Jul 24 2014

Italian Energy Reforms

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The Italy National Renewable Energy Plan was commissioned in April of 2009, as part of an update to the European Union’s directive in 2001. The 2001 directive produced a set of national targets from individual member states. Italy was supposed to have 25 percent of its power generated from renewable resources by 2010 but, falling short of that, the country’s target was substantially reduced to 17 percent by the year 2020 (Renewable Energy, EC).

Italy_minister_Zanon-200x150

Image of Italian minister of economic development, Flavio Zanon, the day of his conference.
Reforms have been recently made to Italy’s renewable energy incentives. The minister of economic development, Flavio Zanon, has announced that there will be an altered cap on renewable incentives. The change aims to change solar energy incentives spending at 9 billion euros annually for a 20 year period, as opposed to the previous 18 year period. Essentially, this creates a 3 billion euro savings which will assist households and businesses with electricity bills (Woods, 2013). However, the change has been criticized by many analysts, who state that this will scare off investors and trigger costly legal actions (Jewkes, 2014). Solar technology in Italy took off at the end of 2010 when production subsidies skyrocketed, increasing from 750 million euros to 6.7 billion euros in 2013. Over the last 5 years, investments of roughly 50 billion euros have been made in solar energy and, as a result, solar energy capacity has increased significantly. Italian Prime Minister Matteo Remzi has been criticized for his government’s changes, stating that the subsidy cuts were not planned properly and have the potential to affect long-term investment in renewable resources (Jewkes, 2014).

solar farm

A 1 megawatt solar farm in Italy
Similar trends in cutting funding for projects has been seen in Spain, Greece, and Bulgaria. Some analysts state that energy companies should have seen this coming; it is an ongoing trend in Europe that countries invest too heavily in renewable energy and then are forced to cut the budget for one reason or another. In 2013, Spain had a comparable change in renewable tariffs that triggered a wave of multi-billion euro lawsuits, ultimately giving compensation to energy companies based on the fact that they were misled by the government (Jewkes, 2014).
Due to economic factors within the country, Italy has to balance the pros and cons of investment in renewable energy at this time. While immediate cuts to subsidies may improve the economy in the short-run, it will eventually come back to hurt the country if energy investors are unwilling to continue on with their projects.

 

Citations:

Renewable Energy. European Commission. <http://ec.europa.eu/energy/renewables/action_plan_en.htm>

Jewkes, Stephen. Italy’s planned solar subsidy cuts risk scaring off investors. June 23, 2014. <http://uk.reuters.com/article/2014/06/23/italy-solar-subsidies-idUKL6N0P41TW20140623>

Woods, Lucy. Update: Italy reforms renewable energy incentives. September 2, 2013. <http://www.pv-tech.org/news/italy_reforms_renewable_energy_incentives>

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