What will be the new scenario in Italy with the approval of the regulation on biomethane? Davide Valenzano - Federica Ceccaroni

Transcription

1 What will be the new scenario in Italy with the approval of the regulation on biomethane? Davide Valenzano - Federica Ceccaroni Regulatory Affairs Unit GSE Italian Energy Services Operator Agriculture and Renewable Energy: the biogas/ biomethane value chain Reggio Emilia 30 June 2015

2 The GSE MSE Ministry of Economic Development (with others Ministries) MEF Ministry of Economy and Finance AEEG Energy Regulator Decrees and Guidelines Ownership 100% Resolutions Ownership 100% Ownership 100% Ownership 100% Purchase of electricity for small customers Electricity market, natural gas market and environmental markets Research on the energy system MISSION: GSE promotes the development of renewable energy sources and energy efficiency in Italy, granting economic incentives, managing energy services and supporting the policy makers - 2 -

3 The GSE s activities Management of support schemes and energy services for RES, CHP and Energy Efficiency (electricity, heating, transport): management of dematerialized applications, plants qualification and inspection, contracting, management of measures and incentives services, etc. Energy management: participation in the electricity market (energy withdrawn in the context of incentives/services managed), forecasting of electricity production, management of unbalancing costs, calculation of curtailed wind power generation, etc. GSE aims to reduce renewables unbalancing costs so it is crucial an accurate forecasting of non-programmable plants. CO2 auctions : we are in charge of auctioning Italian emission allowances on the European Common Auction Platform (CAP) Support to institutional policy makers and public administration Studies, statistics, monitoring on RES and EE: statistics, monitoring reports for the EU, analysis of economic and employment impacts, environmental effects, authorization procedures, generation costs in Italy and at international level, analysis and comparison of international policies International activities: participation in the main international associations (IEA, IRENA, RES4MED, etc.) and in the energy projects and studies funded (Concerted Action on RED, PV Parity, etc.) Information and training: promotion of RES and EE (workshops, reports and guides, training, etc.) Support to Italian RES operators ( Corrente project) to improve, at national and international level, the Italian industrial chain visibility in the fields of renewables and energy efficiency - 3 -

4 Legislative Framework for biomethane Main European Directives. and national transposition instruments 2009 Directive 2009/28/EC Promotion of the use of energy from renewable sources It promotes the use of agricultural material such as manure, slurry and other animal and organic waste for biogas production since it has significant environmental advantages in terms of heat and power production and its use as biofuel Legislative Decree 28/11 art.20: connection of biomethane plants to natural gas network; art.21: incentives for biomethane injected into the natural gas network; art.24: traceability of raw materials, prior use Ministerial Decree 5 December 2013 (puts into effect art.21 of Leg.D.28/11) Directive 2003/30/EC Legislative Decree 128/2005 (transposition of Directive 2003 (modified by Directive 2009/28/EC ) 2005 Promotion of the use of biofuels or other renewable fuels for transport 2003/30/EC) Law 296/2006 Introduction of a minimum binding share for the use of biofuels in charge of obliged operators that release for consumption (gasoil and petrol) 2006 Ministerial Decree 110/2008 (application of art.1, comma 368, point 3 of Law 296/2006) Regulation of criteria, condition and modality to put into effect the binding obligation for release a minimum biofuels quota for consumption in the national territory

5 The Italian Law for biomethane Implementing what has been established by the Legislative Decree 3 March 2011 n. 28, the Italian Government issued the Ministerial Decree 5 December 2013, which provides incentives for the production of biomethane: biomethane used in high efficiency cogeneration plants biomethane injected into the natural gas grids biomethane used as a biofuel for transport The biomethane plants must be in Italy. Biomethane through the grids, but what are grids? Grids are all the networks, transport and distribution systems, including: transport and distribution networks of natural gas whose managers have an obligation to connect third parties, other transport networks, transport systems using cylinder trucks, distributors of fuel both for road and for private use, including agricultural use, even if not connected to the networks of transport and distribution

