The white certificate scheme: the italian experience and proposals for improvement

The white certificate scheme: the
italian experience and proposals for
improvement
Dario Di Santo Veronica Venturini
fiRE – italian federation for the Rational Use of Energy fiRE – italian federation for the Rational Use of Energy
Via anguillarese 301 Via anguillarese 301
00123 Roma iT 00123 Roma iT
disanto@fire-italia.org venturini@fire-italia.org

Daniele forni Enrico biele
fiRE – italian federation for the Rational Use of Energy fiRE – italian federation for the Rational Use of Energy
Via anguillarese 301 Via anguillarese 301
00123 Roma iT 00123 Roma iT
forni@fire-italia.org biele@fire-italia.org

Keywords
baseline, tradable white certicates, programme impact, na- Strengths and weaknesses, achieved results and suggestions
tional energy efficiency plans, incentive mechanisms, energy to improve the current scheme will be addressed.
efficiency policy, energy savings certificates, policy implemen-
tation, cost effectiveness
Contents
This paper will present in the first chapters how the Italian White
Abstract Certificate scheme works, its basis and market dynamics. Then it
The Italian White Certificate scheme is one of the most com- will focus on the evaluation of the economical impact of deemed
plete examples of baseline and trade incentive schemes existing savings projects, since they are the most important in term of
in Europe, created with the aim of promoting energy efficiency accounted savings and deeply affect the capability of the scheme
measures on final energy uses. The first draft was defined by to reach the mandatory targets and promote energy efficiency
Ministerial decrees in July 2004. The scheme provides for elec- solutions. The analysis will show some critical issues that could
tricity and natural gas DSOs1 the obligation to achieve yearly play a negative role in the future and suggests changes in the
energy saving targets certified by the presentation of a corre- scheme’s design in order to avoid the possibility of a failure.
sponding number of white certificates (each equal to one toe). Comparison with other schemes shows that this scheme works
The DSOs can reach their target either by implementing energy better in promoting the growth of energy efficiency actors than
efficiency solutions among end-users or by buying white cer- in stimulating the implementation of energy efficiency projects.
tificate from other DSOs, ESCOs or companies that have an For this reason, the paper suggests to consider white certificate
appointed energy manager as provided by Italian law 10/1991. schemes (called hereafter WhC) as a complementary policy, to
During the first years of application, the scheme encountered be used together with other incentive schemes and policy tools.
some initial difficulties and has been corrected and modified The analysis of the Italian WhC is mostly based on three sur-
with ad hoc legislative acts in December 2007 and in May 2008. veys recently implemented by FIRE2 among energy managers
Recently, it has become difficult to find white certificates on and ESCOs [1][2][3], on a study realized by FIRE in 2010 [4],
the market, due to the configuration of the scheme more than and on information, views, experiences, and issues communi-
to market dynamics, and there is the necessity to change the cated by policy makers, institutional officers, FIRE’s members,
scheme. and energy managers at FIRE’s workshops, conferences, and
It is time to make a brief assessment of the White Certificate training courses [5].
scheme, evaluating its effectiveness in promoting energy efficien-
cy in comparison to the experiences of other EU member States.
2. fiRE, the italian federation for the Rational Use of Energy, is a no-profit associa-
tion that manages the italian energy manager network on behalf of the Ministry
for the Economic Development and promotes energy efficiency supporting profes-
sionals and operators that work in the energy field. it deals with the italian white
1. DSo: distribution system operator. certificate scheme since 2001.

ECEEE 2011 SUMMER STUDY • EnERgY EffiCiEnCY fiRST: ThE foUnDaTion of a low-CaRbon SoCiETY 249

Contents Keywords Authors

2-011 Di SanTo ET al PanEl 2: CURREnT EnERgY EffiCiEnCY PoliCiES

Figure 1. Yearly DSOs’ targets and issued certificates.

The Italian White Certificate scheme technically and administratively sound –, the owner receives
from GME (Gestore dei Mercati Energetici that manages the
The sCheme’s bAsICs Italian Power Exchange and the Emission Trading, Green Cer-
The Italian WhC scheme (also known as TEE, acronym of tificates and WhC markets) on its account a number of WhC
the Italian legislative definition “titoli di efficienza energetica”, corresponding to the recognized saving (one White Certificate
meaning “energy efficiency certificates”) created by the D.M. 20 equals to one toe of savings).
July 2004, whose purpose is to promote measures to improve Every party with WhC on its account can then trade the cer-
energy efficiency among end-users, has now entered its second tificates either on the real time GME market7, which usually
phase, after the changes introduced by the D.M. 21 December is held once a week, or through bilateral contracts registered
2007 and the D.Lgs. 30 May 2008 No. 1153. on the GME’s platform. Operators that cannot present WhC
The system is based on the obligation, imposed on electric- projects may join the market too as traders. The scope of WhC
ity and natural gas DSOs with more than 50,000 customers, trading is to allow obliged DSOs to obtain a WhC amount suffi-
to meet specific targets, expressed as primary energy savings cient to reach their targets. The certificates should be presented
and increasing over the years as shown in Figure 1, aimed at to AEEG within May 31st of the year that follows the obligation.
increasing end-use energy efficiency. These savings can be In the case of an insufficient number of certificates there are
achieved through energy efficiency actions among end-users two possibilities:
and are assessed using tons of oil equivalent (toe) as measure- • if the number of WhC is at least equal to half the DSO’s tar-
ment unit4. Cumulative targets for DSOs, set at 200,000 toe get, the DSO is not subjected to penalties, but the next year
in 2005, rose from 2.2 million toe in 2008 to 6.0 million toe it must add these lacking WhC to its target;
in 2012. This year a new ministerial decree should extend the
scheme duration beyond 2012. • if the number of WhC does not reach half of the target, the
Figure 2 shows how the scheme works. A DSO or a volun- distributor is fined and it has nevertheless to add the lacking
tary subject – a DSO with less than 50,000 users, a company WhC to its target the next year.
controlled or controlling a DSO, an energy service company It is worth noticing, since it is important in the scheme’s frame-
(ESC)5, or a company or institution that have appointed an en- work, that AEEG has not set the value of the penalty. That
ergy manager in accordance with article 19 of law 10/916 – may means it will be calculated on the basis of the extent of the
apply for WhC by presenting an energy efficiency project. If default and of the involved DSO’s behaviour in complying with
the project satisfies the rules set by AEEG (the Italian Electric- the request to correct it. Therefore, the market lacks this typi-
ity and Gas Authority) and is approved by ENEA (the Italian cal price upper threshold. We will see in Figure 2 which is the
Energy Agency) – whose task is to check that the project is actual threshold to the market price.
The end-user can benefit from part of the economic value
of the WhC or, less frequently, from a discount on the capital
3. D.M. is the abbreviation for ministerial decree, a legislative second rank act that cost of the solution or on the energy service annual fee, where
is issued in accord to a law or a legislative decree (D.lgs.). The white certificate applicable. It can be an active party only if it is an organization
scheme was in fact provided for in the electricity and gas markets liberalization
laws. with the energy manager appointment obligation provided by
4. with the italian production mix, one toe is about 1,200 m3 of gas or 5,350 kwh law 10/1991.
of electricity. That means that a 0.187 toe/Mwhe and 0.086 toe/Mwht coefficients
are used.
Almost every project involving an improved efficiency in the
5. in order to participate in the white certificate scheme it is not necessary to be an final consumption of energy can be admitted in the scheme,
ESCo, as defined in the 2006/32/EC directive, but it is sufficient for the company from boilers to lighting systems, from solar thermal to cogen-
purpose to deal with the implementation of energy efficiency measures. This is the
reason why we use ESC as acronym instead of ESCo. before it can present a project
an ESC shall demonstrate to comply with this request by obtaining an accreditation
(“accreditamento”) with aEEg.
6. industrial companies that have a primary energy consumption of at least 7. it is possible to participate in “viewer mode” to the sessions by following the
10,000 toe and the other type of companies or authorities other 1,000 toe have to directions given at the following link: http://www.mercatoelettrico.org/En/Mercati/
appoint an energy manager by law. Their network is managed by fiRE. accessowhC.aspx.

