White certificates in Italy: what happened, what to...

White certificates in Italy: what happened, what to expect

Dario Di Santo, FIRE

Bolzano, 4 October 2018

www.fire-italia.org

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The Italian Federation for the Rational use of Energy is a no-profit association founded in 1987 that promotes energy efficiency, supporting energy manager, ESCOs and other companies dealing with energy.

Besides the activities directed to its members, FIRE operates under an implementing agreement with the Ministry of Economic Development to manage the Italian energy manager network since 1992.

In order to promote energy efficiency FIRE cooperates and deals with public authorities, energy technology and service companies, consultants, medium and large consumers, universities and associations to promote best practices and improve the legislation.

FIRE manages SECEM - an accredited body under ISO 17024 - to certify Energy management experts (EGE - UNI CEI 11339).

FIRE: the association for energy efficiency

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Some members of FIRE:

A2A S.p.A., ABBVIE s.r.l., ACTV S.p.A., Aeroporto Valerio Catullo S.p.A., Agenzia per l'Energia e lo Sviluppo Sostenibile, AICE scarl, Alpiq Intec S.p.A., AMIA S.p.A., AMIAT S.p.A., Ascopiave S.p.A., Atlas Copco S.p.A., Avvenia s.r.l., Axpo Italia S.p.A., Azienda provinciale per i servizi sanitari TN, Banca Mediolanum S.p.A., Banca Popolare di Sondrio, Beghelli S.p.A., Berco S.p.A., Bit Energia s.r.l., Bosch Energy and Building Solutions Italy s.r.l., Brembo S.p.A., Cabot Italiana S.p.A., Carbotermo S.p.A., Carraro S.p.A., Carrefour Italia S.p.A., Centria s.r.l., Comau S.p.A., Compagnia Generale Trattori S.p.A., Consul System S.p.A., CPL Concordia soc. coop., Credito Emiliano S.p.A., CTI Energia e Ambiente, DBA Progetti S.p.A., DNV GL Business Assurance Italia s.r.l., Edilvì S.p.A., Edison Energy Solutions S.p.A., Egidio Galbani s.r.l., Electrade S.p.A., Elettra - Sincrotrone Trieste S.p.A., Elettrostudio Energia S.p.A., Enarkè associati, Enel Energia S.p.A., Energika s.r.l., Energon Esco s.r.l., Energy Saving s.r.l., Energy Team S.p.A., Engie Servizi S.p.A., ENI S.p.A., Estra Clima s.r.l., Fedabo S.p.A., Fenice S.p.A., Ferrari S.p.A., Ferrero Industriale Italia s.r.l., Ferriere Nord S.p.A., Fiera Milano S.p.A., Fincibec S.p.A., Finco, Finstral AG S.p.A., FIPER, Fondazione Policlinico Università A. Gemelli, Gewiss S.p.A., Gruppo Società Gas Rimini S.p.A., Hera S.p.A., Hitachi Drives and Automation s.r.l., Holcim S.p.A., IDM Südtirol, Ilsa S.p.A., Industrie Cotto Possagno S.p.A., Intesa Sanpaolo S.p.A., Iplom S.p.A., IRBM Science Park S.p.A., IREN S.p.A., ISAB s.r.l., Italcementi S.p.A., Italgas Reti S.p.A., Italgraniti Group S.p.A., Kairos s.r.l., Lidl Italia s.r.l., Loclain s.r.l., Manutencoop Facility Management S.p.A., Marche Multiservizi S.p.A., Mater-Biopolymer s.r.l., Mediamarket S.p.A., MM S.p.A., Montello S.p.A., NBI S.p.A., Pasta Zara S.p.A., Politecnico di Torino - Dip. di Energetica, Polynt S.p.A., Publiacqua S.p.A., Raffineria di Milazzo S.C. p. A., RAI - Radiotelevisione Italiana S.p.A., Restiani S.p.A., Rete Ferroviaria Italiana S.p.A., Roquette Italia S.p.A., Samandel S.p.A., San Marco Bioenergie S.p.A., Sandoz Industrial Products S.p.A., Schneider Electric S.p.A., SDA Express Courier S.p.A., Seaside s.r.l., Siena Ambiente S.p.A., Siram S.p.A., Solvay Energy Services s.r.l., Studio Botta, Tecno s.r.l., Thales Alenia Space Italia S.p.A., Tholos s.r.l., Trenitalia S.p.A., Trenord s.r.l., Trentino Trasporti S.p.A., Turboden s.r.l., Università di Genova - DITEN, Università Campus Biomedico, Università Cattolica del Sacro Cuore, Wind Tre S.p.A., Yanmar R&D Europe s.r.l., Yousave S.p.A.

