This document discusses Italy's targets for renewable energy generation, emission reductions, and energy efficiency by 2020 based on EU directives. It analyzes potential interventions to meet these targets, including increasing renewable capacity, improving grid efficiency, and promoting energy efficiency. Regulatory authorization procedures for projects and challenges financing energy infrastructure projects in Italy are also examined. Areas for further discussion include balancing costs and environmental objectives, optimizing the grid, incentive schemes, and promoting related national industries.

1. ITA-SOLne-090928-P0
The information contained in this document belongs to Value Partners S.p.A and to the recipient of the document.
The information is strictly linked to the oral comments which were made at its presentation, and may only be used
by attendees of that presentation. Unauthorized copying, disclosure or distribution of the material in this document
is strictly forbidden and may be unlawful.
Milan, 28 September 2009

2. 1
ITA-SOLne-090928-P1
Finance &
realize
Plan Authorize
•Assessment of
possible areas of
intervention and
priorities setting:
-New generation
capacity
-Improvement of
system efficiency
(existing plants,
interconnectors,…)
-Improvement of
energy efficiency
•Definition of
incentive/ penalty
schemes
•Definition of
national/regional
energy plans
•Screening/
approval of
projects
-Approval at
national/local level
(Title V devolution)
-“Conferenza dei
servizi”
-VIA/VAS
procedures
-Regional
Administrative
Court rulings
(TAR)
•Financing of
approved projects
-Project finance
schemes
-Special Purpose
Vehicles
-Infrastructural
Funds
•Realization of
projects
-Build
-Start-up
-Operate &
Transfer
Objectives
• Definition of long-
term objectives
for the Country,
e.g.:
-System security
-Energy costs
-Share of
renewable
generation
-Emission reduction
-Consumption
reduction (“energy
efficiency”)
-…
Focus of EU Directive
(20-20-20)

3. 2
ITA-SOLne-090928-P2
20% renewable generation 20% emission reduction 20% energy efficiency
•5% of 340 TWh •~600 Mio tons CO2/y •Italy today: ~170 Mio TEPToday
Source: GSE, 2007 Energy Report, AEEG, Bocconi IEFE, RIE Bologna, Value Partners Estimates
2020
Possible
Levers
Italy targets at 2020
•17% of 470 TWh
(European target
20%)
•-20% to reach ~500 Mio
tons/y
•-13% for sectors not
covered by EU Emission
Trading Scheme (ETS)
•-20%: -34 Mio TEP
•Incentives to
renewable sources:
. Solar
. Wind
. Biomass
. …
•Zero emission
generation: nuclear?
•CCS: Carbon Capture &
Storage
•New transport
technologies (new modal
transport, hybrid cars,
mass transport, …)
•Building efficiency
certificates
•Process efficiency
•Co/ Tri generation
•…

4. 3
ITA-SOLne-090928-P3
!
•Which are the interventions on the generation mix required to
balance cost/environmental objectives?
•Which interventions on infrastructures (particularly on the grid)
are needed to optimize system efficiency in the new scenario?
•Which types of incentive systems are more appropriate to
promote the evolution towards the desired scenario?
•Which initiatives should be taken to ensure that incentives
contribute to the development of national industries?
1
2
3
4
FOR DISCUSSION

5. 4
ITA-SOLne-090928-P4
"
!
55% 55%
14% 14%
31%
13%
7%
4%
30%
13%
12%
9%
5%
12%
5%
21%
Italy, 2007 Italy, 2020
(projected)
EU27, 2007
Gas
Coal
Oil
Hydro
Renewables*
• Further push on renewables (in
progress)
• Increase of gas supply through
the introduction of new LNG
terminals
• Selective introduction of nuclear
plants?
• Further development of “clean
coal”?
• Increase of electricity imports
from neighbouring countries
through new interconnections?
• …
* Wind, solar, bio-mass, waste,…
Source: SAFE, Value Partners analysis
ESTIMATES
Hydro + renewables
Nuclear
Fossil fuels
Generation mix Italy vs. EU27,
Percentage of production
Possible future developments
1
Italian CCGT
efficiency higher
than OECD avg.
(51% vs. 45%)