250 ECEEE 2011 SUMMER STUDY • EnERgY EffiCiEnCY fiRST: ThE foUnDaTion of a low-CaRbon SoCiETY


PanEl 2: CURREnT EnERgY EffiCiEnCY PoliCiES 2-011 Di SanTo ET al

Figure 2. Italian white certificates scheme.

eration, from electric motors to industrial process projects. The calculated on the basis of an algorithm based on at least one
exceptions not admitted in the scheme are projects aimed at measurement. For example in the case of high efficient cogen-
increasing efficiency in electricity generation and solutions that eration, the savings are calculated with respect to the amount
are not listed in dedicated tables provided by the ministerial of fuel consumption, the electricity produced, and the useful
decrees that set up the scheme8. Each of the eligible projects is heat supplied to the user. The deemed saving approach has
expected to issue a certain number of certificates, depending on the advantage of requiring no meters and of making the WhC
the installed or replaced units, or on measured parameters (e.g. available since the implementation of the action. The engineer-
electricity and heat produced by a district heating plant), usu- ing estimates approach requires some measurements, delaying
ally for a period of five years (eight years for building envelope the emission of the first WhC usually by one year12. Both ap-
related projects, ten years for high efficiency CHP). proaches make it easy to present projects.
One of the main issues with WhC is how to calculate the In the other cases, when a simplified file is not available, the
energy savings, since in many cases it is not reliable and prac- proponent must get a prior approval for the procedure of meas-
ticable to use meters9. For some actions, the savings are deter- urement and evaluation of the savings he intends to use. These
mined on the basis of special “files” defined by AEEG. In this are calculated on the basis of measured quantities (the so-called
case (deemed savings – with no on-field measurement – and “metodo a consuntivo”, or energy monitoring plan). In fact, the
engineering estimates – with on-field measurement) it is easy proponent shall make a market survey to estimate the baseline
to evaluate the savings on the basis of the installed units or the of the solution with respect to market standards and the related
produced kWh (e.g. solar heating, windows replacement, CHP “additional” savings, and propose a methodology to calculate
and district heating, etc). For example every square meter of the savings based on appropriate metering. Under this proce-
glazed solar thermal panels installed in Rome substituting an dure, important actions – such as industrial cogeneration and
electric boiler corresponds to 0.154 toe10. For deemed savings, many industrial projects, building renovation, waste heat re-
a preliminary survey is made by ENEA – previously by AEEG covery, etc – are presented.
with the help of ENEA, RSE (Energy System Research Center) An important issue is that only additional savings are consid-
or other subjects – in order to evaluate the standardized sav- ered for WhC. Additional savings are evaluated with respect to
ings to be recognized by these files. If during the survey it is a standard market baseline, dependent on the considered solu-
not possible to achieve a standardized method11, the engineer- tion and/or sector, that represents the average energy perform-
ing estimates approach is proposed. It implies that savings are ance of the typical action. This is a correct approach, whose
aim is to give the incentive only to the savings promoted by the
scheme – and not to the ones that would be obtained in any
8. The italian version of the D.M. 20 July 2004 is downloadable from the following case because of technological improvement, mandatory stand-
link: http://www.autorita.energia.it/it/ee/def.htm.
ards, or market developments –, thus theoretically ensuring
9. Either because it would be too expensive or because it would be difficult or
impossible to isolate the effects of the energy efficiency solution (e.g. for buildings that the incentive is both cost-effective and able to promote an
thermal insulation).
increase in energy efficiency. Unfortunately, though, the effects
10. This number will change in case of different location (the file considers five
solar zones), of gas boiler or district heating integration, or of evacuated tube col-
of the additional savings approach are not the expected ones.
lectors. See “list of deemed savings file” chapter.
11. for example, because there is no agreement among the stakeholders (tech-
nology manufacturers, energy providers, DSos, consumers, associations, etc), or
because the savings vary a lot depending on some variable. 12. That is the time required to “measure” the savings.




