Removing permitting barriers would boost Italy’s corporate PPA market
The European corporate renewable power purchase agreement (PPA) market has grown incredibly over the past few years; 2020 was a record-breaking year with nearly 4 gigawatts (GW) of capacity contracted and 2021 is already set to be even better (3.2 GW so far).
This growth can be attributed to several factors: a surge in corporate commitments to decarbonise, the falling cost of renewables, and the ability of PPAs to provide companies with long-term, fixed-price renewable supply.
However, corporate PPA markets are not yet as strong as they could be in some European countries. Despite its potential as a strong market for corporate PPAs, Italy is in thirteenth place in Europe in terms of PPAs announced in the country.
Last year, there was less than 0.1 GW of corporate PPAs announced in Italy, compared to 1.3 GW in Spain and 0.8 GW in Germany. Since 2007, Italy has only accounted for 2% of total European corporate PPAs.
Although it is not currently one of the top European countries for corporate PPAs, Italy has laudable ambitions when it comes to renewable energy. Their national energy and climate plan includes the target of reaching a renewable generation share of total energy consumption of 30% and 55% of electricity consumption by 2030. However, this will have to grow to about 40% RES share of total energy consumption and over 70% of electricity consumption, with the installation of 70 GW of new capacity by 2030 (an increase from 55 GW installed in Italy today to 125 GW).
So, what can be done to spur corporate PPAs in Italy?
Permitting procedures for renewable projects in Italy are lengthy and complicated. This is preventing renewable energy deployment at the scale needed for the country to achieve its goals and restricting corporate access to cost-competitive projects. Simplifying the permitting process should be a priority for Italian ministers wanting to spur a green recovery.
In Italy’s post-Covid Recovery Plan, the government outlines its intentions to cut red tape and streamline the legal system. Such intentions will however need to be translated into concrete measures with one of the most important reforms currently under definition being the DL Semplificazioni (Simplification Decree). This is an important development, as a short and simple permitting process is key to unlocking the potential of corporate PPAs in Europe. In recognition of this fact, Article 16 of the Renewable Energy Directive stipulates that Member States must shorten and simplify the permitting process for new and repowered projects.
As barriers to corporate PPAs continue to be removed, we should see more deals like the one signed in May by the Italian company Telecom Italia (TIM). The ICT firm signed a 10-year PPA with ERG for the supply of 3.4 TWh of wind energy. Similarly, we saw Ferrero, the maker of Nutella, announce this week a 10-year PPA with Falck Renewables for Sicilian solar power.
Both announcements reflect companies’ desire to sign up for renewables in Italy, with much more potential to be realized. Further agreements like this will enable Italy to reach the renewable electricity targets laid out in their energy and climate plan and will help the EU to reach their 2030 and 2050 climate goals.
Written by: REF-E and Elettricita Futura
For a list of recent, confirmed PPA deals in Italy, download the slides below from REF-E.
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