6. 5
ITA-SOLne-090928-P5
• Strong price differentials
between Italy and neighbouring
countries (France, Austria,
CEE, …) but international links
still limited
• June 2008: new UCTE plan
envisions several new lines with
France, Switzerland, Austria,
Slovenia, Croatia and Tunisia
• Congestions among different
areas do not allow the most
efficient plants to operate and
result in price differentials
• South and Islands are generally
disadvantaged
• Congestions bound to increase
with new plants if no measures
taken
Source: SAFE; UCTE; Value Partners analysis
Increase of international
connections
Removal of internal
bottlenecks
• Change of paradigm: from few
large-size plants to distributed
generation
• Development of domestic
systems (solar, micro-
turbines,…) which need to
exchange energy with the grid in
both directions
Critical
sections
Development of
“Smart Grids”
2

7. 6
ITA-SOLne-090928-P6
~30
~5
~60
~40
~100
Estimated
incentives
2000-2010 (total)
~2
Estimated cost
to reach 2020
targets
#
!
• Conto Energia
(80 Mln € in ‘08)
• CIP6
(~5 Bln € in ’07)
• Green certificates
• Tax exemptions
New
generation
capacity
Improvement
of system
efficiency
Improvement
of energy
efficiency
• Trans EU networks
• Green book on
interconnections
• …
• White certificates
market
• 55% tax reduction
on energy saving
investments
• …
Billion Euros
Source:GSE, 2007 Energy Report, AEEG, Bocconi IEFE, RIE Bologna, Value Partners Estimates
Possible areas
of intervention
Examples
Need to re-balance
the incentive
schemes:
. Carry on the effort
on generation,
focusing it on
“real” renewables
. Invest in network
efficiency and
security of supply
. Strongly promote
energy efficiency
on end users and
not only on
distributors
3

8. 7
ITA-SOLne-090928-P7
$% &
'
Source: Politecnico di Milano, Solar Energy Report 2008; Value Partners analysis
Old incentive schemes
Thanks to "Conto Energia"
MW
New "Conto Energia"
Existing photovoltaic plants Expected evolution
2003 2004 2005 2006 2007 2008
~30
~300
~32 ~40 ~50
~40
~10 ~80
~40
~120
~260
~40
2009E 2010E 2011E 2012E
~500
~800
~1.400
~2.000
“Conto Energia”
•Feed-in tariff to re-
launch development
of photovoltaic
generation
introduced in July
2005
•The tariff rewards
production, is granted
for 20 years and is
about 0,4 €/kWh
produced with a 2%
reduction per year
•Rates increase with
level of architectural
integration and varies
with power installed
In 2011 the 1.200 MW, cap of the existing
"Conto Energia“ will be reached
4

9. 8
ITA-SOLne-090928-P8
' !
Silicon &
Wafer
producers
Cells &
Modules
producers
Components/
control
systems
producers
EPC/
Distributors
Installers
Presence of
Italian
companies
Typical
EBITDA
~50% ~18% ~15% ~10% ~20%
Italian companies
Foreign companies
Italian companies
Foreign companies
with subsidiary in Italy
50-60% 30% 10%
% on total
investments
Source: Politecnico di Milano, Solar Energy Report 2008, Press clippings
EXAMPLE: PHOTOVOLTAIC
4
98%
2%
22%
40% 38%
52%
25%
23% 26%
74%

10. 9
ITA-SOLne-090928-P9
Initiatives taken so far Open issues Further improvements needed
• “Autorizzazione Unica”
• “Conferenza dei servizi”
• Regional Energy Plans
(PEAR)
• VIA procedure for larger
plants
• DIA procedure for smaller
plants in some Regions
• Different implementation by Regions
• Often an “on-top” procedure
• +20-25% extra costs and +10-15%
extra time with respect to EU
standards
• Authorization doesn’t mean
realization (minorities can rely on
TAR and State Counsel suspension)
• Different application by Regions
• Lack of national guidelines
• Separate procedures for plant and
feed-in-point connection (especially
if expropriation is needed)
• Implement homogeneously in all
Regions making it really the
“only” authorization needed
• Sanctions to plaintiffs in case of
unjustified/ unproven legal
actions
• Create PEAR in all the regions,
using the same guidelines
• Create a “VIA - Autorizzazione
Unica” valid for all plants
• Parallel procedure for plant +
connection

11. 10
ITA-SOLne-090928-P10
•Public institutions and private investors
with limited experience in infrastructural
investments
•Limited use of “innovative” financial
instruments (e.g. bonds for financial
investors, asset backed securities)
•Credit market crunch increasing
caution from lenders and investors
•Institutional investors interested mostly
in “brown field” equity investments
•Complexity, uncertainty of times and
unclear authorization procedures
strongly influence investors’ interest
Italian context
•The Italian context “as-is” is not able
to mobilize the size of investments
which is needed to support the
evolution of the system
•As a result, many projects already
approved/ ”quasi approved” fail to
start because of lack of capitals
•To fill the infrastructural gap, Italy
needs a strong evolution in terms of
financial culture of the institutions
operating in the market
Implications on funding of energy
projects