In order to facilitate the comprehension of the way addition- ity to obtain WhC, and this means that WhC become only a
al savings work, two examples are presented below, one for the premium for the ESC or end-user that presents the project).
deemed saving evaluation and one for the energy monitoring In fact, since it is difficult to find reliable market data in Italy,
plan evaluation. the evaluation of additional savings is usually more complex
If we change our gas boiler with a condensing one at home, and time consuming than the identification of the required
we can expect a high energy saving, since often the substituted meters and of the proper algorithm. For some actions, like the
boiler is old and characterized by low real efficiency13. But we domestic boiler example, it dramatically reduces the savings,
have to take into account that, due to the technological im- with respect to the ex-post VS ex-ante energy consumption
provements, even low class boilers presently have a high effi- difference, and thus the economic impact of WhC. For this
ciency, so the old boiler could not be considered as a baseline. reason, it is a main variable in the scheme and should not be
The baseline should instead be evaluated with respect to the underestimated.
typical boiler installed today in the residential sector. In this When renewable sources are used as fuel, the produced
particular case, since the Italian legislation set a minimum useful heat is integrally converted in savings with a 0.086 toe/
boiler efficiency that represents well the typical boiler instal- MWht coefficient.
lation, this value represents the baseline. So the additional There are four types of WhC:
savings are calculated as a difference between this reference
• Type I: electricity savings;
value and the condensing boiler efficiency, for which the corre-
sponding deemed saving is 0.060 toe for a boiler with domestic • Type II: natural gas savings;
hot water production installed in Rome. It is worth noticing
• Type III: savings of other fuels (LPG, diesel oil, etc) for other
that to reach one toe of savings with this action, from 10 to 27
purposes than transportation;
boilers are needed, depending on the climate zone14, and this
correspond, with a WhC price of 90 Euro, to 3–9 Euro/boiler/ • Type IV: savings of other fuels (LPG, diesel oil, etc) for
year. transportation uses.
In case of industrial cogeneration (CHP), for which there is
This classification exists because end users pay a tariff compo-
no simplified file, it is necessary to use the monitoring plan ap-
nent on electricity and natural gas distribution to allow obliged
proach. Regarding the baseline issue, there are three possibili-
DSOs to recover costs “not covered in other ways”16. This com-
ties, according to ENEA:
ponent gives way to a reimbursement for obliged DSOs that is
• CHP is not a usual practice in the considered industrial sec- currently worth 93.68 Euro/toe (it ranged between 88.92 and
tor, thus the baseline corresponds to the separated produc- 100.00 Euro per toe from 2005 to 2010) and is assigned to DSOs
tion of electricity and heat15; upon the presentation of type I, II, and III certificates to the
AEEG17.
• CHP is a usual practice in the considered industrial sector
The scheme provides a minimum threshold for presenting
(e.g. paper or ceramic industry), but has not yet been used
projects, which varies from 25 to 200 toe, depending on the
in the company that presents the project, thus the baseline
type of actions and the proponent (see Table 1). This is miti-
corresponds to a typical CHP solution (e.g. steam turbine,
gated by the fact that projects implemented among different
or reciprocating gas engine);
users can be combined to achieve the required threshold. The
• CHP is a usual practice in the considered industrial sector threshold is an issue for small projects, especially in case of
(e.g. paper or ceramic industry) and CHP was already used energy monitoring plans, and for companies with an energy
in the company that presents the project, thus the baseline manager, because for a single user, reaching a 200 additional
corresponds to the solution with the higher efficiency be- toe savings is not an easy task.
tween the typical CHP system and the ex-ante plant. Table 2 shows that if a proponent implements different ac-
tions benefiting different clients, they can be added together
This shows how the same solution, which virtually ensures the
provided that they present the same evaluation method (all
same energy consumption reduction, is treated differently with
deemed savings, for example). If different evaluation methods
respect to the user. This means that this incentive scheme does
are used (for example solar thermal, which uses deemed sav-
not consider the capability of different technologies to pro-
ings, and CHP, which uses engineering estimates), the corre-
mote a real energy consumption reduction, both because of
sponding actions can be added only if they benefit a single user
the additional savings and because it does not take into account
and are presented as a monitoring plan.
projects’ lifetime. Besides, additional savings do not mean ad-
ditional actions: we will show below that the incentive is often
too weak to justify an operator choice (i.e. the energy efficiency
action will be carried on in any case, regardless of the possibil-
16. This definition, provided by D.M. 20 July 2004 and meaning that the DSos
reimbursement shall take into account the earnings related to energy efficiency
investments, is not easy to translate into numbers. Since DSos are mainly passive
parties, because they usually do not implement projects, it is possible to say that
the DSos reimbursement shall be substantially similar to the whC market price.
13. for example 70-75 %, since not only the nominal efficiency is lower, but also DSos actually claim a reimbursement higher than the market price, in order to
the boiler works at partial loads most of the time, due to the mild italian weather. cover the expenses related to their units dealing with whC and the reduced energy
This of course amplify the real efficiency gap between the two solutions. earnings from distribution.
14. in italy there are six climate zone, classified from a (the hotter one) to f (the 17. Type iV certificates do not give access to reimbursement, thus making them
colder one). Roma is in zone D. not worth to exchange on the market (this is the reason why in the price diagram
15. This is by the way the case of ChP for civil sector heating and cooling uses, as in figure 3 they are not present). it is expected that a new law will change this and
considered in engineering estimates file no. 21. so in the next years they also will become interesting.




Table 1. minimum required thresholds to present a project.

DSOs and company with
Threshold (toe) Voluntary parties
energy manager
Deemed savings 25 25
Engineering estimates 100 50
Monitoring plan 200 100

Table 2. possibility to sum up different actions to reach the thresholds of Table 1.

Possibility to sum different Non homogeneous
actions in a project to reach Homogenous savings evaluation methods savings evaluation
the minimum threshold methods
Engineering
One client Deemed savings Monitoring plan Monitoring Plan
estimates
Engineering
Many clients Deemed savings Monitoring plan Not permitted
estimates

Figure 3. WhC (TEE) price trend.

