Analysis of economic impacts of the feed-in tariff scheme for photovoltaic technology in Italy
| Author(s) | Poponi, Daniele | |
| Date Accessioned | 2018-12-14T13:26:25Z | |
| Date Available | 2018-12-14T13:26:25Z | |
| Publication Date | 2018 | |
| SWORD Update | 2018-10-17T16:04:56Z | |
| Abstract | With 22 TWh of electricity generated in 2016, solar photovoltaic (PV) systems contribute to meet more than 8% of Italian electricity demand, the third-highest share in the world. Between 2006 and 2016, domestic PV capacity underwent a massive scale-up, increasing from 37 to 19,300 MW. More than 90% of domestic PV installations over the same period were supported by the feed-in tariff program Conto Energia. ☐ While the Conto Energia program was undoubtedly impactful in terms of spurring domestic PV demand, the question of whether it was a cost-effective program remained largely unanswered at the end of its implementation cycle. In 2016, annual feed-in tariff payments for PV systems totaled approximately EUR 6 billion, equivalent to about 0.4% of the Italian GDP. The estimated total cost of this incentive scheme, throughout its full lifetime from 2006 to 2038, is about EUR 130 billion. Given the scale of this financial burden, the possibility that Italy could have achieved the same energy sustainability goals, but at lower subsidization costs and with higher economic impacts, warrants serious investigation. The rationale for this analysis is not only to conduct a posthumous assessment of sunken costs, but also to provide Italian energy policymakers with useful methodological insights as they prepare to design new policies to achieve the objectives set forth in the National Energy Strategy published in 2017. ☐ The methodological framework used in the present study is based on the integration of three main methodologies: learning curves, energy scenarios, and input-output tables. The economic impact analysis was carried out within the frame of two scenarios spanning the time period 2010-35. The reference scenario incorporates historical PV deployment under the Conto Energia program between 2010 and 2016. The counterfactual scenario assumes lower PV deployment between 2010 and 2020, but higher energy-efficiency investments, so that the impact on reducing natural gas demand and carbon emissions by 2020 is the same as in the reference scenario. Both scenarios achieve the National Energy Strategy objective for PV generation by 2030. ☐ Projections for PV system prices and their components for the two scenarios were developed based on the historical relationship between prices and market, as expressed by the learning-curve equation. Between 2002 and 2016, PV-system prices in Italy observed a learning rate of 15%. A large part of the PV-system price reduction can be explained by the reduction in module and inverter prices, two components that are subject to global learning and economies of scale effects. However, local learning effects also had a non-negligible impact on reducing PV system prices and in the scenarios, and it is assumed that they will continue to do so. ☐ Between 2010 and 2020, estimated subsidies paid to support PV deployment under the Conto Energia program amount to EUR 73 billion in the reference scenario. In the counterfactual scenario, estimated subsidies paid to support PV deployment and the additional investments in energy-efficiency projects total about EUR 17 billion. This suggests that a “wait and see” strategy, postponing support to PV deployment in order to benefit from global learning effects and at the same time “free up” financial resources to accelerate energy efficiency, would have probably had a significant effect on reducing overall clean-energy subsidization costs in Italy between 2010 and 2016. ☐ The Input-Output methodology was used to estimate the gross output and employment effects of the two scenarios. The calculation of output multipliers did not show significant differences between the two scenarios in the three sectors analyzed (PV Installation, PV Operation and Maintenance, and Energy Efficiency), while the difference between employment multipliers was marked. The much higher employment multiplier of the additional energy-efficiency investments in the counterfactual scenario makes this scenario more efficient in terms of employment mobilization. Averaging impacts in the three sectors, the employment multiplier for the counterfactual scenario is about 15% higher than in the reference scenario. ☐ Finally, the overall cost-effectiveness of the two scenarios was assessed by dividing employment impacts by estimated subsidies. The twofold strategy underlying the counterfactual scenario – to dilute support for PV technology over time and to accelerate energy-efficiency investments – results in a ratio of employment impacts to subsidies more than three times higher than in the reference scenario. This finding suggests that at least part of the incentives disbursed to support PV deployment under the Conto Energia program could have had a significantly more efficient impact in terms of creating employment, while still having the same effect on contributing to energy-sustainability objectives. It can be concluded that the Conto Energia program had and still has a significant “opportunity cost” on the Italian economy. | en_US |
| Advisor | Kurdgelashvili, Lado | |
| Degree | Ph.D. | |
| Program | University of Delaware, Energy and Environmental Policy Program | |
| DOI | https://doi.org/10.58088/d3a8-9g06 | |
| Unique Identifier | 1078921946 | |
| URL | http://udspace.udel.edu/handle/19716/23992 | |
| Language | en | |
| Publisher | University of Delaware | en_US |
| URI | https://search.proquest.com/docview/2130950487?accountid=10457 | |
| Keywords | Applied sciences | en_US |
| Keywords | Social sciences | en_US |
| Keywords | Conto Energia | en_US |
| Keywords | Energy policy | en_US |
| Keywords | Energy scenarios | en_US |
| Keywords | Sustainability objectives | en_US |
| Title | Analysis of economic impacts of the feed-in tariff scheme for photovoltaic technology in Italy | en_US |
| Type | Thesis | en_US |