunities for the Lombardy Region. This Executive Summary synthetically describes

the topics developed in the Report.

All the studied technologies (hydro, solar, geothermal, biomasses, biogas) could find a real

application in the Lombardy Region and/or foster the development of Lombardy industries.

Therefore wind technology has been included too.

A multidisciplinary analysis deals with technological, economical, legal and environmental

aspects and even considers local and public acceptance, the impact on the electric system,

the industrial chain and the state of the art of research in the Lombardy Region.

The Report objectives are manifold. The Report addresses different actors in the RES

development process: private investors and finance (EAC, Incentives), the regulator

(EROEI indicator for sustainability, CO2 abatement costs by 2020), the local administrator

(environmental section, acceptance), the producer (technologies and costs). The legal

section is transversal since it is a part of general interest.


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RES development constraints, like acceptance and regulation risks, are also underlined in

the Report.

The different sections developed in the Report are the following:

The technological section (Chapter 1) , developed by the Politecnico di Milano (POLIMI),

describes, for each specific technology, its costs, its potential development, the

technological evolution and prospects for end users. A table summarises the results at the

end of the Chapter.

In the legal section (Chapter 2), developed by the Università di Milano (UNIMI), the

regulative framework (till May 2011) concerning the authorisation processes for the

installation and operation of energy plants is reported, underlining the importance of fast

and simplified procedures for plant realisation.

A low carbon Region perspective must take into consideration environmental aspects,

more and more relevant and with economical impacts, given the European targets.

The environmental section (Chapter 3), developed by the Università Cattolica del Sacro

Cuore (UNICATT) and UNIMI, analyses some relevant aspects concerning the CO2

abatement costs for the different technologies and their environmental impacts. The

results show high costs for some technologies but a good potential for a sustainable

development due to others. The analysis takes into account different economical

scenarios.

The economical section (Chapter 4), developed by the Università Bocconi di Milano

(UNIBOCCONI), analyses the energy production costs for each technology, considering all

the different expense items and operational modes of renewable energy production plants.

The analysis takes into account different economical scenarios. Another economical aspect

deals with the analysis of incentives system.

The section concerning industrial and research state of the art (Chapter 5), evaluates the

state of the art of the renewable energies industrial chain (developed by UNIBOCCONI)

and the local state of the art of research in the RES field, developed by Energy Lab

Foundation and elaborated by the Università di Milano Bicocca (UNIMIB).

Renewable energies implementation is not only a means to reach the European targets

but mainly an opportunity for local development. Social acceptance is studied in the

Sociological Section (Chapter 6), developed by UNIMIB and RSE S.p.A. Different critical


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aspects are underlined, from the approval level till the project realisation level on a local

scale.

Furthermore, RES integration in the electrical system creates other problems to the grid

due to the intermittency of renewable energy production and the obstacles generated by

connection delays.

The section Non programmable Renewable Energy impact on the electrical system

(Chapter 7) , developed by RSE S.p.A., focuses on non programmable renewable energy

plants underlining important differences even among plants characterised by variable and

intermittent sources.

Finally, conversion tables and synthesis tables for each technology are reported.

The technologies

The most interesting technologies that make use of renewable energy sources, upon

which there are a lot of expectations in a framework of sustainable development at a

national and international level are described. For each energy technology both

theoretical and operational principles are reported, along with different plant examples

and their potential applications.

In particular, the following renewable energy sources are discussed:

• biomasses (for electricity and thermal production, even in the cogenerative mode, and

for biofuels production);

• geothermal energy (from electricity production till district heating and heat pumps);

• hydroelectric energy (mainly focusing on the real small scale applications in Europe);

• solar energy (both electricity from PV or concentration systems and thermal energy

production)

• eolic energy (on shore, off shore and minieolic)

The section ends with a synthesis table with economical data (Table 2) used as data

inputs for other evaluations developed in the following chapters.


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Tab. 2 - Economical data

Notes:

• O&M costs by POLIMI refer to the energy produced (€/MWh). Operational hours

equivalent have been derived at a national level from TERNA source, whenever

available, on the basis of installed capacity and energy produced data. Concerning

energy produced, the reference year is 2009 (most recent data available) while an

average value between 2008 and 2009 has been used for installed capacity (referring

to 2009 installed capacity, some plants that have just worked for a few days have been

included thus influencing the calculated equivalent hours).