DemAnD, supply AnD WhC’s prICe toe. Figure 3 shows the price trend over the years (till the begin-
The scheme therefore works on the basis of a demand, repre- ning of March 2011)18.
sented by the obligation imposed on DSOs (e.g. 4.3 million toe WhC can be cumulated with another national scheme grant-
in 2010), and a supply, represented by the certificates held by ing a 55 % tax deduction when energy efficiency refurbish-
parties who have presented and got approved energy efficiency ments are undertaken, and with many regional incentives. This
projects. means that a household owner can obtain the tax deduction
Since there is a demand/supply driven market, periods of for a solar thermal or a double glass window installation, for
oversupply, as in 2008, when the price tends to remain relatively example, and an ESC can ask for WhC (of course provided it
low can be followed by periods when the price goes up because reaches the minimum project threshold by summing up differ-
of a shortage of certificates. The certificates are bankable until ent clients), offering a discount to the end-user. They are also
2012 and can therefore be withheld by the owner to be sold at a compatible with green certificates and the RES feed in tariff, but
time considered more favourable. only for the thermal part (i.e. green certificates can be issued on
In 2009, the certificates were traded at a value between the electrical output of a biomass fired cogeneration plant while
75 and 85 Euro per toe, whereas in 2010 the price has reached WhC can be obtained on the heat recovery, if used for heating,
100 Euro per toe and has averaged in the range 90-95 Euro per air conditioning, or other useful purposes).

18. Type iii whC were not exchanged before the end of 2008 because till then
they opened no right to tariff reimbursement. Presently only type iV whC have
this problem.




Figure 4. Usage of simplified files and monitoring plans as total Figure 5. Deemed savings share by different solutions.
savings percentages.

Deemed savings capability to promote energy end of this article, the new values of the files are also presented
efficiency (marked with a “bis” or a “tris”).
The other solutions are less profitable, and in most cases
As part of the scheme of energy efficiency certificates, the
the cash flow generated by WhC trading seems insufficient
method of deemed savings deserves special attention because,
to promote their implementation. FIRE has pointed out this
since the scheme has started, using standard files to quantify
risk since the beginning of the scheme, when the availability
the energy savings has largely prevailed over the other two
of the first file for CFL lamps permitted to get one WhC every
types of evaluation, both in terms of savings certificates and
79 lamps, making this action very inviting for DSOs and ESCs.
number of operations performed (as shown in Figure 4 [6]).
As soon as the file was modified, reducing the additional sav-
The reason for this success lies mainly in the simplicity of appli-
ing coefficient, this solution became less attractive; the same
cation of such files, which do not require direct measurements
happened with aerators and low flow shower taps. As a conse-
of energy flows.
quence the percentage for these solutions has been reducing in
It is worth noticing that the fall in engineering estimates is
the recent times. Since WhC market prices have not changed
due to an administrative tribunal decision in 2006 that blocked
much, the lack of other highly profitable solutions explains the
the possibility to recognize savings related to CHP and district
reason why it is getting difficult to find WhC on the market (as
heating files19.
shown by Figure 1).
Another emerging trend is the growth of monitoring plans,
It is possible to start from a simple calculation, in order to
due both to a better understanding of the methods needed to
better explain this point. One toe means around 90 Euro from
present this kind of projects, and to an increasing difficulty in
WhC, as seen in Figure 3, and an economic saving on bill of
presenting new deemed projects.
400-600 Euro for the large industrial users and 700-800 Euro
Figure 5 shows what kind of technical solutions were pre-
for the civil ones with Italian energy prices21 (household aver-
sented among deemed saving files. It is clear that compact fluo-
age costs in early 2011, as reported by AEEG, are 0.75 Euro/m3
rescent lamps, together with low flow shower taps and aerators
and 0.16 Euro/kWh). Apparently WhC increase the cash flow
lead the game, with 87 % of savings. Altogether, the other files
of a 10-20 %, which would represent a good incentive. There are
amounted only to 13 %.
two aspects that shall be considered: this percentage is usually
This is because the files related to CFL, aerators and shower
lower due to the additional saving coefficient and the impact
taps permitted to earn through WhC more than their capital
of the incentive – cumulated over the years of WhC recogni-
cost. In addition, it was sufficient to distribute lamps, without
tion – depends on the capital cost of the action (acceptable
any on-site installation. These actions provided a very strong
investments in term of pay back time usually average 1,000-
economic benefit, resulting in a rapid diffusion of CFL on the
2,000 Euro/toe for industrial users and 3,000-6,000 Euro/
market. Thus CFL became the baseline, and AEEG decided to
toe for civil users, whereas the WhC contribution is around
change the additional savings coefficient20, reducing the ad-
400 Euro – calculated at a 5 % discount rate – on “additional”
ditional savings. In the list of the deemed savings files at the
toes).
In order to address more specifically this issue, FIRE carried
on a study in 2010 within the “Ricerca di Sistema” programme
19. The tribunal decision followed a request of a DSo that asked for an increase
in the calculated savings. The tribunal gave reason to the DSo and asked aEEg
to evaluate the “incentive to capital cost of investment” ratio for
to change the algorithm, but the aEEg tried to have the sentence changed by the deemed savings files.
superior tribunal (Consiglio di Stato), which confirmed the tribunal decision, and
then it took another half a year – in 2010 – to issue the new files no. 21 e no. 22.
The main hypotheses are:
Thus all the ChP and district heating plants realized between 2006 and 2010 will
have their whC issued in the end of 2010 and for this reason a strong increase in
the engineering estimates percentage is expected in 2011 aEEg’s report.
20. To keep into account only the additional saving, a additional saving coefficient
is used, which is 100 % when the baseline corresponds to the ex-ante situation and
a value between 0 and 100 % in the other cases. The gross savings are then mul- 21. lPg and diesel oil will cost 1,300-1,500 Euro/toe. large industrial costumers
tiplied by this coefficient to get the net savings that are considered to issue whC. costs are lower, but usually higher than other EU Countries.




%

Figure 6. WhC’s incentive VS capital cost ratio for deeemed savings files. Only results above 10% are shown.

