As is known, renewable energies are produced from sources which, by their nature, regenerate themselves at least at the same speed with which they are consumed or are not "exhaustible" on the "human" time scale; moreover, their use does not affect the resources available for future generations. Historically, the development of renewables coincided with that of the modern energy market: until the mid-50s, the exploitation of woody biomass and hydropower were able to satisfy a large part of the energy needs (this is still the case today in many countries of the world). The main non-renewable source was coal. The tumultuous development following the Second World War increased energy consumption to such an extent that the exploitation of other sources of energy was indispensable: first of all oil and, subsequently, gas and nuclear power. The trend described was substantially common to all the major nations of the globe.
Since the 90s, the issue of sustainable economic development linked to the impacts of the excessive use of fossil fuels has strongly emerged. At the end of 1997 we thus arrive at the Kyoto Protocol, a date from which many of the major economies, albeit in various forms, allocate funds and set objectives for developing renewables, and above all "new renewables", seen as the main element for reducing emissions climate-altering. Wind, photovoltaic, solar thermal are beginning to be considered as a central element of energy policy and not, as happened previously, a matter of "research and development" or ethical business to satisfy appreciable environmental requests.
Since 2000, the development of renewables has become tumultuous and even unexpected. This is not only in Europe: for example, for many years Texas has recorded the largest investments in renewables worldwide. The reasons for the tumultuous growth are diverse.
1) The generous incentives they have attracted many investors eager to diversify their portfolio into safe and regulated businesses; in hindsight, this has led to many distortions and speculations.
2) geopolitical tensions which at different times have crossed Russia, North Africa, the Middle East and South America and which have highlighted the fragility of the Western energy system, based on the massive import of fossil fuels. Renewables emerge as an element, even if not sufficient, to increase energy independence and security of supplies.
3) Technological research and development industrial they have reduced the production costs of many renewables, making them competitive with fossil fuels, especially in a scenario of rising prices. An example shows the extent of the change: in 2008, it cost around €1 million to build a 4 MW PV plant; in 2012 this figure dropped to an average of 1,5 million and this figure could still fall.
Italy was no exception. The development of RES, especially after the launch of the energy bill for photovoltaics, has taken everyone by surprise. Approximately 1 GW per year was installed in wind power (ie 2% of peak demand in Italy). In the photovoltaic sector, there was no production in 2008, reaching 15 GW in the third quarter of 2012; 2011 GW were installed in 9 alone, making Italy the first country in the world for solar investments. In 2011, Italy substantially achieved the European objectives for 2020 nine years in advance.
Certainly the tumultuous development also had a "dark side": subsidies which exploded to over €7 billion a year, 12 billion when fully operational, which will weigh on the bills of final consumers for several decades; installation of non-state-of-the-art panels; dominant logic of financial speculation. The control of incentives has gotten out of hand: the system used to monitor large production plants was not "trained" to see the birth of thousands of small plants on the roofs. The lesson has led the government to impose registers and caps on spending. Small consolation is the fact that similar phenomena have occurred in other European countries.
Dark sides, but also important benefits. As highlighted in our study "Costs and Benefits of Electric Renewables" (see www.agici.it) the impacts of the development of renewables are different:
The creation of a new manufacturing industry – Italy is the third largest manufacturing country in Europe and many companies have believed in renewables by reconverting their production. Of course, not all operations were successful, and some "trains" can be considered lost: for example, the production of hydroelectric turbines or traditional silicon panels. However, it must be said that Italy is the leading European producer of biomass turbine generators (80% of the market), exports about half of the gearboxes used in wind turbines and in 2011 produced 16% of the world's inverters.
Employment Effects – Industrial development will create over 2020 new jobs by 100, especially in supply chains with the highest rate of innovation such as photovoltaics (+70 employed in 2020 compared to 2011).
Reducing imports of fossil fuels – The study estimates gas import savings of 13 billion cubic meters (Italy consumes around 70 every year) with a benefit for the national system of €55 billion.
Reduction of daytime peak electricity demand – Possible thanks to the photovoltaic system which operates at maximum power in this period. This will allow the most polluted plants to be used less and less with a benefit on bills of €35 billion by 2030.
Precisely in order not to waste this heritage, the Government, in the draft of the National Energy Strategy, has foreseen a further development of renewables, deciding to go beyond the European objectives, without anyone forcing it. This is evidenced in the article by prof. Andrea Gilardoni appeared in these columns on 8 September. The intervention is accompanied by a drastic reduction in incentives, a reduction that could not fail to occur given the times of austerity and given the decline in the investment costs of renewables. The perspective is to make renewables not dependent on subsidies and able to compete with fossil sources.
Is this a realistic goal? For the writer, certainly yes. Renewables will continue to grow without subsidies, although certainly at a lower rate than in the past. They will grow differently, in purely industrial ways. To trivialize, photovoltaic plants will be built only where there is the sun, wind farms in the windiest areas and biomass power plants will not be fed with fuels from exotic countries thousands of km away from Italy.
The industrial experience can be successfully exploited in the large emerging countries which are only now starting to focus on renewables. It is no coincidence, for example, that all the photovoltaic auctions in South Africa have seen an Italian group as the first successful bidder.
In short, with the era of generous incentives and financial investments over, a new era is opening up for the Italian renewables sector which will have an industrial nature and which, by exploiting the expertise acquired at home at an international level, could be even more fruitful that in the past.
Finally, a brief reflection on the relationship between renewables and the energy model. Indeed, there is no doubt that they are changing it: from centralized to distributed production. Furthermore, the massive development of photovoltaics is changing the tip-to-base dynamics of demand. In fact, this technology works at maximum power around midday, especially in the summer months, where the demand for electricity for the use of air conditioning systems is maximum. This makes the use of obsolete but flexible plants such as open-cycle plants fueled by fuel oil or gas no longer convenient.
In short, we are beginning to touch the new energy model first-hand, which will still require massive investments in technology and infrastructure to fully develop its benefits. This opens up the topic of smart grids, which we will however see in a future article. A change in the regulation of the various aspects of the energy market will also be necessary in order to take into account and enhance the evolutions underway without wasting the important investments in gas combined cycles made in recent years.
To read last weekend's FOCUS ENERGY article, click here
The third episode of FOCUS ECONOMY will be published next Saturday 22 September