• Concerning off shore wind plants, since national data are not available, the

international reference (belonging to North European Countries) has been adopted;

• Concerning PV, the calculated hours equivalent represent an average national value.

Considering plants located in Southern Italy, a real average value could be 1500 while

in Northern Italy 1000.

• With reference to concentrating solar plants (CSP), a 7 hour equivalent storage has

been considered and a multiple solar value (ratio between the thermal power


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generated by the solar field and the one sent to the power block in order to be

converted into electricity) of 2.

• Concerning geothermal and solar plants, being the applications manifold, more detailed

evaluations for the different energy technologies are reported in the specific

paragraphs.

The legal aspects

During the last years, the European institutions have defined a transition path towards a

high energy efficiency economy characterised by low CO2 emissions. According to these

goals the diversification of the energy sources and, especially, the increase of renewable

sources in the energy production will be playing a relevant role.

Specifically, with the Directive 2009/28/CE the CO2 emission cut as well as the increase in

energy efficiency targets (both by 20%) have become compulsory. Italy has adopted this

Directive with the Legislative Decree 2011/28 that redefines different aspects concerning

the authorisation procedure aimed at building and operating power plants.

So far the location and construction of power plants for renewable energy production has

represented a controversial issue. As a matter of fact, on the base of the allocation of

competences stemming from the Italian Constitutional Reform (2001), the Regions are

entitled with administrative and legislative competences that make it possible to

differentiate their policies and, sometimes, to influence the development of renewable

energy production.

It would be mentioned, as an example, the Moratorium bills concerning the authorisation

procedures approved by Regions such as Puglia, Sardegna and Molise and successively

ruled unconstitutional by the Constitutional Court.

Therefore specific guidelines have been enacted (10th September 2010) aimed at defining

a common procedure (the “single procedure”) and the minimal conditions required for the

release of the single permission, including the assessment of the harmonization conditions

of the new plants with the surrounding landscape.

The most recent Legislative Decree deals with these aspects. It still foresees the “single

authorisation procedure” for the plant construction (in addition to the “enabling simplified

procedure” and the notice concerning “free building activities”).


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However it provides modifications concerning both the procedure timing and the optional

request of an Environmental Risk Assessment (ERA): 180 days including the procedure

which leaves out the ERA and 90 days after the time due for the ERA, when requested.

Furthermore, the regions (and under specific conditions the provinces when delegated)

are entitled to provide the

authorisation concerning the

connection between power

plants and the national grid by

a different sort of single

procedure. This procedure

must be coordinated, i.e.

carried out at the same time,

with the related power plant

authorisation procedure.

Environmental impact

Energy production from renewable sources addresses to a sustainable development

framework; however, a renewable energy source does not imply the absence of

environmental impacts.

This Report compares different energy technologies describing, from a qualitative point of

view, their potential environmental impact. Moreover, interesting quantitative indicators

are considered, i.e. the avoided CO2 emissions during plant operation and their energy

efficiency along their estimated lifetime.

Hydroelectric plants that require human intervention, such as building dams, artificial

banks, but also the regulation and reduction of flow, might alter energy exchanges

among the different watercourse sections. That is the reason why the concept of minimum

vital flow for watercourses has been introduced. Other possible impacts are linked to the

hydroelectric plant structure, due to the realisation and operation of its different

components. As other civil structures, different land and landscape use as well as tourism

and noise effects have to be considered.


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In general, environmental impacts associated to large hydroelectric plants can be

proportionally referred to small plants as well. PV plants do not generate chemical or

acoustic pollution. However, during production processes the environmental impact is

similar to the one belonging to a chemical plant since in the production process toxic or

explosive substances are used and need the presence of security systems and specific

instruments in order to protect the health of both workers and the production site.

Furthermore, in building and installing the system components, the high energy quantity

needed comes from fossil fuels thus determining a negative environmental impact before

entering into operation.

Land occupation is another important critical aspect for photovoltaic energy systems.

Even for thermal solar panels, that convert solar energy into thermal energy, the main

direct environmental impacts derive from the system’s components production and

transport while the main indirect impacts are linked to raw materials and electricity use.

