Seconda parte Electricity Market

THE SEGMENT OF MGAS

MGP-GAS (Day-Ahead Market): operates through continuous trading for

 gas to be delivered the next day. The AGS segment (system gas) follows an

auction mechanism and takes place on day G-1.

MI-GAS (Intra-Day Market): also uses continuous trading for gas to be

 delivered on the same day (G). The AGS segment here too is handled via

auction on day G.

MPL (Locational Products Market): conducted via auction, and activated

 only upon request by Snam Rete Gas, which purchases gas from users to meet

localized physical network needs or to address imbalances between injections

and withdrawals.

MGS (Regulated Market for Gas in Storage): functions through auctions

 for the trading of stored gas by authorized users and Snam Rete Gas.

MT-GAS (Forward Gas Market): uses a continuous trading mechanism for

 contracts with different delivery periods. Orders are sorted into separate books

depending on the type of contract, as defined in the Technical Rules.

ENERGY EFFICIENCY

The energy market is evolving: customers mainly seek efficient and cost-effective

services, regardless of where the electricity comes from. Local and sustainable

solutions, such as energy efficiency and renewable energy, are becoming more

competitive than traditional sources, pushing the sector towards integrated energy

services.

Utilities are shifting from selling electricity to offering energy services, where profit

margins are higher. Energy efficiency technologies are often provided at no upfront

cost, but with long-term contracts that build customer loyalty.

The beneficial and multiplier effects that investments in energy efficiency generate on

the economy:

Positive repercussions in terms of technological leadership and commercial

 strategies for domestic businesses

Stimulation of innovation and the development of new products and services

 Positive effects on the environment

 Reduction of operating costs in the various sectors

 Increased security and diversification of the energy sector

 Creation of new professionals

 “No regret” measures: there are no counterparts to pay in exchange for these

 benefits (efficiency, not savings)!

EU DIRECTIVE 2023/1791

The new directive, effective from September 2023, strengthens the EU’s commitment

to energy efficiency.

It introduces the "energy efficiency first" principle, which is now legally

 binding. This means that energy efficiency must be prioritized in all relevant

policies and major investment decisions, both in the energy and non-energy

sectors. In practice, this requires EU countries to prioritize measures that

reduce energy consumption before investing in new energy supply

infrastructure.

This directive is part of the broader European Green Deal and the

 REPowerEU plan, aimed at reducing dependence on Russian fossil fuel

imports.

It sets a binding target for an 11.7% reduction in energy consumption

 by 2030, compared to 2020 reference projections.

New annual energy savings obligations for Member States are established:

 0.8% (2021–2023),

1.3% (2024–2025),

1.5% (2026–2027),

1.9% (2028–2030).

The total EU energy consumption in 2030 should not exceed 992.5 Mtoe

 (primary energy) and 763 Mtoe (final energy).

The EU directive requires Member States to prioritize energy efficiency for

 vulnerable customers and social housing, using funds generated from the

extension of the Emissions Trading System (ETS).

Energy audits are mandatory for all companies above a certain consumption

 threshold, including SMEs. Additionally, large consumers must adopt energy

management systems.

Member States must report on energy efficiency investments and implement

 support mechanisms to achieve EU targets.

ENERGY EFFICIENCY SUPPORT SYSTEM IN ITALY

Thermal account: not competitive, preferred by public consumers.

Tax benefits: energy efficiency investments can be deducted from taxes (65% or

110% in the Italian case), of interest to private consumers.

Tradable energy efficiency certificates (or Tradable White Certificates TWC):

electricity and gas distributors are required to achieve a certain amount of savings.

Third parties can also promote investments, receiving certificates that can be sold to

the obligated parties. This tool is intended for industrial consumers.

LEGAL FRAMEWORK FOR TWC IN ITALY

The energy efficiency market was proposed in 2001 with binding targets for energy

distributors and launched in 2004. It was reformed in 2012, 2017, and 2021, with the

current obligation in place until 2024. A Tradable White Certificate (TWC) certifies a

saving of 1 ton of oil equivalent.

Energy distributors (gas and electricity with more than 50,000 customers) are required

to achieve a certain amount of energy savings each year. To meet the Energy

Efficiency Obligation, they have 4 options:

1. Develop their own energy efficiency projects

2. Work together with third parties (e.g., product manufacturers, installers,

financial institutions) on energy efficiency projects

3. Buy "tradable white certificates" (TWC) on the market, which prove energy

savings achieved by third parties

4. Pay a fine for not meeting the obligation

ENERGY EFFICIENCY CERTICATES

GME issues TEE (Energu efficiency certicates, also TWC) to:

electricity and gas distributors and their controlled companies;

 companies working in the energy services sector (Energy Service Companies –

 ESCOs);

parties that have appointed a person in charge of energy conservation and

 rational use (Energy Manager, as defined by law 9/1991);

companies in the industrial, residential, service, agricultural, transport, and

 public sectors, provided they have appointed a person responsible for energy

conservation, or have set up an energy management system certified under ISO

50001, and meet these requirements throughout the project’s technical lifetime.

