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White certificates: news and opportunities after 2018 review


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D.M. 10 maggio 2018 introduced some important modification to the guidelines of the Italian white certificate scheme, mostly to deal with issues such as the lack of certificates to fulfil the targets and the excessive rigid rules introduced in 2017 to present new energy efficiency projects. The presentation shows the main changes and some results in terms of issued certificates and prices and summarises some hints on the future of the scheme.

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White certificates: news and opportunities after 2018 review

  1. 1. White certificates in Italy: what happened, what to expect Dario Di Santo, FIRE Bolzano, 4 October 2018
  2. 2. X 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
  3. 3. X FIRE: the association for energy efficiency 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.
  4. 4. X 4 FIRE: the association for energy efficiency 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. On-going and just completed EU projects:
  5. 5. The scheme basics: EEO + WhC trade 5 Demand WhC is an EEO DSOs 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 1 WhC = 1 addi*onal toe All sectors and all energy efficiency projects are allowed. 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.).
  6. 6. The WhC legislative path 6 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.
  7. 7. Some base points under 2017 guidelines 7 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.
  8. 8. 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). 8
  9. 9. Evaluation of additionality starting from May 2017: Additionality and eligible savings 9 Steps: evaluation 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 r o d u c t i o n , c l i m a t e , occupation, etc.), which can be higher or lower than ex-ante baseline; e v a l u a t i o n o f m a r k e 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-adjusted baseline Standard-adjusted baseline Ex-post consumption (new installation) Ex-post consumption (substitution) Energy consumption baselines and eligible energy savings Non eligible savings Eligible savings Consumption Baseline consumption Source: FIRE.
  10. 10. The path from projects to WhC 10 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).
  11. 11. From EE project to white certificates 11 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 include 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.
  12. 12. Verification process 12 Source: FIRE. On-site verification has been used less than expected, in fact, especially with standard projects. Documental verification 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).
  13. 13. The growth of the industrial sector 13
  14. 14. Industrial projects under WhC 14 MPP approach played a positive role. Even if it requires the proponent to deal with complex issues, like 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.
  15. 15. Outcomes of projects’ evaluation 15 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 Approved Rejected Other Under evaluation Source: FIRE on GSE data. 54% 41% 4% 1% MPPs 2015: 999 Approved Rejected Other Under evaluation Source: FIRE on GSE data. 90% 7% 2% 1% CRs 2015: 10.765 Approved Rejected Other Under evaluation Source: FIRE on GSE data. 38% 49% 3% 10% MPPs 2017: 364 Updated on June 14, 2018 Approved Rejected Other Under evaluation Source: FIRE on GSE data. 59% 31% 5% 5% CRs 2017: 5.339 Updated on June 14, 2018 Approved Rejected Other Under evaluation Source: FIRE on GSE data. 38% 49% 3% 10% PPPM 2018: 364 Updated on June 14, 2018 Approved Rejected Other Under evaluation Source: FIRE on GSE data. 45% 1%1% 53% CRs 2018: 1.145 Updated on June 14, 2018 Approved Rejected Other Under evaluation Source: FIRE on GSE data.
  16. 16. 0 200 400 600 800 1.000 1.200 1.400 1.600 1.800 2.000 0 20 40 60 80 100 120 140 160 180 200 January2016 February2016 M arch 2016 April2016 M ay2016 June 2016July2016 August2016 Septem ber2016 October2016 Novem ber2016 Decem ber2016 January2017 February2017 M arch 2017 April2017 M ay2017 June 2017July2017 August2017 Septem ber2017 October2017 Novem ber2017 Decem ber2017 January2018 February2018 M arch 2018 April2018 CRs MPPs Proposals presented 2016-2017-2018 MPPs MPPs (new guidelines) CRs Source: FIRE on GSE data. Proposals trend 16 Reduction of CRs and MPPs due to the evolution of the additionality requirements and to the increasing complexity of the rules.
  17. 17. WhC and EED art. 7 targets 17 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).
  18. 18. 0 100 200 300 400 500 07/03/06 07/06/06 07/09/06 07/12/06 07/03/07 07/06/07 07/09/07 07/12/07 07/03/08 07/06/08 07/09/08 07/12/08 07/03/09 07/06/09 07/09/09 07/12/09 07/03/10 07/06/10 07/09/10 07/12/10 07/03/11 07/06/11 07/09/11 07/12/11 07/03/12 07/06/12 07/09/12 07/12/12 07/03/13 07/06/13 07/09/13 07/12/13 07/03/14 07/06/14 07/09/14 07/12/14 07/03/15 07/06/15 07/09/15 07/12/15 07/03/16 07/06/16 07/09/16 07/12/16 07/03/17 07/06/17 07/09/17 07/12/17 07/03/18 07/06/18 07/09/18 WhC'sprice(Euro/certificate) 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 18 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. 1 2 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
  19. 19. WhC scheme cost and other results 19 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 o e / y e a r o f e n e r g y 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 billion euros of added value.
  20. 20. 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 offer 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. 20
  21. 21. FIRE conferences and training courses 21 Conferences Enermanagement Edifici Bologna, 23 ottobre 2018 Enermanagement Trasporti Bologna, 24 ottobre 2018 Enermanagement Industria Milano, 29 novembre 2018 Certificati bianchi, Roma, 2019 Convention SECEM,
 Rimini, 2019 Conferenza ISO 50001, Padova, 2019 Conferenza EPC,
 Bologna, 2019 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.).
  22. 22. 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! 22
  23. 23. Thank you! italiana-per-l'uso-razionale-dell'energia For more information about our activities visit our web site!