As solar panels, this technology has visual impact problems that can be reduced choosing

forced circulation plants located inside residential houses.

On the contrary, CSP do not lead to relevant environmental problems since the toxic

thermal fluids used in the past have been substituted by the molten salts technology, a

mixture of sodium and potassium nitrates largely used in agriculture as fertilisers: they are

easily disposed of, non-toxic and non-flammable and they solidify very fast in case of

accidental leaks. Nonetheless, the high soil occupation due to these plants, as well as

orographic, geological and landscape constraints limit their technological potential.

Among all the technologies considered, undoubtedly wind energy is characterised by the

least environmental impacts. Actually, wind plant operation does not imply toxic

substances use nor air and water environmental pollution generation.

Public opposition is the first obstacle for wind plant diffusion if compared to their visual

and acoustic impacts, mainly when they are installed in cultural heritage or protected

areas.

As the other renewable energy sources, a geothermal plant generates less CO2

atmospheric emissions with respect to a traditional power plant. Nonetheless, a negative

environmental impact is due to fluid uptake from the subsoil such as CO2, H2S, CH4 and

NH3, along with chemical elements uptake (mainly heavy metals) by geothermal sources.


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Concerning geothermal probes associated to heat pumps, the environmental impact

derives from the deep or superficial soil drilling. Furthermore, some researches have

demonstrated that when heat demand is not accompanied by a soil “regenerative” action,

the geothermal field is predestined to progressively reduce its potential.

Among the energy technologies that could interest the Lombardy Region, a major role

could be played by biomasses: in this Report we have especially considered agricultural

and forestry residues, along with energy crops with a low environmental impact belonging

to Short Rotation Forestry (SRF) cultivations.

In order to restrain the environmental impacts due to atmospheric emissions of toxic

compounds, biomass combustion must be oriented to small and high efficient plants that

use wooden material (preferably pellets) or to big centralised cogenerative plants for a

little community of end users (Tab.3).

Tab. 3: Comparison between atmospheric emissions avoided or generated by biomass combustion with respect to the use of fossil fuels (expressed in kg·t-1 of dry biomass)

Even biogas plant diffusion is limited by factors that negatively impact on the

environment. The anaerobic digestion market is actually strongly influenced by limitations

in spreading soils with nitrogen-based compounds.

The last energy technology considered is represented by second generation biofuels,

among which bioethanol and biodiesel in particular, since agricultural and forestry residues

used for biofuels production leads to high greenhouse gases emission reduction with

respect to the use of fossil fuels along an LCA analysis; nonetheless, atmospheric

particulate and polycyclic aromatic hydrocarbons (PAHs) emissions reduction strongly

depend on both biodiesel percentage and engine type.

Technology Fossil CO2

PM10 CH4 N2O COVNM NH3

SO2 NOX

Open fireplace - 71,1 9,03 - 0,51 2,68 100 0,81 0,35 2,68 Traditional stove - 650 4,03 - 2,12 2 20 0,81 - 0,03 2 Low emissions

wood stove - 869 3,03 - 2,72 1,44 9,89 0,41 - 0,17

1,44

Pellet stove (BAT) - 998 0,53 - 3,09 2,79 0,91 0,11 0,08 2,79

CHP plant 8 MWe

- 962 0,0002 - 2,40 - 1,3 - 0,36 - 0,006 - 1,35 - 1,3

CHP plant 8 MWe - SRF

- 814 0,096 - 2,207 0,0528 - 0,20 0,02 0,05 0,54

CHP plant 100 MWe

- 896 0,003 - 1,69 - 0,80 - 0,15 0,34 - 2,41 - 0,80


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CO2 avoided emissions can be used to select the best technologies for Lombardy from

both environmental and energy production points of view.

Besides the environmental analysis mainly based on avoided emissions the EROEI (Energy

Return On Energy Investment) indicator has been considered in order to evaluate the

“energy use efficiency” due to an investment in an energy production plant based on RES

along its lifetime. The EROEI indicator is calculated as the ratio of the net energy returned

by the plant during operation on the overall energy consumption during all the plant

lifetime. The break even point for a sustainable energy technology is then given by

EROEI=1. Different papers at international level show a range of EROEI values calculated

for different energy technologies, depending on different methodological approaches and

input datasets (Fig. 7). The competition between RES and traditional technologies based

on fossil fuels is evident, considering that high “energy efficiency ratios” correspond to

plants with higher EROEI values.