Our members represent both the supply and the demand side of energy efficiency services and solutions.

Around 400 members, almost equally divided between

organisations and professional.

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Besides being involved in many European projects, listed next, FIRE implement surveys and market studies on energy related topics, information and dissemination campaigns, and advanced training.

Some of FIRE clients over the years: Ministry of Environment, ENEA, GSE, RSE, large organizations (such as Centria, ENEL, Ferrovie dello Stato, FIAT, Finmeccanica, Galbani, H3G, Poste Italiane, Telecom Italia, Unioncamere), universities, associations, energy agencies and exhibition organizers.

www.fire-italia.org

On-going and just completed EU projects:

The scheme basics: EEO + WhC trade

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Demand

WhC is an EEODSOs have to meet

energy saving targets

Certificates can be traded on the market

Voluntary parties (small DSOs, ESCOs and

companies with energy management expert or EnMS) can also obtain

certificates

Supply

WhC is partly an incentive 1WhC=1

addi*onaltoeAllsectorsandallenergyefficiencyprojectsareallowed.

Source: FIRE.

The Italian scheme is an EEO scheme with many flexibility options (voluntary parties, exchange market, possibility for DSOs to achieve 60% of target to be recovered in the next 2 years, etc.).

The WhC legislative path

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2004

D.Lgs. 79/1999 DSOs should be put under an EE obligation scheme.

1999

ARERA 103/03 WhC operative guidelines.

2003

D.M. 24/4/2011 WhC scheme introduction.

2001

Source: FIRE.

D.M. 20/7/2014 Targets fix and improvements.

D.M. 21/12/2017 New guidelines (targets, reimbursement for other fuels, etc.).

2007

ARERA 9/11 Introduction of the tau coefficient.

2011

2017

D.M. 28/12/2012 New guidelines (targets, new deadlines for proposals, GSE as managing authority, etc.).

2012

D.M. 11/1/2017 New guidelines (targets, new control and verification procedure, no more tau coefficient, limits to eligible projects, etc.).

D.M. 10/5/2018 New additionality, enhanced flexibility for DSOs, reimbursement cap, etc.

2018

A complex scheme like the Italian WhC needs frequent updates and fixes. Sought effects often require time to be obtained.

Some base points under 2017 guidelines

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Energy savings evaluation methods starting from May 2017:

Standard projects (SP – a mix of deemed savings and metered savings). Savings are calculated based both on the installed units and the measurements done on a statistically representative sample.

Monitoring plans projects (MPP – a type of metered savings). Savings are measured according to an algorithm and a set of meters (both for energy consumption and adjustment factors). With the new guidelines additional requirements were introduced for the consumption baseline that has to be based on meters capable of at least daily measures of the savings and on recorded data for at least one year.

WhC lifetime (as changed by D.M. 10 maggio 2018)

WhC Lifetime changes according to the technology and in case of new installation or substitution of existing plants/components. For new installation WhC lifetime passes from 3 years (behavioural measures and heat recovery) to 10 years (complex/expensive measures in industry and buildings). In case of substitution the typical range is from 5 to 7 years, with the exceptions of control systems for gas flow and heated air in ceramic dryers (3 years) and electric/hybrid/LNG/natural gas/hydrogen vehicles (10 years).

Prior of 2017 guidelines: 5 years with tau coefficient.

News introduced by D.M. 10 maggio 2018

Some of the main aspects:

a)no more additionality integrated in the scheme for projects linked to improvements of existing facilities. WhC lifetime reduction (from 10 to 7 years and from 7 to 5);

b)new eligible projects;

c) introduction of eight standardised solutions (led for internal and public lighting, electric motors, compressed air generation, smart bill, naval propulsion systems, hybrid and electric vehicles fleets);

d)improved flexibility for DSOs (two years to recover the 40% target flexibility instead of one, as it was previously of the 2017 guidelines);

e)250 euro DSOs’ reimbursement cap;

f) possibility to issue temporary non-energy saving related certificates by GSE in case of lack of certificates to cover the minimum target;

g)new definition of cumulativeness, with the possibility to take both white certificates and super or iper ammortamento (with a 50% reduction of the number of certificates).

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Evaluation of additionality starting from May 2017:

Additionality and eligible savings

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Steps: eva luat ion of ex -ante baseline through 1-year measurements; a d j u s t e d b a s e l i n e ( p roduc t i on , c l ima te , occupation, etc.), which can be higher or lower than ex-ante baseline; e va lua t i on o f ma rke t (average of actual market o f f e r ) a n d s t a n d a r d ( m i n i m u m l e g i s l a t i v e requirements) adjusted baselines; definition of additional s a v i n g s f o r n e w installations.