6 The Italian Law for biomethane CHP According to the Ministerial Decree 5 December 2013: << Bio-methane injected into the natural gas network can be supported, on producer's request. by the issue of incentives for the production of electricity from renewable sources, in case it is injected into the network and used in high efficiency cogeneration plants >> The incentives for the production of electricity from renewable sources are described in the DM 6/7/2012. The incentive is a Feed in Tariff for power plants of capacity lower than 1 MW and a Feed in Premium for power plant with a capacity over 1 MW CHP plants over 5 MW have to compete in an auction system to access to the incentives; CHP plants over 100 kw have to compete in a registry system. These incentives are subjected and contribute to the spending cap for RES-E incentives (approaching) - 6 -

7 The Italian Law for biomethane CHP Biogas Tipology Size /MWh Period kw kw 200 Biogas from products kw MW 144 Over 5 MW kw kw 216 Biogas from by-products kw MW 135 Over 5 MW years kw 226 Biogas from wastes kw 119 Over 5 MW kw 99 Landfill gas kw 94 Over 5 MW kw 111 Sewage gas kw 88 Over 5 MW

8 The Italian Law for biomethane Grid injection According to the Ministerial Decree 5 December 2013: << Bio-methane injected into the natural gas network can be supported, on producer's request. through the provision of a specific incentive, in case it is injected into the natural gas grid >> Plants with a production capacity exceeding 250 m3/h must consume residues or wastes in a percentage of at least 50% by weight. The incentive is a Sliding Feed in Premium on injected gas, equal to the double of the 2012 gas price (28 c /Sm3 or 28 /MWh t ) minus the price of gas on a monthly basis. If the plant has a production capacity up to 500 m3/h, GSE could, upon request, withdraw the biomethane and sell it on the market. Producers will receive 56 c /Sm3 as a Feed in Tariff. Bonus: +50% bonus for plants using exclusively wastes and residues +10% bonus for plants with a capacity less than 500 m3/h -10% of the FiP for plants with a capacity exceeding 1000 m3/h - 8 -

9 The Italian Law for biomethane Transport According to the Ministerial Decree 5 December 2013: << Bio-methane injected into the natural gas network can be supported, on producer's request. by the issue of biofuel certificates in case bio-methane is injected into the grid and used for transport >> A quota system for biofuels is currently in place in Italy. Current quota is 5% of energy content of gasoline and diesel sold, but in 2020 it will be 10%. Biomethane sellers can receive the certificates (1 certificate for 10 Gcal) in order to reach the annual quota. As for other biofuels, biomethane must be certified as sustainable If the obligation is not fulfilled, the fine starts from 600 /Gcal Biomethane produced from residues/wastes receives 2 certificate every 10 Gcal (double counting) If a producer sells directly the biomethane in new filling station (built at his own expense), he will get a premium of +50% in the total number of certificates for 10 years - 9 -

10 The Italian Law for biomethane Ministerial Decree 10 October 2014 (the new Decree for biofuels) established the trajectory from 2015 to 2022 for the biofuel quota obligation Advanced biofuels are introduced: biofuels produced from materials listed in Annex 3 of the Decree. They include biomass fraction of wastes and residues (apart from UCOs and animal fats cat. 1 and 2), animal manure, sewage sludge, bagasse, grape marcs, wine lees, nut shells, nonfood cellulosic materials, etc... Biomethane can be an advanced biofuel. The subtarget in advanced biofuels is a way to promote advanced biofuels (including biomethane from waste and residues). It is another way to promote such biofuels in addition to double counting. 12% 10% 8% 6% 4% 2% 5% 5,5% 6,5% Transport 7,5% % 10% 10% 10% 1,2% 1,2% 1,6% 1,6% 2% 0% Q% Q% Advanced biofuel

11 The Italian Law for biomethane General overview Purpose Subsidy New plants Old Plants * Production of electricity in high efficiency CHP plants Injection into the gas grid Use in transport Feed in tariff / Feed in premium (on MWhe) Feed in tariff / Feed in premium (on MWht) Blending obligation Certificates (on Gcal) 20 years 40% of the subsidy for new pants 40% of the subsidy for new pants 70% of the subsidy for new pants 20 years or Remaining FER-E subsidy period + 5 years * Existing biogas plants can be upgraded into biomethane plants (totally or partially) and can receive the biomethane subsidy