Fig. 7: Range of EROEI values associated to different energy technologies


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Renewable energy contribution to the regional targets

Since a “burden sharing” concerning the amount of renewable energy to be produced by

2020 among the Italian Regions has not been defined yet, the Lombardy Region has fixed

the target of 17% of its final energy consumption using RES (including a minimum

contribution of 10% of biofuels for the transport sector), then imposing to the Region the

same national target.

The fulfilment of the defined target will then be possible with an increase of the actual

renewable energy plants capacity and/or with a reduction of the regional energy final

consumptions.

Actually, the increase of the energy efficiency of actual and future energy production

plants will imply a reduction of final energy consumptions: therefore, the regional target

must even take into account this last factor in the quantification of the energy produced

by renewable energy sources in the Lombardy Region by 2020.

From the results contained in the Report it emerged that, with respect to the regional

target concerning the abatement of about 8000 ktCO2 beyond 2020, the renewable

sources contribution will cover a minimum percentage of 50%, in the hypothesis that 10%

is represented by the use of biofuels in the transport sector (see Fig.8 for the energy

produced by each technology).

Fig. 8: Scenario concerning renewable energy production in the Lombardy Region in 2020


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It’s interesting to calculate the CO2 avoided emissions (t/y) per MW installed, resulting

from the average equivalent hours of each plant considered in the study (Fig. 9). As can

be seen fro Fig. 9, mini and small hydroelectric plants, along with plants fuelled with

biomasses and biogas plants, play a major role in terms of CO2 abatement.

Fig. 9: CO2 avoided emissions by a 1 MW plant

CO2 abatement costs for the different energy technologies

From the CO2 abatement cost for each energy technology, the increase in costs depending

on the market interest rates considered (4%, 6% and 10%) appears evident (Fig. 10, 11

and 12). First of all, it’s interesting to note that the solar thermal technology is definitely

competitive since it is characterised by very low CO2 abatement costs even showing

negative values associated to lower WACC values (4% and 6%).


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On the contrary, technologies, such as PV, that have always been strongly fostered with

economical incentives in the Lombardy Region, show very high CO2 abatement costs.

Small wind energy technology, despite the absence of data concerning its potential by

2020 in the Lombardy Region, appears very penalised, figuring in the very last position in

a scale of technologies characterised by increasing CO2 abatement cost values.

Neglecting technologies with a null potential in the Lombardy Region (i.e. onshore and

offshore wind plants and concentrating solar plants), from the analysis of CO2 abatement

costs it emerges that the only production of electricity due to the combustion of

agricultural and forestry residues is not convenient. On the contrary, while solar thermal

plants, small and mini hydroelectric plants and low temperature geothermal plants play an

important role undoubtedly presenting an interesting development potential by 2020 in

the Lombardy Region.

Fig. 10: Minimum and maximum CO2 abatement costs for different RE technologies (Interest rate = 4%)


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Economical evaluation and incentives

With reference to the economical evaluation, for each technology the Equivalent Annual

Cost (EAC or levelised cost), i.e. the net overall cost value for the energy producer for an

investment along the real lifetime of a specific energy production plant, has been

calculated (€/MWh).

An average lifetime of 15 years has been considered, apart from considering a possible

residual time for specific cases like hydroelectric plants. As costs data the same reported

in the technological session by POLIMI have been used (Tab.2).

Three economical scenarios associated to different interest rates values (4%, 6%, 10%),

each one split in low cost and high cost sub scenarios, have been considered.

Results are summarised in Fig. 13: the minimum values of the bars represent the EAC

calculated for the low cost sub scenario at 4%, while the maximum values represent the

EAC calculated at 10% for the high cost sub scenario.