• for each technology a range of typical investment cost has it is very difficult to find enough certificates on the market, the
been estimated; situation is becoming critical.
The low revenue per unit and the complex procedure for the
• the value of 90 Euro/toe has been applied for the years of
collection of documentation to present a project, in fact, often
the incentive (five or eight depending on the solution) and
do not justify the effort of presenting a WhC project. This is the
discounted at 5 % ;
case of actions that are not normally made by actors allowed
• the incentive/capital cost ratio has been calculated for typi- to present projects, such as small companies and individual
cal situations, with reference to climate zone, solar zone, and installers, for heat pumps, boilers, air conditioners, window
other files’ variables. glazing and insulation in residential buildings. In these cases,
the number of units to reach the threshold for submission of a
Figure 6 shows the files that presents a “WhC incentive/capital
project is particularly high, and the per unit revenue is low. To-
cost of the action” ratio higher than 10 %. As it can be seen,
gether they make it inconvenient to take part in the scheme23.
apart from lamps, taps, and stand-by, only VSD for industrial
One option for equipment and appliance retailers and in-
pumps, solar thermal collectors in substitution of electric boil-
stallers may be to rely on an ESC, which could serve as a “col-
ers, and the substitution of electric DHW boilers with gas boil-
lector” of actions. On the other hand, however, it would not be
ers remain available. All other actions present a lower ratio.
easy to involve such a company, because of the low premium
It is worth noticing that even if a less than 10 % ratio can be
available, if the collectable certificates are not a conspicuous
good when calculating NPV and IRR22, from a psychological
number.
point of view it is insignificant, at least in terms of helping to
This is the reason why the scheme is not able, at least with the
choose which energy efficiency action to implement.
actions considered so far, to promote these technical solutions
The methodology of evaluation through deemed savings
efficiently.
presently works more as a support scheme for ESCs rather
In order to check the position of energy managers and the
than as an award to stimulate the investment in energy efficient
other operators on this issue, FIRE made three surveys, one
technologies. The main reason for the high disparity in terms
aimed at ESCos in 2009 [1] and the other at energy managers,
of economic returns among the technologies is due to the fact
which closed respectively in 2009 [2] and in January 2011 [3].
that the WhC scheme considers only the yearly additional sav-
The results, with respect to the perception of the WhC strength,
ings achieved by each technology in the 5-10 years for which
was similar. We present below information about the most re-
WhC are issued, and is not related to the expected lifetime of
cent survey. A questionnaire was sent to approx. 2,000 energy
the different projects. Thus the market baseline of the different
managers and FIRE received 144 replies24.
technologies becomes fundamental in evaluating the weight of
Figure 7 shows that the participation of energy managers in
the WhC incentive.
the WhC scheme has till now been very scarce and that many
Although in principle this represents a just form of re-
source allocation, giving full importance to the objective to be
achieved and not to the means, in practice it results in leaving
out of the game several viable technologies that could be imple-
23. for example, in the case of the replacement of single glazing with double glaz-
mented broadly, but are not stimulated by the WhC scheme. As ing in residential file n. 4, between 1,100 and 12,500 m2 of surface, depending
on climate zone, need to be replaced to reach the minimum threshold of 25 toe
with a corresponding revenue varying from 12 Euro to 1 Euro per square meter.
24. Considering that the questionnaire was a complex one and that it remained
22. nPV (net Present Value) and iRR (internal Rate of Return) are well known open for answers for a short period the answer rate is satisfying and higher than
economic indicators to evaluate investments. usual.




Figure 7. Energy manager answers to one of the questions raised within a recent FIRE survey. SSE=ESC, distributor=DSO.

of them do not consider the scheme worth joining in. The most Critical aspects
commonly provided reasons are: The WhC scheme has shown some critical issues, only partly
• lack of interest due to an insufficient economic value; resolved by the latest measures issued by public authorities.
Legislative decree 115/2008 opened the way for some substan-
• complexity of the scheme; tial changes, but it was not transposed in a ministerial decree.
• lack of an adequate knowledge of the WhC scheme; The government showed a renewed commitment to the scheme
with the legislative decree 28/2011 related to the 2009/28/EC
• size of actions below the scheme threshold; directive, so 2011 should be the year for a confrontation be-
• lack of a dedicated call centre for queries about the scheme; tween institutions and stakeholders to identify the possible
improvements.
• lack of guidelines for monitoring plans evaluation and for The following issues could enhance this scheme if correctly
simplified files; dealt with.
• lack of interest in energy efficiency measures from their Presently only 25 simplified files have been published by
company. AEEG26. Given that over 90 % of the presented projects cor-
responds to this kind of actions, it goes without saying that this
The first three points are linked together, and witness the fact is a limiting factor: many implemented projects that fall outside
that the WhC scheme is not a strong incentive to implement the files are not asking for certificates. This is reflected by the
energy efficiency actions. Besides, its complexity and the dif- very low number of applications submitted by companies with
ficulty of getting information frighten many people more than energy managers (only two at the end of June 2010, to be com-
the scheme deserves. pared with the over 2,000 companies and local authorities that
• The reasons behind this result are the following: have an appointed energy manager).
Information about the availability of WhC on the market and
• Obliged distributors do not play a direct role in the im- their trading prices have improved thanks to recent measures
plementation of energy efficiency measures (i.e. their only (e.g. bilateral market average prices are now published month-
source of revenue is the tariff reimbursement); they do not ly), but this is still not enough to enable an investor to properly
really care about the WhC scheme, even considering their manage the price risk and the best market strategies, both be-
ESCOs25. cause of the low frequency of updates and of the lack of data.
• Low incentives, together with the minimum threshold, the This represents an important limitation for a baseline and trade
complexity of the scheme, and the lack of information, keep scheme. It would be useful to have a web page on the GME
away many potential participants. website with real-time data. And it would not be difficult to
achieve, considering that all the projects are presented via web.
• The financial crisis does not help energy efficiency, at least The definition of the new rules on the reimbursement rate
until energy prices remains low (which is not the recent for DSOs – indexed to the trend of the main energy carriers,
trend). but not to the outcome of the market in the previous years - is
another limit to the price of WhC, given the reluctance of DSOs
to directly implement projects and to purchase certificates at
a price greater than the refund. Having no longer profitable

26. The twenty files indicated in the list below and five engineering estimates:
ChP, district heating, VSD for water pumping systems, natural gas decompression
25. for example EnEl Si and EnEl Sole for the EnEl group. systems, centralized heating and cooling for buildings.




