Renewables, Italy accelerates but it’s not enough. United States, China and Germany on the podium, but the Nordic markets advance
According to the main results emerging from the 62nd edition of the EY report Renewable Energy Country Attractiveness Index (RECAI)which ranks the top 40 countries in the world for attractiveness of investments and development opportunities in the renewable energy sector, to achieve the set decarbonisation objectives it is necessary to accelerate the path of the energy transition tripling the world‘s renewable energy capacity Of 11 GW by 2030.
Countries such as the United States, Germany and China are at the top of the EY ranking and stable compared to the previous edition of the RECAI dating back six months ago, while Nordic markets such as Denmark, Sweden and Norway rise significantly in the index.
Italy gains a position compared to the last edition, moving to 14th. In fact, the country has set itself ambitious objectives in the field of renewable energy, aiming to increase the share of renewables in final consumption of the electricity sector up to 65% by 2030. In the first half of the year the installed capacity is equal to 2.5GWrepresenting an increase in 120% compared to 2022.
Giacomo Chiavari, EY Europe West Strategy and Transaction Energy Leader, comment: “The constant increase in energy needs and geopolitical instability are some of the factors that have led to the need to accelerate the transition towards more sustainable energy models. From this perspective, to double the production of energy from renewable sources by 2030, estimates indicate that our country will have to fill a gap of approximately 11 GW compared to the targets established for wind energy and 35 GW in relation to photovoltaic energy. In addition to the significant economic and environmental benefits that the energy transition brings with it, new opportunities will also be created for the world of work: by 2030, in fact, the offer for professions specialized in the renewables sector will triple and it will therefore be crucial to consolidate the skills and training processes linked, in particular, to STEM disciplines”.
Enabling technologies as well as investments in projects related to renewable energy are among the themes at the center of the United Nations Conference on Climate Change (COP28) which is taking place in these days and where it will be possible to take stock of the progress made so far with respect to ‘Paris Agreement on climate change.
United States, China and Germany on the podium, the Nordic markets advance
The three main global markets identified in the RECAI remain unchanged compared to the previous edition: the United States maintains first position, fueled by significant growth in solar as a result of the incentives of the Inflation Reduction Act (IRA). Germany follows in second place, recording substantial growth in the onshore wind sector; new capacity installed by the end of September exceeds the total installed last year. China also continues its upward trajectory in offshore wind, maintaining third place in the index. The Nordic countries continue to pursue their renewable energy ambitions, with Denmark, Sweden and Norway moving up two, three and five places respectively.
PPA market, green hydrogen, M&A and regulation
The country has set itself ambitious targets to increase the share of energy produced from renewable sources and, as indicated by the recently announced government measures, to facilitate access to these sources. There is growth and greater interest in the national food market PPA (Power Purchase Agreement), as also confirmed in the RECAI index where the country passes from 13 th al 12 place in the ranking compared to the previous edition. This especially following a reduction in the wholesale price of energy which fell following the peaks of the year 2022, despite the price not having returned to the starting points of the period before the energy deficit and the crisis in Ukraine.
An important role in the new scenario of the National Integrated Plan for Energy and Climate of last June (PNIEC) is constituted by thegreen hydrogeni.e. produced using electricity from renewable energy sources, of which Italy aims to increase the share, compared to the total hydrogen used in industry, up to 42% by 2030. In addition to the European incentives on investments to start projects, the introduction, at a national level, of an incentive on the volumes produced is expected to reduce the difference between the unit cost of green hydrogen production compared to non-decarbonised production.
However, as far as the market is concerned M&A of renewables in Italy, there are numerous operations that seek projects that can be implemented in the short term with the aim of quickly replacing third-party electricity costs still incurred with self-produced energy at a much lower cost. More in the medium term, the aim is to diversify the portfolio of plants located in different geographical areas of the country so as to give access to green energy (produced from renewable sources) produced locally. However, the market suffers from the uncertainty linked to the partial regulation on the matter which therefore has an impact on the pipeline of projects towards which potential investors could orient themselves.
Looking to the future, one of the major challenges and opportunities linked to the development of renewables, given their intrinsic nature of intermittency and consequent need for stabilization, is constituted by the storage of the energy produced and, in particular, of the energy produced in excess of the question of the moment. The maximization of self-consumption from decentralized renewable production and the trend of electrification of consumption, for example in relation to electric mobility, also contribute to generating demand for energy storage; the solution of battery storage (electrochemical or fluid) can represent a decisive opportunity to consolidate the growth of renewable energy, thanks to a technological evolution that makes it increasingly competitive.
From a regulatory point of view, that of storage is still in the development phase as we are awaiting the publication of the Technical Operating Provisions which will define the terms and conditions of the so-called “time shifing” products in the field of electrical storage, also useful in terms of developing a market PPA (Power Purchase Agreement) virtuali.
A further regulation that will soon be defined is that contained in the draft FER-X decree of the MASE (Ministry of the Environment and Energy Security) which aims to review and update some incentive mechanisms, providing different support methods for the plants renewables with generation costs close to market competitiveness. The intervention scale of the FER-X decree is at least 10 volte larger than the previous decree and the numbers, although indicative, indicated in the draft (60 GW to be included in the mechanism in the next 5 years) suggest that a large part of the renewables market could be involved, possibly including photovoltaics in agricultural areas, which has so far been excluded.
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