12. 11
ITA-SOLne-090928-P11
$( & )
• New energy plan:
-Nuclear
-Renewables
• New infrastructure
plan:
-Energy corridors
-Gas hubs
-Smart grids
• New incentive
schemes
-Renewables
-System efficiency
-Energy efficiency
• New industrial policy
-Promotion of R&D on
new technologies
-Promotion of national
industrial chains
• More agile
authorization
procedures for
generation and grid
connection
• Improved cooperation
between central and
local authorities
-Reduction of local veto
power, particularly for
strategic investments
-Introduction of local
benefits linked to
investment realization
• Central monitoring of
project
implementation times
and analysis of critical
cases
• Extension of new
project financing
schemes
-SPV involving utilities
-SPV promoted by
financial companies
-Securitization
schemes to create
new financial
products
• Involvement of other
financial subjects:
-PE funds
-Infrastructural funds
-“Fondazioni”
-…
• System security
• Energy cost reduction
• Renewable energy
• Emission reduction
• Energy efficiency
FOR DISCUSSION
• Optimal resource
allocation
• National industry
creation
• R&D
Finance &
realize
Plan AuthorizeObjectives

13. 12
ITA-SOLne-090928-P12
%
valuepartners.com
London
Greencoat House
Francis Street
SW1P 1DH - London
UK
Tel. +44 (0) 20 7630 1400
Rome
Via di Porta Pinciana 1
00187 Rome
Italy
Tel. +39 06 697 6481
Milan
Via Vespri Siciliani, 9
20146 Milan
Italy
Tel. +39 02 485 481
Singapore
7 Temasek Boulevard
Suntec Tower One #26-04
038987
Singapore
Tel. +65 6820 3388
Hong Kong
1806 Vicwood Plaza
199 Des Voeux Road Central
Sheung Wan
Hong Kong
Tel. + 852 2103 1000
Beijing
Tower A, Suite 1702,
Vantone Centre
Jia 6 Chaoyangmenwai Avenue
Chaoyang District
100020 Beijing
People’s Republic of China
Tel. +86 10 5907 0616
Mumbai
8°floor, C block
Devchand House, Shiv Sagar Estate
Dr. Annie Besant Road
Worli, Mumbai 400 018
India
Tel. +91 22 6611 9700
Shanghai
Fortune Gate office building,
Unit 02, 25/F
1701 Beijing Rd (W)
200040
People’s Republic of China
Tel. +86 21 6132 4230
Rio de Janeiro
Rua da Candelária 60
10ºandar Centro
Rio de Janeiro – RJ
Brazil
CEP 20091-020
Tel. +55 21 2213 9191
Buenos Aires
Alicia Moreau de Justo 550
4 Piso
C1107AAL
Buenos Aires
Argentina
Tel. +54 11 4314 4222
São Paulo
Rua Padre João Manuel 755
1°e 2°andares – cjs. 11, 12 e 21
Cerqueria Cesar
São Paulo
Brazil
CEP 01411 - 001
Tel. +55 11 306 809 99
Istanbul
Sunplaza
Dereboyu Sk. No:24 Maslak
34398 Istanbul
Turkey
Tel. +90 212 276 98 86
Dubai
Business Central Towers
Suite 1304 A
P.O. Box 503025 - DMC 9
Sheikh Zayed Road
Dubai, U.A.E.
Tel +971 4 4335628
Munich
Maximilianstrasse 35a
80539 Munich
Germany
Tel. +49 (0) 89 24218 445
Energy experts worldwide
Ruggero Jenna
Director
Singapore office
ruggero.jenna@valuepartners.com
Enrico Lanzavecchia
Director
Shanghai office
enrico.lanzavecchia@valuepartners.com
Alessandro Leona
Senior Engagement Manager
Milan office
alessadro.leona@valuepartners.com
Alberto Calvo
Senior Engagement Manager
Milan office
alberto.calvo@valuepartners.com
Andrea Pappalardo
Finance Specialist
Milan office
andrea.pappalardo@valuepartners.com
Marco Venneri
Engagement Manager
Singapore office
marco.venneri@valuepartners.com