0

100

200

300

400

500

600

Hydro

(5 M

W)

Win

d (200 k

W)

Win

d (5 M

W)

Win

d Off

shore (2

0MW

)

Sola

r PV

(3 k

W)

Sola

r PV

(1000 k

W)

Geoth

ermal B

inary

(20 M

W)

Geoth

ermal F

las h (2

0 MW

)

Solid

Bio

mas s (1

7 MW

)

L iquid

Bio

mas s (1

7 MW

)

Bio

gas (500 k

W)

€/M

Wh

Fig. 13: EAC ranges (€/MWh) calculated for different technologies and scenarios

In literature incentives for energy produced by RES is calculated depending on the extra

production cost with respect to conventional fossil fuels. Nevertheless, other barriers

(economical-financial, political, cultural and environmental) prevent RES diffusion, thereby


24

increasing the risk profile. Therefore, the incentives, increasing the project revenue,

decrease the risk and give rise to a market signal for individuals and Institutions. There

are different kinds of incentives: in the Report only incentives linked to electric energy

production are considered. Actually, RES for thermal energy production have been scarcely

considered by the legislator although they present the biggest increase margins and

attention has been limited to taxation mechanisms (as the costs detraction by 55% for

some applications in the domestic sector).

At present, the incentive system is as follows:

• Green certificates;

• Feed in tariff for RES electricity except PV (“ Tariffa Omnicomprensiva”);

• Feed in tariff for PV systems (“Conto Energia”);

• CIP6 subsidy.

These financial mechanisms are funded through the A3 component of the national

electrical bill (representing 68% of the system charges) by the end user.

The high increase of capacity installed, with particular reference to PV installations that

have access to the “Conto Energia” incentive system, costed about 3,4 billion euros in

2010; forecasts for 2011, according to recent announcements of the President of the

Authority for Electricity and Gas (AEEG), indicate a cost of 5 billion euros.

Type of subsidy GWh

Overall subsidy (MLN€)

Unitary subsidy

(€/MWh)

% Total subsidy

CIP 6 6300 780 123,8 23,0%

Green certificates 17800 1580 88,8 46,5%

Tariffa omnicomprensiva 1220 212 173,8 6,2%

Conto Energia 1967 826 419,9 24,3%

27287 3398 806,3 100,0% Tab. 4: Overall and unitary subsidies with respect to energy produced in 2009 Source: IEFE elaboration from AEEG data

The Lombardy Region is directly involved in RES promotion through the expense of 201,6

M€ that would generate 493,7 M€ of investments till 2013. The contributions are

essentially in capital account and are activated through call for proposals.


25

Some of these economical burdens are going to increase with the increase of plant

capacity. Therefore, AEEG has invited the Government to “shift a significant part of the

burdens due to the RES incentive system from the energy bill to general taxation, in order

to guarantee progressive and proportional criteria for public costs funding”, apart from

revisiting the incentives criteria (mainly Green Certificates), considered too generous for a

decline of generation costs. In our opinion this is a dangerous choice: if, at present,

incentives are accepted since they are not politically influenced and are directly bought by

the consumer, the shift to general taxation would create uncertainties in the attended

cash flow, linked to funds availability of the financial administration. In order to calculate

the RES net impact on public accounts we can consider the revenues (in terms of VAT for

example) coming from new investments , along with the occupational impact.

The adoption of the Directive 2009/28/EC foresees a deep revision of the actual system

starting from January 2013. A lot of specific issues will be defined through Executive

Decrees to be emitted during the next months. It must be underlined that every

instrument presents its pros and cons that must be considered with respect to both the

fixed targets and the Reference Institutional context. Therefore, the research of the

effectiveness and efficiency of the incentives system must proceed with a credible and

realistic promotional diffusion policy.

State of the art of research and industries operating in the RES sector

At present, databases that exhaustively contain information on industries operating in the

renewable energy chain at a regional level are not available, mainly for cross-membership

of industries with existing merceological categories .

It is then extremely difficult to extract and map the value chain of RES area where product

and service are so strictly related.

Furthermore, this area is quite young and constantly changing and the frequent

diversification of industries belonging to similar areas are not easily captured by statistical

sources.

Mapped industries are 240, representing 0,05% of the overall regional industries, that

were 499.005 in 2008 (Istituto Tagliacarne, 2010). Data are referred to 2010.

Turnover data are general; at this level it is not possible to define the turnover due to

activities just related to renewables.