On May 31, 2021, new legislation on energy efficiency certificates (TEE) was

published, reforming the existing system. The decree sets annual energy savings

targets for electricity and gas distribution companies, with a progressive increase in

White Certificates to be achieved from 2021 to 2024. Additionally, a "pay as bid"

auction system was introduced for issuing TEE, with both maximum and minimum

price limits. Since January 1, 2020, TEE can be combined with tax credits, and the

participation of companies and institutions has been expanded.

For the past 20 years, White Certificates (TEE) have been the main tool to support

energy efficiency in industries, helping save 29.3 Mtoe of primary energy. However,

fewer companies have taken part voluntarily since changes were made in 2017 and

again in 2021.

Since 2017, to get White Certificates, companies must present an energy-saving

project, get it approved, carry it out, and monitor the results for about one year.

Certificates are given only after the GSE checks and confirms the savings.

Since 2017, companies can only submit two types of projects to get White Certificates:

final or standardized projects, both requiring clear energy measurements. However,

the system has limits: incentives are paid very late (over 18 months after the project)

and the amount is not known in advance, which makes the system less attractive.

In comparison, the French system gives the incentive in one single payment right after

the project is approved.

The Decree of May 21, 2021, introduced two helpful tools: the Preliminary

Communication (CP), which allows the project date to be brought forward, and the

Preliminary Evaluation Request (RVP), which lets companies check in advance if

the project can get incentives. After using one of these options, the full project must

be submitted within 24 months.

TEE DURATION

TEE life of the energy efficiency interventions = number of years for the issue of the

certificates:

5 years for all measures

 8 years for interventions on the building envelops

 10 years for high efficiency cogeneration



The actions with technical life over 5 years are reduced to an equivalent 5 year saving

with the following coefficient:

All projects must achieve a minimum amount of savings, even when combining

multiple interventions.

There are 3 types of projects eligible for White Certificate (TWC) release:

• Deemed savings, standard projects with plug-and-play solutions

• Engineering estimates, where savings (and

TWCs) depend on technical parameters

• Monitored projects, where savings are calculated by

monitoring the system before and after the energy efficiency

investment

The costs incurred by

distributors to carry out

projects or purchase TWC

are recovered through

consumer bills, with an estimate

based on the previous year’s TWC price. The GSE sets a maximum recoverable

amount from gas bills, based on the TEE price, which is around 250 €/TEE from the

previous year.

SANCTIONS FOR NOT REALIZING THE OBLIGATION

Sanctions apply to distributors who do not meet their obligation:

• If a distributor has achieved at least 60% of their target, they can make up for it in

the following year without any penalties.

• If the 60% threshold is not met, sanctions will apply, even though the missing

savings must be made up in the following year.

• If the entire market does not achieve 100% coverage of the obligation, the

compliance benchmark becomes the market coverage level, and obligated parties will

be fined only for the missing TWC relative to the total required.

MARKET OPERATOR GME AND TEE

GME manages the Energy Efficiency Certificates Market (MTEE) where:

Distributors buy TEE if they do not meet their annual savings target.

 Distributors sell TEE if they exceed their annual savings target.

 ESCOs and other eligible companies can sell the TEE they obtain through

 independent projects.

The TEE Register is an electronic database that tracks the movement of certificates,

such as trades, blocks, or cancellations, according to the rules of the Regulations for

registering bilateral transactions of energy efficiency certificates.

SAVINGS EVALUATIONS

Three evaluation approaches:

– deemed savings approach (no on-field measurement) (standard forms, RVC-S)

– engineering approach (some on-field measurement required) (analytical forms,

RVC-A)

– energy monitoring plan approach subject to pre-approval (ex post forms, RVC-C)

THE EU MARKET FOR CO2

In Europe since 2012 it is not possible to generate electricity from fossils fuel without

emissions credit, the emission credits are tradable permits that give a company the

right to release a certain amount of CO2.

The Effort Sharing Decision (2009/406/EC) is part

of the EU Climate and Energy package. It sets a

goal to reduce greenhouse gas emissions by

14% compared to 2005. This goal is split into two

parts: A 21% reduction for