12 Regulation for biomethane In compliance with Legislative Decree 28/11 and in application of Ministerial Decree 5 December 2013, the Italian Authority for electricity and gas with the consultation 498/2014/R/gas has started a regulation process and published following resolutions: Resolution 46/2015/R/gas (12 February2015) «Instructions for the connection of biomethane plants to gas network and definition of quantities admitted to incentives» Resolution 208/2015/R/gas (7 May 2015) «Tariff coverage for incentives to biomethane injected into the gas transmission and distribution networks» Resolution 210/2015/R/gas (7 May 2015) «Market instructions for biomethane injected into the gas transmission and distribution networks» On the 22th of April 2015, after the publication of Resolution 46/2015/R/gas and in application of art.8, comma 2 of Ministerial Decree 5 December 2013, GSE has published for the consultation a first part of Operative Procedures for the qualification of biomethane plants admitted to incentives (closing date: 22 May 2015)

13 Regulation for biomethane Resolution 46/2015/R/gas provides GSE with some instructions for the Operative Procedures in case of injection into the grid, as follows: Metering responsability: gathering and validation of quality and quantity measures are entrusted to network operators while the installation and maintenance of metering devices are entrusted to producers (and to network operators in case of injection throught cylinder trucks). Functional requirements for metering systems: must be similar to natural gas ones, then they re read remotely and must be compliant with legal metrology. Elements for establishing quantities admitted to incentives: use of lower calorific value (LCV) of biomethane, monthly transmission of meausurements to GSE by the 10th of every month, definition of calculation algorithms for each typology of plant); differentiation of incentivised quantities according to used materials. Contents of bilateral agreements (art.4 and 5 of MD 5 December 2013): start and end (expected) for the supply and provided monthly quantities fornite (expected). Date of entry into operation of biomethane plants used for transports: it is the date specified in bilateral agreements. Modality of definition of energy consumptions according to art. 3.6 of Ministerial Decree 5 December 2013 (based on real measurements). Art. 50 identifies GSE as responsible for the certification of quantities admitted to incentives according to modalities and timings defined in Operative Procedures

14 Regulation for biomethane Resolution 208/2015/R/gas, by applying art.8, comma 1, letter c) of Ministerial Decree 5 December 2013, has established that economic resources for financing biomethane incentives (included the costs for GSE withdrawal of biomethane) are covered by a Fund for measures and energy efficiency and renewable development interventions within natural gas industry», feeded by tariffs (distribution service tariff and tariff additional to trasnsport ones). Resolution 210/2015/R/gas, in compliance with consultation 498/2014/R/gas, has approved first market instructions for biomethane injection into the transport and distribution grid, and has also defined rules for biomethane allocation in case of GSE withdrawal, as an alternative to direct sale to the market and only for plant having a capacity up to 500 standard meter cube/hour, according to art.3, comma 3 of mentioned Ministerial Decree 5 December Elements provided from this resolutions are preliminary to the definition, within GSE Operative Procedures, of modalities for GSE withdrawal

15 GSE Consultation of Operative Procedures OBJECTIVE: describe, for consultation, the modalities and requirements for submitting a request for qualify, in particular: Show legislative framework, included explanations of laws, with particular focus to art.4 of decree, about eligible operators to incentives; Describe modalities and requirements for the presentation of request for qualify of biomethane plants, and GSE evaluation procedure; Specify requirements and modalities to comunicate the date of entry into operation for plants. STRUCTURE OF THE DOCUMENT Chapter 1 General Framework : it synthesize main concepts of the decree and show modalities to punti into effect art. 4; Chapter 2 Qualification procedure for biomethane plants, it explains main eligibility requirements for incentives and the documentation for being qualifyed and communicating the date of entry into operation