projects like the fluorescent lamps to drive the supply side, takes into account the capability of the implemented actions
considering the fast growing energy saving targets, represents to produce savings during its lifetime. The national target for
an issue since WhC price is rising and the reimbursement is the 2006–2009 period has been totally fulfilled (and even ex-
not. Thus, unless the reimbursement rule is reviewed to allow ceeded) by the obliged actors. For the second obligation pe-
higher values, to increase the number of presented projects, riod, the obligation has been increased from 54 TWh cumac
a simplification of the applications for monitoring plans, and up to 345 TWh cumac, with transport fuel suppliers added to
possibly the reduction of the thresholds for projects dimension the energy suppliers as obliged actors. Compared to the Italian
will become almost a requirement. scheme, the number of French files is much higher (currently,
The possibility to introduce a minimum threshold for the there are about 200 files for 200 energy efficiency actions),
price of WhC could also be considered, like the one used in the and covers almost all energy savings registered in the French
Italian green certificate scheme, in order to shield participating scheme. Another method of calculation is admitted: specific
companies from the risk of very low prices on the market (note field measures are presented to and evaluated by ADEME, and
however that this is not a risk in the near future, because of the this aspect can be easily compared to the Italian monitoring
lack of certificates expected for the 2011 obligation). plan evaluation method.
Concerning additional savings, it is better to maintain them, It is worth noticing that not only these three schemes, but
but it could be useful to simplify their evaluation in monitoring also the one set by Flemish government in the Belgian federa-
plan projects, or at least to provide sectorial guidelines to help tion, created in 2003, have fulfilled their targets and are consid-
proponents to identify them. ered cost effective, since the cost to save energy is lower than
the cost of supply. The French scheme is more capable of pro-
moting structural actions, since the savings are calculated on
A Tee scheme to be generalised to all european the lifespan of the projects. This is an important point, together
countries? with a simple procedure for approving new deemed savings
Even if energy efficiency is usually considered the most cost- files.
effective option to achieve emission reduction targets, it is well At EU level, the European Commission would like to create
known that it needs some support both to implement long pay- a harmonized scheme, but since each country has already set
back time actions and to overcome non economic barriers. For its own schemes, with different obliged actors, different fields of
this reason, during the last decades, starting from the oil crisis action and also different energy units to calculate the savings,
of the 70s, many policies have been adopted and many incen- it is almost impossible to start a new general scheme with com-
tives used. mon rules. What can be done is the creation of an energy sav-
At EU level, what has been achieved so far is not in line with ings obligation scheme in the framework of the Energy Services
the energy efficiency goal of 20 % by 2020. Even if it is not man- Directive recast that will be done in the next months. Should
datory, stronger efforts are needed and a new European En- this be agreed upon, the EU will provide a general framework,
ergy Efficiency Action Plan (EEAP) has recently been adopted, while national schemes will remain in the member States’
together with new legislative proposals and energy directives responsibility. Two fundamental points that the European
recasts. In 2013, the European Commission will provide an Commission wants to clarify are that savings must be “real”
“assessment of the results obtained and whether (energy effi- and “measurable”. Qualitative energy efficiency improvement
ciency) programs will, in combination, deliver the 20 % objec- measures should also be provided together with the completion
tive”. In the case the EU target is unlikely to be achieved, “the of a competitive energy market where ESCos should be seen as
Commission will propose legally binding national targets for the main boost. Moreover, consumer rights and consciousness
2020”. It means that the efforts required by the national energy must be strengthened (information, access to ESCo services,
efficiency policies must be strengthened and more incentives demand side management) [14, 15].
need to be created. Among measures indicated in the EEAP, As alternatives, or complementary instruments to WhC, it is
WhC are perhaps the most complex solution, and also a very possible to consider tax deduction schemes, guarantee funds,
new one. In this chapter some European WhC schemes are incentive for interest28, and schemes that give a set incentive
briefly compared, together with other type of policies. for every saved kWh or toe. Italy is planning to issue the sec-
Table 3 shows some differences among the three WhC ond and the third schemes, in order to promote ESCOs and
schemes used in the UK, France, and Italy. It is worth noticing small energy efficiency measures respectively. Considering the
that all schemes have been able to fulfil their targets in the last emphasis that the EEAP puts on ESCos, guarantee funds and
years. They differ in many aspects, but additional savings are incentive for interest can be a very effective solution. Energy
a fundamental requirement for all three schemes (for further efficiency actions are usually cost effective, so it is important
investigation we suggest [1]). to create the conditions for facilitating ESCos’ activities. Tax
The French scheme, started in 2006, is the closest to the Ital- deduction is interesting especially when undeclared work is
ian one. For measuring savings, standardized measure files widespread, because revenue generated by taxes paid by unde-
have been defined, providing eligibility criteria and calculation clared labourers can help balance the cost of the policy for the
methods for the most common measures. The energy unit to State budget. In Italy, the 55 % tax deduction, whose amount
measure the realized energy savings is the kWh cumac27, which is distributed over five years (ten for projects implemented in

28. These are schemes that finance the interest rate given by banks, thus making
27. The word “Cumac” is a synthesis of the french words ”cumulé” and ”actual- convenient for third party financing and energy performance contracts. guarantee
isé”, meaning added and discounted. funds have similar effects.




Table 3. Comparison among different white certificate schemes [14].

