Although Italy is still relatively dependent on fossil fuel resources, it has rapidly increased its gas and renewables resources in the last ten to 15 years in an attempt to fast track its reputation as one of the most diversified power nations in the world. Compared to other G8 countries, in particular France and the US, Italy has a notable historic absence of nuclear resources and therefore appears slightly behind in terms of diversifying its energy portfolio.
But as Ernst & Young's senior executive of power and utilities Filippo Gaddo explains, this does not account for recent developments. "Italy might not appear to have the most diversified energy portfolio out of the developed countries, but the changes it has made away from oil plants in the last ten years have been very significant. A lot of oil plants have been closed and replaced with gas and renewables resources. In many ways, Italy's recent push towards gas has been recognised as the equivalent of the dash-for-gas in the 1990s, but balanced with a larger quantity of renewables," he says.
Italy's reliance on oil stood at roughly 20% in the 1990s but that figure is now down to just a few percent. Out of its electricity mix, about 50% comes from gas, roughly 15% from coal, more than 20% comes from renewable sources and the rest is imported. Hydroelectric energy currently plays the most dominant role in contributing to the overall renewables percentage.
"Italy, together with France and Sweden, has the largest hydro resources in Europe. Certainly in France and Italy this is largely down to the dams each country has in the Alps," Gaddo says. "Italy has, however, also invested heavily in wind and photovoltaic (PV) resources – it has a particularly favourable climate for the latter. Because the vast majority of hydro resources that could be put in place already exist, current investment tends to be largely focused on the wind and PV markets."
Geothermal centre of excellence
Geothermal energy is also being increasingly exploited in Italy, particularly due to the shallow depths and volcanic activity in areas such as Tuscany. This gives the nation a unique resource compared with the rest of mainland Europe, and it is one it hopes to promote to the rest of the world.
"Tuscany is investing a lot in geothermal energy. The region wants to become a centre of excellence for knowledge and research for the rest of the world.
"The region actually began developing its geothermal resources sometime ago but then the innovation in that field was recognised as moving to Iceland. Tuscany is now, however, heavily investing again," Andrea Paliani, Ernst & Young's partner for utilities in Italy, says.
"If you look around Europe now, there is a tendency for particular cities or regions to establish themselves as centres of excellence for a particular energy field. France, for instance, has achieved this with nuclear energy, while in the UK offshore wind technology is becoming prominent. Tuscany's aim is to become the centre of excellence for geothermal technology globally, not only through production but through universities and research centres where people will go to learn about that particular technology," he adds.
Another important part of Italy's bid to diversify its energy portfolio is the reintroduction of nuclear plants. Following the Chernobyl disaster in April 1986, Italy closed many of its nuclear plants, but legislation published in July 2009 proved the government was committed to restarting a nuclear programme.
"Italy is currently going through the process of facilitating investment into nuclear resources and has set a target of reaching 25% of its total energy capacity through this power source," Gaddo says. "The government's basic aspiration is to one day have 25% of the country's energy derived from nuclear, 25% from renewable sources and 50% from gas."
Italy's push towards renewable energy resources in recent years has also been heavily supported by a range of government incentives and improvements to infrastructure. Two primary types of support for renewable energy exist in the country – one through tariffs and the other through certification. "Green certificates were introduced in 1999 and have certainly given strong incentive to the domestic renewables sector. There are also additional incentives for specific technologies such as PV through special feeding tariffs," Gaddo says.
"Italy is one of the forerunners of the smart grid and has invested heavily in producing one of the first generation of smart meters. This is important as there is currently a problem with congestion on the network. With the majority of Italy's offshore and onshore wind resources being positioned in the south of the country, there is a need to have a transmission network set up to link power to the north."
Ernst & Young has identified three major developments for Italy's energy sector over the next decade.
"Firstly the current investment in nuclear resources will see the plants become operational by 2019 or 2020, which will mark a big change for the country. Secondly, Italy will continue to introduce more renewable energy sources, particularly in terms of geothermal and wind," Gaddo says.
"Lastly, similar to many other European countries, Italy is likely to start working towards the possible introduction of electric vehicles.
"While this potential move will not change the country's energy mix, it will have obvious implications on demand and how the electricity is balanced. Again, this is more of a long-term change, but one that could see electric vehicle programmes introduced in major cities over the next few years."