Activity to be done on a per-project basis.

0

20

40

60

80

100

120

Ex-ante baseline Adjusted baseline Market-adjustedbaseline

Standard-adjustedbaseline

Ex-postconsumption (new

installation)

Ex-postconsumption(substitution)

Energy consumption baselines and eligible energy savings

Non eligible savings Eligible savings Consumption Baseline consumption

Source: FIRE.

The path from projects to WhC

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Main points: Proposals should be submitted before starting with the project implementation;At least 12 months of measurement for the ex-ante baseline are needed;GSE controls both SPs and MPPs (project proposals) and request of certification (RCs - reports of savings).

From EE project to white certificates

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GSE first evaluates the project proposal, then t h e r e q u e s t f o r c e r t i f i c a t i o n . B o t h inc lude a thorough a n a l y s i s o f t h e submitted documents and of the proposed algorithm, consumption baseline, additionality, meters, etc.

Proposals are submitted through a web platform.

Even if a project is approved, GSE can make extended verifications.

Source: FIRE.

Verification process

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Source: FIRE.

On-site verification has been used less than expected, in fact, especially with standard projects.

Documental ver i f icat ion are usually quite demanding, leading often to the rejection of the proposal and to legal dispute (90 rulings of Lazio’s administrative court, of which 58 in 2018 so far).

The growth of the industrial sector

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Industrial projects under WhC

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MPP approach p layed a posit ive role . Even i f i t requires the proponent to deal with complex issues, l ike adjusted consumption baseline, r e l i a b l e m o n i t o r i n g a n d verification, additionality, etc., it also brings flexibility and e n s u r e s a n a c c u r a t e a s s e s s m e n t o f e n e r g y savings. Frauds are difficult.

The approach based on metered savings and reliable M&V procedures produced two other benefits: a) it improved the know-how and skills of end-users, ESCOs and other market operators, leading to an improved capacity of the market to find and propose energy efficiency measures integrated with manufacturing processes, and b) offered to the management bodies (GSE, ENEA, and RSE) a lot of data on industrial processes and their usage and transformation.

The existence of the WhC scheme created a more favourable environment for energy efficiency in enterprises: top managers understood the value of energy efficiency improvements by exploiting WhC.

The prominent role of industrial projects was recognised in the two national strategies issued in 2013 and 2017 that require to improve the WhC scheme especially toward the industrial sector.

Outcomes of projects’ evaluation

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The main issues incurred in the verification and control process are: issues with consumption baseline and additionality (often not a clear aspect); insufficient information and/or documentation on the project;issues related to the closure or modification of plants prior the end of the technical life;large frauds emerged in 2017 with SPs (around 700 million euros over WhC lifetime).

53%38%

7% 1%MPPs 2016: 815

Approved Rejected Other Under evaluation

Source: FIRE on GSE data.

81%

17%2% 0%

CRs 2016: 11.709



54%41%

4% 1%MPPs 2015: 999



90%

7% 2% 1%CRs 2015: 10.765



38%

49%

3%10%

MPPs 2017: 364 Updated on June 14, 2018



59%31%

5% 5%

CRs 2017: 5.339 Updated on June 14, 2018



38%

49%

3%10%

PPPM 2018: 364 Updated on June 14, 2018



45%

1%1%

53%

CRs 2018: 1.145 Updated on June 14, 2018



0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

0

20

40

60

80

100

120

140

160

180

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January

2016

February

2016

March

2016

April 2016

May 2

016

June 2016

July

2016

August 2016

Septem

ber 2016

Octo

ber 2016

November 2

016

December 2

016

January

2017

February

2017

March

2017

April 2017

May 2

017

June 2017

July

2017

August 2017

Septem

ber 2017

Octo

ber 2017

November 2

017

December 2

017

January

2018

February

2018

March

2018

April 2018

CRsM

PPs

Proposals presented 2016-2017-2018

MPPs MPPs (new guidelines) CRs


Proposals trend

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Reduction of CRs and MPPs due to the evolution of the additionality requirements and to the increas ing complexity of the rules.

WhC and EED art. 7 targets

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0,0

5,0

10,0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

White certificates targets and achievements(updated at the end of May 2018)

Target (million WhC) Updated targets (million WhC) Issued WhC 31/5-1/6 (million WhC) Savings (Mtoe)

FIRE on GME data.