26

The data available for number of employees and for the turnover data, are given for the

whole company so is not possible to define the exact number of employees working on

activities in RES field for industries with more product lines. The same can be stated for

industries located in the Lombardy Region but operating at a national (and/or

international) level.

In order to reduce the possible imbalance generated by the mapping procedure, the

biggest industries with a limited local territorial occupation and with scarce data

concerning their business dimension in RES were excluded. This choice had excluded well

known energy producers on a national scale (i.e. General Electric, Siemens, ABB).

From the analysis (Tab. 5) it emerged that the total gross turnover of industries with

available data, about 91% of the sample, amounts to 5,6 billion euros, representing

1,76% of the total added value generated in Lombardy in 2008, with single industrial

contributions well beyond the regional average.

If we consider the net profit as of 2009, 70% of industries produced revenues.

Considering the types of activities, the most relevant for the income are planning and

installation (3,9 billion euros) followed by manufacturing (2,4 billion euros) and

professional (1,8 billion euros) activities. With reference to energy sources, solar energy is

the leader producing the largest revenues (3,4 billion euros).

Activities Biogas Biomasses Wind Geothermal Hydro Multi sources

Solar Total

Financial Insurance

25

19130 19155

Manufacturing 49770 266966 59500 197926 536129 1268636 2378927

Professional 60436 763 2885 47706 76888 188678

Wholesale Retail

44925

18

262418 1012060 1319421

Planning Installation

12030 731

2050

135661 247921 398394

Production 15752 264189 8986 43330 931699 22888 1286845

Total 77552 637247 9774 61568 244141 1913614 2647524 5591420

Tab. 5: Turnover (expressed in k€) per source and activity

In the different EU Countries, especially in Germany, investments in research have

determined industrial development while Italian industries operating in this field have not


27

reached a similar expansion yet mainly because of the incentives system strongly built on

capacity installed than on research.

Nevertheless, at a national level public investments in research in the energy field

increased more than in other traditionally strong sectors, like manufacturing, building and

service areas. Energy efficiency and saving are the mainly fostered sectors where there is

a major feedback in terms of patents. In the IRES Report (2010) Italy is ninth in terms of

patent applications in the energy sector mainly due to research on cogeneration and fuel

cells.

The development of renewable energy sources, if considered along all the value chain,

fosters different occupational opportunities at different levels in terms of ability,

competence, responsability and remuneration.

Lombardy Region is the one that fosters research most. Unfortunately, regional

disaggregated data concerning the energy sector or, more specifically, renewable energy

sources are not available.

Therefore, an analysis focused on the identification of the main actors operating at a

regional level in the energy sector has been carried out by Energy Lab Foundation in 2008

thanks to the project “MApping of Competences (MAC1)”, funded by Lombardy Region.

Results of this survey are available on the following website:

http://mappaturacompetenze.org where a quite detailed picture of the state of the art of

research in the five Universities of Milan is represented.

In 2010 the mapping procedure was opened to other Universities or Research Centres

operating in the Lombardy Region (MAC2). Since the beginning of 2011 results are

available and this work, still developed by Energy Lab Foundation will constitute a unique

and useful instrument for the quantification of the real consistency of research on RES in

Lombardy. Furthermore, it could be a big opportunity for industries interested in finding

competences in the energy sector useful for new products development. The most

interesting data on research consistency in the Lombardy Region can be summed up in

the following figures and tables.

Considering the 480 research areas linked to the energy sector 1379 human resources are

occupied (professors, researchers, technicians and temporary resources) among 75

University Departments and 19 Research Centres localised on the regional territory

(Tab.6). Along with this permanent personnel staff, there are a high number of people


28

belonging to non permanent personnel staff (fellow researchers and staff with temporary

contracts).

Researchers 507 Professors 807 Technicians 23 Other 42 Total 1379

Tab. 6 Human resources working in the energy sector in Lombardy

A look at the research institutions involved, divided with respect to their subject area,

underlines the strong presence of scientific and technological subjects (Tab.7).

Economical 39 Financial 15 Juridical 5 Medical – Sanitary 3 Scientific - technological 66 Sociologic 15 Humanistic 6

Tab. 7 Research institutions involved with respect to their reference area

The Energy Lab Foundation analysis emphasizes that, at a regional level, research in the

energy sector is strongly directed towards RES and other interrelated technologies.