2011), has been an outstanding success for building actions like demonstrates that the targets can be achieved with projects that
solar thermal, double glazed windows, thermal insulation and at least in part are not really promoted by the scheme, and then
high efficiency boilers. Another tax deduction scheme, 20 % for are not really “additional”30, even if they comply with the AEEG
electric engines, has instead been a failure. This suggests that definition of additional savings (e.g. the household boilers ex-
such schemes require a high level of incentive to be effective. ample previously shown).
Besides, they can only be used by people with a tax debit, and In Italy the situation can be portrayed as a half full glass. The
this is an important limit. scheme has worked well so far for some specific actions and
has been able to achieve the mandatory targets. After the end
of first phase, dominated by compact fluorescent lamps, it has
Discussion and proposals become difficult to reach the targets. Recognizing this issue,
The WhC scheme is a complex scheme, and therefore difficult schemes [14]. decree 3 March 2011 gives the possibility to the
Table 3. Comparison among different white certificate the legislative
and expensive to manage for the DSOs and voluntary parties. Ministry of Economic Development to increase the value of
Therefore the role of AEEG and from now on of ENEA and the incentive – by allowing higher prices in the market through
GSE29, both as regulator and facilitators, will be decisive for a revision of the DSOs reimbursement and/or by introducing
its success. multipliers for the acknowledged savings based on the lifespan
In fact, due to the issues indicated in this paper, it may be savings of different solutions31 –, and to allow the presentation
questioned whether WhC schemes are useful and effective. It is of new projects to become simpler and cheaper.
difficult to give a yes/no answer, since there is no experience of Up to now the Ministry of Economic Development has
such a scheme at a maturity stage. Most of the indicated issues demonstrated to be able to overcome the main issues of the
can be overcome by the right policy measures, so it is worth to schemes, so it is possible that the modifications that are going
try at least some modifications. to be decided will improve the scheme.
The first issue is how to judge whether it has been a success. The second issue is what are the goals of a WhC scheme.
An important point is that the achievements of the scheme There are three possibilities.
should be measured on the basis of the actions actually pro-
moted and the contribution to the development of energy
service companies and the energy efficiency market, not just to
the fulfilment of the mandatory targets. The Italian experience
30. because whC do not affect the choice of the project proponent of implement-
ing the project, as shown before in the document.
31. for example interventions on the building envelope or on district heating could
29. The recent legislative Decree 3 march 2011 n. 28 (adoption of the 2009/28/EC have a multiplier equal to three or four, since the savings will be generated for a
directive) assigns to gSE (gestore dei Servizi Energetici) the role of managing the long time, whereas solutions such as lamps or stand-by systems will have one or
white certificates projects platform that presently is managed by aEEg. less, since they won’t last more than five years.




Table 4. Deemed savings files.

Deemed savings files

Saving (10-3 Units needed to
File Unit per toe
Technology Unit toe/unit/year) reach 25 toe
number
min max min max max min

1-tris CFLs P <15W lamp 212 4.049 0 5 101.215 5.306
2 electric DHW boiler -> gas DHW boiler 1 boiler 14 14 73 73 342 342
3 4 stars boiler
heating 1 boiler 11 71 14 92 1.786 272
heating and DHW 1 boiler 9 25 40 117 625 214
4 gas DHW boiler -> high efficiency gas DHW boiler 1 boiler 16 16 64 64 391 391
5 single glazed windows -> double glazed windows
houses 1 m2 43 500 2 23 12.500 1.087
offices 1 m2 56 500 2 18 12.500 1.389
hospitals 1 m2 38 250 4 26 6.250 962
6 walls and roof insulation
houses 1 m2 83 3.333 0 12 83.333 2.083
offices 1 m2 108 3.333 0 9 83.333 2.688
hospitals 1 m2 79 1.667 1 13 41.667 1.969
7 photovoltaic
beta< 70° 1 kWp 3 4 240 346 104 72
beta> 70° 1 kWp 4 6 166 241 151 104
8-bis solar thermal collectors for DHW
electric boiler substitution 1 m2 4 10 104 229 240 109
gas/oil boiler substitution 1 m2 7 16 61 134 410 187
district heating 1 m2 10 22 45 98 556 255
9 VSD electric engines for industrial pumping systems
1 turn industry 1 kW 12 42 24 83 1.042 301
2 turns industry 1 kW 6 20 49 166 508 151
3 turns industry 1 kW 3 11 95 319 265 78
seasonal industry 1 kW 11 38 27 90 940 278
11 high efficiency electric engines
1 turn industry 1 kW 37 294 3 27 7.353 936
2 turns industry 1 kW 19 149 7 53 3.731 469
3 turns industry 1 kW 10 77 13 102 1.923 245
seasonal industry 1 kW 35 270 4 29 6.757 868
13a-bis aerators and low flow shower taps residential sector 1 device 187 187 5 5 4.682 4.682
13b-bis low flow shower taps hotels
electric boiler 1 device 60 60 17 17 1.488 1.488
gas/oil boilers 1 device 101 101 10 10 2.525 2.525
13c-bis low flow shower taps sport centers
electric boiler 1 device 11 11 89 89 282 282
gas/oil boilers 1 device 19 19 53 53 476 476
15 air to air domestic heat pumps
COP 3,0 apartment 6 59 17 166 1.471 151
COP 3,5 apartment 4 48 21 226 1.190 111
COP 4,0 apartment 4 40 25 272 1.000 92
COP 4,5 apartment 3 36 28 308 893 81
17 public lighting control systems 1 kW 4 14 70 234 357 107
18 MV public lighting lamps->HPS lamps 1 lamp 5 31 32 206 779 121
19 air conditioners < 12kWf 1 kWf 263 588 2 4 14.706 6.579
20 walls and roof insulation for cooling purposes 1 m2 1.250 5.000 0 1 125.000 31.250
23 led semaphoric lamps lamp (10 W) 14 40 25 74 998 339
24 led lamps for cemeteries lamp (0,5 W) 611 611 2 2 15.263 15.263
25a anti standby anti stand-by device 150 150 7 7 3.741 3.741
25b anti standby anti stand-by device 376 376 3 3 9.402 9.402
27 DHW electric heat pumps heat pump 9 15 68 111 368 225