16 GSE Consultation of Operative Procedures Introduction Structure of the procedures Deadline: 22 May General Framework 1.1 Current legislative framework 1.2 Summary of MD 5 December Clarifications 1.4 Application of art.4 of MD 5 December 2013, related to incentives for biomethane used for transport (after the injection into the grid) 2. Qualification procedure for biomethane plants 2.1 Definitions 2.2 How to qualify a plant 2.3 Qualification process 2.4 Modalities for submission or requests 2.5 Filling of the request 2.6 GSE evaluation of requests

17 GSE Consultation of Operative Procedures Key points Missing European laws related to quality standards for biomethane (used for transport and injected into the grid, M/475 Mandate). Only biomethane based on upgrading biogas produced by anaerobic digestion of biological products, by-products and organic materials from municipal waste. Biomethane plants to be admitted to incentives must respect technical requirements and industry standards (i.e. UNI TR 11537:2014) Gas Network Code must be updated according to following principles: Definition of quality standards for injection of biomethane into the grid and of criteria for the request and acceptance of connection for biomethane plants; Definition of criteria to manage transport and balancing of biomethane into natural gas pipelines (capacity assignation, etc.) and implementation of delivery point from biomethane productions; Definition of modality to gather quality parameters, standards for metering devices and how to make available measurements

18 GSE Consultation of Operative Procedures Biomethane injected into natural gas pipelines must respect following quality standards: provisions from Ministerial Decree 19 February 2007; conditions from Ministerial Decree 5 December 2013, concerning the exclusion of biomethane produced with thermochemical processes by the catalytic treatment of synthesis gas downstream of biomass gasification; Must not contain materials described in technical report UNI/TR 11537, since maximum limits are not yet been identified. Injection of biomethane into natural gas transport and distribution grid Use of biomethane without injection into natural gas transport and distribution grid Network operator Responsible for quality verification Biomethane producer

19 GSE Consultation of Operative Procedures The incentives for biomethane can start, but together with following actions: Network code update; Definition and publication of quality standards from network operators; Completion of legislative and regulatory framework (i.e. for capacity assignation, measurements sharing, settlement, balancing aspects in case of GSE withdrawal)

20 GSE Consultation of Operative Procedures Request for Qualification Eligible Operators: responsible for biomethane plants under design or construction (project qualification); in this case operators must comunicate the start of construction of qualified plant by 18 months from the release of the qualification (for force majeure or independent of the will causes the deadline is increased up to 3 years from the qualification); responsible for biomethane plants already entered into operation by 1 year from the date of entry into operation of biomethane plant. Date of entry into operation Art. 3 date of first injection of biomethane into the natural gas pipeline as declared from network operator. Art.4 - date of first release of biomethane for transport consumption, namely the starting date of bilateral agreements for the supply between biomethane producer and operator that release for consumption. Art.5 date of first running after the completion of construction of all CHP plant components

21 GSE Consultation of Operative Procedures GSE Evaluation process GSE evaluates requests within 120 days. The evaluation process, (for plants under design or running), is composed, as an example, of following phases: Check of data entered into GSE Biomethane Portal and adequacy verification between provided information and attached documents; Technical and administrative examination of provided information and documents; Verification of the date of entry into operation and definition of the incentive (starting date, other parameters useful to pay incentives (i.e. auxiliary services, energy related to biomethane for hybrid plants, etc.); Evaluation of additional documentation required from GSE during the evaluation process; Communication of the result of the evaluation or tacit consent. Changes of type of incentives after the qualification of the plant can be done. At this purpose the producer should send to GSE a specific request by the 30th of June of each year. GSE evaluates the request and communicate the result within 60 days from the request receipt date

22 What s next (from GSE) Definition of modalities for data and information transmission related to measurements for incentive payments. Definition of procedures to start withdrawal mechanism for biomethane injected into transport and distribution network grid for plants up to 500 std mc/h. Definition of minimum elements for withdrawal agreement with GSE. Identification of information flows with network operators Implementation of Biomethane portal Definition of administrative data for the payment of incentives

23 Thank You For Your Attention