If we analyse the single specific research lines under macro areas of interest, among 1031

research lines registered, 230 (22,3%) concern “renewable energy sources and

technologies” (Tab.8).

It must be underlined that each research area could be described by a maximum number

of 3 keywords: therefore, the overall number of research lines reported under this issue

could be higher than the actual number of active research lines (480).

If we insert the more generic word “renewables” in the research by keywords the number

of research lines becomes 293 instead of 110 resulting from the insertion of “non

renewables”.


29

Obviously, this result is even due to the fact that manifold aspects are associated to the

term “renewables” , linked to 3 main streams: technologies, sources and vectors, market

and environment.

Research lines for each macro area Total 1031

Environment, health and climate change 85 8,2% Building activities and other uses 76 7,4% Energy: social and cultural aspects 36 3,5% Non renewable energy sources and technologies 109 10,6% Renewable energy sources and technologies 230 22,3% Markets and Finance 22 2,1% Policies and planning 80 7,8% Regulation 49 4,8% Energy efficiency and saving 169 16,4% Systems, grids and infrastructures 125 12,1% Transports and mobility 50 4,8% Note: Each research line could belong to a maximum of 3 areas of interest Tab. 8 Research lines for each macro area of interest resulting from MAC1 and MAC2 databases in the Universities and Research Centres located in the Lombardy Region.

The mapping procedure evidences important local academic competences, from

managerial aspects till the evaluation of impacts of renewables on the market and new

investment opportunities.

The multidisciplinary competences offered by the Universities located in the Lombardy

Region represent a great opportunity for local small to medium enterprises (SMEs) that

want to transfer new technologies from the labs to new production and/or investment

lines in a continuously expanding market.

Universities and Research Centres located on the regional territory offer all the

competences for a highly qualified formation of new professional figures requested by the

“green economy”.

Social impact

Despite the fact that an economic development based on a low emissions scenario must

take into consideration renewable energy sources, social consensus is another essential

factor for its success. The importance of public acceptance and, even before, public

perception of renewable energy sources are well known. Nevertheless, this aspect has

never been considered all over the world since the eighties when the first applications


30

began. A public acceptance extremely in favour of renewable energy sources had always

wrongly lead to the opinion that consensus was not a problem. The problem started

passing from a general to a local point of view.

Some fundamental aspects concerning distributional equity (“How costs and benefits are

subdivided at local level?”), procedural equity (“How much local groups and citizens are

involved in the decisional process?”), trust in local institutions and project financers are

linked to local consensus. If we also consider market acceptance (another important

aspect of public acceptance), small producers, apart from covering their needs, can

become suppliers of energy services to third parties, at least in under use or over

production periods.

The producer, a hybrid and still under developed figure, could have a major role in

communicational events, both for economic returns and for their active citizenship

function. In this case, we would even see the development of the prosumer, i.e. a hybrid

figure between the producer and the foreseen consumer.

A comparison between Italy and the rest of Europe (Eurobarometer, 2006, Fig.14 and 15)

is reported. Apart from oil consumption, the use of fossil fuels results similar. In Italy a

reduced acceptance of renewable energy sources can be seen, with particular reference to

biomasses, showing a difference of 5-6% from average EU data. Furthermore, the

percentage of no answers is higher in Italy than in the rest of Europe. A lack of

information and communication is therefore evident, mainly because technological

characteristics are not always exhaustively explained as well as their benefits in terms of

environmental and occupational impacts.

An Italian survey conducted in Padua confirms the need for information on renewable

energy sources at all levels.


31

Fig. 14- Consensus (EU 25 average data) on different energy sources_DK = Don’t Know Source: Eurobarometer, 2006

Fig. 15- Consensus Italy (Average national data) on different energy sources_DK = Don’t Know Source: Eurobarometer, 2006

Impact of non programmable renewable energy sources on the electric system

The integration of RES in the electric system determines specific problems mainly when

we are dealing with intermittent and non programmable sources.


32

These problems could all be ascribed to the often decentralised localisation of plants, on

the one hand, that have to be installed where the source is available, and, on the other

hand, to the intermittency of electric power generated.