• To achieve its mandatory targets. It could be easy or difficult In the second case, it is possible to consider the possibility of
depending on how easy it is to present a project and evalu- using two different and additional schemes: WhC as a basis and
ate the savings. It does not ensure an increase in energy ef- another instrument (e.g. a tax exemption, a guarantee fund, a
ficiency, but can still be useful for the assessment of national fixed premium for toe scheme) dedicated to effectively promote
savings. WhC’s price can be very low. specific energy efficiency measures. It could be something like
the experience of the 55 % tax exemption in Italy. The advan-
• To promote energy efficiency operators and professionals
tage is that it is possible to maintain an almost pure baseline
growth. Same as above, but with a higher WhC’s price, and
and trade scheme, with the related cost-effective benefits, while
it will add to savings assessment the capability of consist-
having the opportunity to promote a rapid diffusion of some
ently increasing the growth rate of ESCs and other actors. It
technologies.
is advisable to have easy procedures to present projects and
The third case has the advantage, with respect to the previous
to evaluate savings.
one, of avoiding the complexity of dealing with cross-subsidies.
• To stimulate the implementation of additional energy ef- It is though quite difficult to manage without the introduction
ficiency projects. In this case, which will comprehend the of multipliers, which can compromise the cost-effectiveness of
previous ones, the market price should be high enough to the scheme, or of a high market price32, both measures that can
allow the WhC price/capital cost ratio to be well above 20 %. lead to speculative effects. Even in the hypothesis of a perfect
In this case, it is advisable to have strict procedures for the policy design, able to assign the right multiplier to each tech-
evaluation of savings, since the incentive value is strong. nology, the complexity of the system can become excessive and
unmanageable.
Considering the costs involved in the creation and manage-
ment of a WhC scheme, the first case should not be taken into
account, unless policy makers reckon it as very important in
32. in the italian scheme it means to set a higher value for the DSos’ reimburse-
their country. ment. of course it would be very difficult to determine such a value.




The last issue is that since the scheme is complex, it is cru- FIRE conference and workshop proceedings dedicated to
cial to monitor its achievements, something that can be done white certificates (www.fire-italia.it/convegni.asp):
through surveys and data analysis. Until now this issue has Convegno FIRE - Rimini - 4 novembre 2010 - Certificati
been underestimated in Italy, as the importance of disseminat- bianchi: risultati e proposte di miglioramento
ing proper information to stakeholders. Key Energy 2009 - Rimini - 29 ottobre 2009 - Certificati
It will be interesting to see what the achievements of the bianchi: la partita si fa seria
WhC scheme will be in the next 2–3 years. In the meantime, Hotel Universo - Roma - 22 aprile 2008 - Il nuovo sistema di
countries that are going to start such a scheme should make incentivazione dell’efficienza energetica
sure that they deal in an appropriate way with the illustrated Older workshops not listed here but available on the indicated
issues and that they take into account a periodical review of the web page
rules in order to overcome possible issues. AEEG’s annual reports about white certificates, www.autorita.
energia.it/it/pubblicazioni_ee.htm
GME’s monthly newsletters, www.mercatoelettrico.org/It/
list of deemed saving files Tools/newsletter.aspx
Files no. 1-tris and no. 13b-bis and 13c-bis are no more active Concerted Action for the implementation of the 2006/32/EC
since January 2011. directive, core theme number 3, information gathered
through FIRE’s participation in working groups
Energy Efficiency Plan 2011 - Communication from the
useful links and references
Commission to the European Parliament, the Council, the
European Economic and Social Committee and the Com-
lInKs of InsTITuTIons AnD AssoCIATIons relATeD To WhITe
mittee and the Committee of the Regions, COM(2011)
CerTIfICATes In ITAly
109/4
AEEG, Italian electricity and gas authority, www.autorita. “European Workshop on Experiences and Policies on Energy
energia.it Saving Obligations and White Certificates” proceedings,
GME, Italian energy market operator, www.mercatoelettrico. 27-28 January 2011, http://re.jrc.ec.europa.eu/energyef-
org ficiency/events/WhC_Workshop.htm
ENEA, Italian Agency for new technologies, energy and envi- “Tradable certificates for energy savings (white certificates)
ronment, www.enea.it - theory and practice”, P. Bertoldi, S. Rezessy, 2006, Eu-
RSE, Energy System Research center, www.rse-web.it ropean Commission Joint Research Centre, Institute for
MSE, Ministry of Economic Development, www. Environment and Sustainability
sviluppoeconomico.gov.it “Polices for increasing energy efficiency: Thirty years of expe-
Federutility, Federation of DSOs, www.federutility.it rience in OECD countries”, H. Gellera, P. Harringtonb, A.
Agesi, www.agesi.it, and Assoesco, www.assoesco.org, ESCos H. Rosenfeldc, S. Tanishimad, F. Unanderd, Energy Policy
associations 34 (2006) 556–573
FIRE, Italian Federation for the rational use of energy, www. “What can we learn from tradable green certificate markets
fire-italia.org for trading white certificates?”, R. Haas, N. Sagbauer,
G. Resch, ECEEE 2009 Summer Study - Act! Innovate!
referenCes Deliver! Reducing energy demand sustainably
“Le ESCO in Italia”, a FIRE survey on ESCOs in Italy, 2008, “Energy company obligations to save energy in Italy, the UK
www.fire-italia.it/indagini/2008-12_indagine_ESCO_re- and France: what have we learnt?”, N. Eyre, M. Pavan, L.
port.pdf Bodineau, ECEEE 2009 Summer Study - Act! Innovate!
“Indagine di monitoraggio della partecipazione al meccanis- Deliver! Reducing energy demand sustainably
mo dei WhC”, a FIRE survey on WhC in Italy, 2009, www. IEA documentation and proceedings available
fire-italia.it/indagini/WhC/WhC_1.asp through the web sites: www.ieadsm.org/ViewTask.
“Indagine sul gradimento dei WhC tra gli energy manager”, aspx?ID=17&Task=14, www.ieadsm.org/Content.
a FIRE survey in cooperation with ENEL on the energy aspx?ID=7#ancMilan
managers participation in WhC in Italy, 2011, www.fire- Energie Plus, Maitriser l’energie durablement, Revue de
italia.it/indagini/WhC_ENEL/WhC_ENEL.asp l’Association technique energie environnement, biweekly
“Osservazioni sul meccanismo dei certificati bianchi e spunti newsletter and bimonthly insight, all numbers from 2007
per l’aggiornamento”, D. Di Santo, RdS, 2010, www.enea. to 2011
it/attivita_ricerca/energia/sistema_elettrico/Elettrotec- Ademe & Vous, Ademe international monthly magazine, all
nologie/Report-elettrotecnologie.html numbers from 2007 to 2011



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