Italian notification on EED art. 7:25.8 Mtoe cumulated. In 2017 4.2 Mtoe cumulated delivered through WhC (56%).

Two points to be noticed: the growing residual target, l i n k e d t o t h e u s e o f flexibility from DSOs due to insufficient supply; the stagnating additional energy savings (mainly due t o e v o l v i n g r u l e s o n eligibility and additionality).

0

100

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07/0

3/06

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6/06

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9/06

07/1

2/06

07/0

3/07

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6/07

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9/07

07/1

2/07

07/0

3/08

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6/08

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9/08

07/1

2/08

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3/09

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6/09

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2/09

07/0

3/10

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6/10

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9/10

07/1

2/10

07/0

3/11

07/0

6/11

07/0

9/11

07/1

2/11

07/0

3/12

07/0

6/12

07/0

9/12

07/1

2/12

07/0

3/13

07/0

6/13

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9/13

07/1

2/13

07/0

3/14

07/0

6/14

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9/14

07/1

2/14

07/0

3/15

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6/15

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9/15

07/1

2/15

07/0

3/16

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6/16

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9/16

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2/16

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3/17

07/0

6/17

07/0

9/17

07/1

2/17

07/0

3/18

07/0

6/18

07/0

9/18W

hC's

price

(Eur

o/ce

rtifi

cate

)

Market session data

WhC market price trend

"May 31st session" "DSO's reimbursement" "Other fuels savings""Gas savings" "Electricity savings"

Source: FIRE evaluation based on GME data

WhC price over time

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Important points on market: r e i m b u r s e m e n t f o r obliged DSOs based on previous year weighted average market price; three critical price periods o v e r t i m e s h o w i n g intrinsic instability.

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3

Changes with 2017 guidelines prior of D.M. 10 maggio 2018:

no more tau coefficient;longer WhC lifetime (period over which certificates are issued based on measured savings);as a result, less certificated per saved toe (from 3,340 toe per project to 277).

WhC lifetime

Additio-nality

Certificates issued over WhC lifetime per saved toe

Discounted value of certificates at

100 euro/certificate

Discounted value of certificates at

250 euro/certificate

2012 guidelines 5 50% 8,4 727 1.818

2017 guidelines 10 50% 5 386 965

2018 guidelines 7 100% 7 579 1.447

WhC scheme cost and other results

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According to GSE fiscal documents, the cost of information, evaluation, and control has been around 14 million euros in 2016.

Other evaluation from GSE: over 2 million additional t oe / yea r o f ene rgy savings; over 6 million tCO2/year; 11,000 equivalent direct and indirect jobs; 1 b i l l i o n e u r o s o f investment; 0.7 bil l ion euros of added value.

Will it work?

D.M. 10 maggio 2018 introduces measures that deal both with demand and supply.

It will take time to verify the effects on the supply side and understand if they will be enough, but the new rules should ensure some stability in the meantime.

An issue not addressed is the need for greater support to WhC operators. The percentages of rejection of practices (30-40% for MPPs) remain too high. Complex schemes require more dialogue between the parties.

A critical aspect is indeed the widespread climate of distrust related to the lack of clear rules on project eligibility and additionality, the excessive use of the “autotutela” option, the difficulties to communicate with GSE. A new approach is required.

On the other hand, WhC operators will face good WhC price and less rejection issues thanks to the lack of additionality.

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FIRE conferences and training courses

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ConferencesEnermanagement Edifici Bologna, 23 ottobre 2018Enermanagement Trasporti Bologna, 24 ottobre 2018Enermanagement Industria Milano, 29 novembre 2018Certificati bianchi, Roma, 2019Convention SECEM, Rimini, 2019Conferenza ISO 50001, Padova, 2019Conferenza EPC, Bologna, 2019

www.fire-italia.org/eventi

Training courses:energy manager e EGE (on-site and on-line);IPMVP-CMVP;intensive training (energy market, RES, CHP, EnMS, LCA, solutions for buildings and industry, etc.).

What can we do together?

FIRE can be a partner for many activities:

carrying out surveys among energy managers, ESCO, EGE, companies with ISO 50001, etc .;

implementation of market and sectoral studies;

guides and analysis on incentive tools and policies;

information campaigns and behavioral change;

dissemination campaigns;

energy audits and feasibility studies;

training courses on energy management and its tools (ISO 50001, energy audits, EPC, IPMVP, LCCA, feasibility studies, etc.), policies and incentives, solutions for energy efficiency, cogeneration, etc;

European projects (e.g. Horizon2020), international cooperation, and much more…

Get in touch!

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[email protected]

Thank you!

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