Among non programmable RES we can cite, in particular, flowing water hydroelectric

plants (without accumulation systems or storage basins) , wind plants and concentrating

and PV solar plants.

Depending on plant capacity and, therefore, the voltage of the connecting grid, problems

could arise in the national transmission system or in the local distribution grids.

In the transmission grids, the diffusion of RES non programmable plants could lead to

additional costs in order to implement the grid with new lines and stations, thus avoiding

the formation of bottle necks that could need, under certain conditions, forced limitations

of RES production.

Fig. 16: Trend of additional costs [€/MWh] for grid reinforcement as a function of wind power penetration into the electrical system (percentage of total energy production) under three cost assumptions representing different European grids (Source: GreenNet-Europe, series of three projects supported by the Framework and IEE Programmes of the European Commission from 2003 to 2009t)

Furthermore, source variability and limited predictability could lead to an increase of

system costs to assure a balance of power generated and power absorbed by the end

users in order to guarantee the continuity of frequency and voltage inside the ranges that

characterise the electric service quality.


33

Fig. 17: Extra balancing cost depending on Wind penetration (Comparison of international studies, except Germany) Source: GreenNet-Europe, series of three projects supported by the Framework and IEE Programmes of the European Commission from 2003 to 2009t

In energy distribution grids particular problems arise linked to the fact that the installation

of distributed generation plants transform grids from passive to active thus needing new

development and management systems till the realisation of the so called “smart grids”.

With reference to the integration aspects , the Report focused on non programmable RES

plants, even showing great differences from one source to another due to their variability

and intermittency.

For example, it’s evident that watercourse variations for a flowing water hydroelectric

plant are very slow and follow the seasons in a quite foreseeable way even if they show

yearly differences.

Difficulties in energy balancing and generation dispatching into the system are then

limited. On the opposite side we have wind plants whose source, wind, presents very

strong variability and intermittency, even if there are some seasonal foreseeable trends

(Fig.16 and 17).

Furthermore, power generated by a wind plant is proportional to the cube of the wind

velocity and because of this sensible fluctuations of wind velocity are transformed in

strong variations of electric power delivered to the grid.

An intermediate position is occupied by solar plants, whose source is very variable, but in

a quite predictable way depending on seasons, days and hours.


34

A non predictable component for these plants can be ascribed to meteorological events

(such as cloud formation) that influence solar plant production for just a few hours or

whole days.

The influence of this last component on

energy production is generally less

important for wind plants.

Big concentrating solar plants are often

characterised by a natural gas generator

that works as an auxiliary power unit or

a storage system of thermal energy that

can be used during night time or periods

with no solar insolation.

Concerning PV plants, the low capacity

that characterises most of the plants,

along with their disperse locations and

the presence of a storage system (batteries), should reduce consequences due to

production fluctuations.

Summing up all the specific characteristics of the different energy plants, in the Report the

aspects of integration of non programmable RES to the electric system refer to the

extreme case study, represented by wind plants, that should embody, if not all, most of

the aspects related to other non programmable energy sources.

References

• Accenture and Barclays (2011), Carbon Capital – Financing the low carbon economy

• Delucchi M.A., Jacobson M. Z. (2011), Providing all global energy with wind, water and

solar power, Part II: Reliability, system and transmission costs, and policies, Energy

Policy 39, 1170-1190

• ECOFYS (2010), www.ecofys.com

• Eurobarometer (2006), Public Opinion in the European Union, European Commission


35

• GSE (2010), Le attività del Gestore dei servizi energetici, Rapporto 2009

• IRES (2010), Annual Report

• Istituto Tagliacarne (2010), Unioncamere, Atlante della Competitività delle Province e

delle Regioni

• Jacobson M. Z., Delucchi M.A. (2011), Providing all global energy with wind, water and

solar power, Part I: Technologies, energy resources, quantities and areas of

infrastructure, and materials, Energy Policy 39, 1154-1169

• Ossenbrink H., Renewable Energy: Photovoltaic, Solar, Electricity Biofuels, JRC

European Commission, http://ie.jrc.ec.europa.eu/

• REN21 2010, Renewables 2010 Global Status Report, Paris, REN21 Secretariat, United

Nations Environment Programme


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Documents

Renewable Energy Report - Executive Summary 2011