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Geothermal least incentivised source of renewable energy in Italy

Sasso 2 geothermal plant by Enel Green Power, Tuscany, Italy (source: Volcanex)
Alexander Richter 10 May 2020

Geothermal remains the least incentivised source of renewable energy in Italy and still no clarity over any incentives going forward in new FER 2 decree.

In an article in Italian GreenReport, highlights how the geothermal energy sector remains the least incentivized renewable energy sector having received EUR 103 million in 2019 or only around 0.9% of total incentives provided for the renewable energy sector. At the same time the revision of FER 1 with FER 2 remains unclear as it relates to geothermal energy. FER is the Decree regulating the methods of incentivising the production of energy from plants powered by renewable sources, including solar photovoltaics by Italy’s Ministry of Economic Development. The New Decree released in August 2019 kept geothermal energy completely out of the incentive schemes.

The Energy Services Manager (GSE) [Italy] presented its 2019 Activity Report , showing that in the last year the value of the resources managed by the GSE for the promotion of sustainability has reached EUR 14.8 billion, of which EUR 11.4 billion for the incentive of electricity produced from renewable sources, EUR 1.3 billion for energy efficiency and thermal renewables, EUR 800 million relating to biofuels and EUR 1.3 billion attributable to the proceeds from CO2 auctions in the context of of the European ETS (Emission Trading Scheme) mechanism.

Costs that it is more correct to frame as investments, literally: in 2019 the activities of the GSE contributed to activate about EUR 2.6 billion of new investments. Above all, renewable energy and the energy savings promoted in the last year are estimated to have avoided the emission of 43 million tons of CO2 into the atmosphere and the consumption of 111 million barrels of oil (with the related import costs), while at least 50,000 annual work units (full-time equivalent) are calculated as the employment related to all the initiatives – new and already underway – supported in 2019.

Thanks to the support of the GSE for the green economy, in 2019 Italy produced over 3 out of 10 kWh with renewable sources (about 115 TWh of electricity from Fer) and 10.7 Mtoe (tons of oil equivalent) of thermal energy: a context in which geothermal energy also offered an important contribution.

As regards the thermal sector, in 2018 final consumption of energy from renewable sources amounted to 10.7 Mtoe (corresponding to approximately 446,000 TJ), a decrease of approximately 5% compared to the previous year. The preliminary estimates of thermal consumption from RES relating to 2019 are based on an overall national figure in line with the previous year, and this also applies to geothermal energy: 0.1 Mtoe is the preliminary estimate provided by the GSE for 2019, identical to 2018 data.

By wading instead to electricity production, preliminary estimates for 2019 indicate an electricity production from renewables equal to approximately 115 TWh, just higher than that of the previous year. At the individual source level, the drop in hydroelectric production (-3 TWh) is more than offset by the increase in production from wind (+2.5 TWh) and solar (+1 TWh) sources; bioenergy and the geothermal source, on the other hand, remain substantially stable. For the latter, the preliminary estimates of the GSE referring to the last year speak of 6.0 TWh compared to 6.1 in 2018.

These 115 TWh, as explained by the GSE, were supported in 2019 by incentives equal to EUR 11.4 billion. Of these, EUR 5,052 million were allocated to renewable electricity sources other than photovoltaics. It is in this context that it is possible to identify the overall incentives for geothermal electricity production: among incentives ex CV, DM 6/7/2012 and DM 23/6/2016, in total we reach EUR 103 million in the whole of 2019. That is, a figure equal to 0.9% of all incentives dedicated to electricity produced from renewable sources in the last year, the lowest figure among all the incentivized sources.

Those dedicated to geothermal energy are, however , progressively decreasing incentives  , while, as is known, the Fer 1 decree on renewables – published in the  Official Journal 185, on August 9   – does not contemplate the renewal of the incentives dedicated to this renewable source, which is slipped inside. of the Fer 2 decree still under development.

Source: GreenReport