To truly complete the energy transition it will not only be necessary to move from gas-powered electricity generation plants to those supported by sun, wind and water. It will also require a complete rethink of the infrastructure. “Large investments in the grid will be needed in the coming years to support a production network that is very different from the current one,” he explains Charles Montellafounder and managing partner of Green Horse Legal Advisory, an independent law firm specializing in energy transition a Truth&Business.
How and why was Green Horse Advisory born? What market needs does this project want to respond to and what does it do?
“After Orrick’s 15 years of industry experience, I came to the conclusion that there was a lack of a vertically integrated entity capable of combining regulatory, legal and finance expertise. Transversal knowledge of the market with a strong regulatory component is essential for identifying the best opportunities on the market based on customer characteristics. The hope is that Green Horse Advisory will be able to define a new paradigm to follow, because it is capable of giving a unique and complete added value in the panorama of consultancy in the energy transition sector”.
What is the state of the art of energy transition in Italy?
“If we consider energy independence as the objective of the transition, then Italy still has a lot to do. As far as renewable energies are concerned, we have experienced great delays in the installation of photovoltaic and wind power, but in the coming years we will certainly recover the gap compared to other countries because we are accelerating and we will seize the opportunities available. Hydroelectric, on the other hand, we are practically exploiting to the fullest extent possible, perhaps net of a few small additional plants”.
Does Italy have the structure – bureaucratic, political, financial – to seize the opportunities that exist in the energy transition?
“The reasoning plan on the energy transition must be twofold. The first is to be able to be independent in absolute terms. I think it is a fundamental goal to be sustainable and independent from any third country, be it Russia, Algeria, or any other country. And become, in the even more optimistic scenario, an exporter of energy”.
And the second?
“The transition can be done using foreign technology, or developing a technological chain that is able to support the Italian transition and create jobs and GDP for Italy. It is an achievable goal: to do so it is necessary to streamline bureaucracy, implement tax breaks and incentives to facilitate research and development. In this way, Italian and foreign entrepreneurs will be encouraged to invest and take risks in the creation of these technologies which will be at the heart of what is the industrial revolution of modern times. An excellent example in this sense is Enel’s gigafactory in Sicily inaugurated three weeks ago, also built with public funds. If we were able to channel private investments in this supply chain as well, we would multiply the advantages of the energy transition for Italy”.
What is the short-term outlook for the renewable energy sector?
I think they will explode in the short term: I expect a boom in 2024, after a 2023 which will already see a substantial improvement, to then consolidate the trend in 2025-2026. It is clear that in the short term the best known and most consolidated technologies such as photovoltaics and biomethane plants will establish themselves. In the medium-long term, however, more innovative technologies such as storage and green hydrogen will arrive. The prerequisites for capturing this opportunity are there: the energy production structure is radically changing, moving from large production centers to many small centres. The next big topic of discussion will be that of the web”.
Explain to us better.
“By radically changing the production network, from large centers to small centres, and radically changing consumption habits – think, for example, of the impact of electric cars charging all together in the evening in an apartment building – it will be necessary to invest to restructure the energy distribution. We will have to make large investments in infrastructure over the next five years to adapt them to new production and consumption habits. The discourse among insiders is very mature, there is awareness. At a political and public debate level, I think it will become very topical within a year”.
Meanwhile, companies are gearing up for the energy transition. The m&a market in the renewables sector has grown hand in hand. What are the trends and possible developments in the medium term?
“Energy shocks have inflated transaction prices, as every kilowatt of energy produced by PV has become more valuable. With the lowering of the price of electricity and gas and the reform of the electricity market that Europe is pursuing, there will also be a normalization of prices in the M&A market of renewables. The decline in evaluations will also come because the costs for authorizations will decrease, increasing in number. In the coming years we will see a drop in prices for plants with mature technology and an increase in those with technologies with great growth potential. However, this period will leave a positive aspect: the interest in the sector and the understanding that it is necessary to have one’s own production plants to take a step forward in sustainability”.