NO to Capacity Payment: illegal, immoral, detrimental to the free market
CAPACITY PAYMENT, the latest mockery to italian renewables, the umpteenth gift to ENEL and to other monopolists and polluters
by Angelo Consoli
The echo of the controversy regarding the so-called Quinto Conto Energia* is still in the air as the government's bill begins to spread its negative effects in the Italian Green Economy sector, halting the growth of many businesses, under-mining the investment certainty and making credit practically impossible to obtain, that here a a new blow arrives.
It's called Capacity Payment. The “technical” government is really good at hiding his support for monopolists and his destruction of rights behind high-sounding denominations in English. So the linear cut in social expenses becomes “Spending Review”, and this gift to ENEL becomes “Capacity Payment”.
The Capacity Payment is a system of incentives to fossil energies, and its purpose is to face the competition of renewable energies, that has already led to closure two traditional energy plants powered on fossil fuels (Milazzo and Brindisi), with another one that is going to close in 2013 (Falconara).
The “Capacity Payment “ was approved by a cross party majority after being presented by former Undersecretary of State for Economic Development during Berlusconi's government, Stefano Saglia as an amendment to the so-called “Decreto Sviluppo”.
The amendment has been supported both by left and right wing of the Parliament, with Lega Nord (right), PD (biggest leftist party in Italy in the last elections), FLI (right) and UDC (center), and represents a giant State aid to ENEL and other producers of energy from fossil fuels, with the excuse of "homogenising the distribution of electricity, because due to the photovoltaic production domestic consumption during the day are covered largely by non-polluting and renewable sources, and this makes it necessary, however, that the combined cycle plants are always ready to meet any possible additional needs ".
In other words what ENEL, ministers, General Directors (including the same Corrado Clini, former General Director of Italian Ministry of Environment for 20 years, 1991-2011, now Minister of the Environment himself) have told us so far, in Rome and in Brussels, it was all wrong.
They used to say that renewable energies and distributed energy models are insufficient to create a critical mass and feed a modern industry and an advanced economy, and that is why we must rely on the "soundness" of power plants fueled by conventional sources, such as coal, oil, gas and uranium.
The facts speak differently, however: photovoltaic alone, having quadrupled its output in the last year, is able to act as a peak shaver for the price of electricity, putting the big centralised plants model in danger and less profitable because their elettricity cannot be sold at peak price anymore.
But the technical government has felt necessary to compensate those who were so terribly wrong (and wanted to insist in the error: let's just be reminded that without the referendum of last year, today we would be building – with what money? – four brand new, very expensive, resource-devouring, polluting, centralised nuclear power plants). In other words, this bipartisan strange alliance is willing to channel to ENEL, EDIPOWER, SORGENIA and Co. funds made available by the reduction in renewables feed in tariffs schemes.
We say NO to Capacity Payment, for three fundamental reasons:
1) The Capacity Payment is an unacceptable “State Aid” forbidden under European competition law. Italy is about to make yet another poor figure at European level, because the Antitrust Authority Commissioner Almunia will strike merciless on this one, just as Mario Monti struck mercilessly Microsoft, Alstom and other major worldwide groups, when he was the Competition Commissioner. Has Monti have already forgotten? Or are those of the Ministry of Economic Development that set traps acting in bad faith, or simply because they are incompetent bunglers?
2) The Capacity Payment is immoral. It privileges those who, in a free market, should be punished. If a furniture company misjudges its production line, and is unable to market its products, it pays the consequences, makes losses and in extreme cases it goes bankrupt. “It's the market baby!” Why should ENEL, having got their production strategy totally wrong, be rescued instead? And there's no excuse for this misjudgement, because ENEL can not say that they had not been warned that the fossil power plants were already in "over capacity" .
Why should we pay for this mistake made by ENEL? Perhaps because ENEL is showing signs of committed repentance for past mistakes? Not a chance. As it was recalled earlier, they have done everything possible to build new nuclear power plants until recently, and are currently hindering in any way the renewable sources (and everyone working in the market of distributed power generation), taking advantage of their dominant position and also of their position of grid connections masters in Italy.
They impose ridiculously long grid connections times to their competitors who are often pushed out of the market by this sole reason, and now have imposed arbitrarily new interface standards that erode the profit margins of the small independent operators, who are already suffering from the unfiar and bureacratic conditions imposed by the Fifth Energy feed in tariff scheme written on ENEL computers and placed on letterhead of the Ministry. A scandal that still cries out for vengeance and that was quickly swept under the carpet, with all its load of moral filth and technical incompetence.
3) The Capacity Payment is technically wrong. It draws funds from resources that should be made ??available in a logic of Third Industrial Revolution to finance storage technologies and smart grids, which are necessary to cover all phases of the solar cycle energy based on renewable sources instead. Electrolyzers, fuel cells, home automation, network sensors, interactive electric meters (but the real ones, that allow the transport of energy in two directions, not the mockeries istalled by ENEL in these years, not programmable for distributed generation), Solar Cooling, distributors of hydrogen, charging stations for electric cars, etc. are all technologies that are necessary to create critical mass on Solar energy. The cost of these technologies are comparable to those that photovoltaic and wind power technologies had when the first feed-in tariff policies began to appear.
These technologies are not children of a Lesser God, and are needed to secure storage and effective distribution of renewable energy. There is mno reason why they shouldn't be encouraged by using funds made available by the gradual reduction of the feed in tariffs for traditional renewable technologies.
If these funds will go to allow ENEL to keep the conventional power plants open, Italy is once again in striking contradiction with the recommendations of the EU, confirming that the pro-European Monti government respects European reccommandations only when it suits them. So the European directives are invoked when they reccommand “reforming the labour market but really serve to weaken the rights of workers, or to cut social spending for an alleged financial austerity, but may be happily be disregarded when they affect the power of the energy monopolies, despite specific warning letters of the European Union to the Italian Government (see letter to the Director Leonardo Senni by the Director-General for Energy of the European Commission Philippe Lowe last June).
It should be also stressed how the energy monopolies with royal salaries and fabulous pensions for their executives, in order to obtain the “capacity payment” used the same old trick of the employment blackmail, taking the trade unions as hostages to be supported in this back ward action, based on an obsolete energy vision. To be totally fair it should also be said that another part of the trade unions took to the streets with the workers against the Romani Decree on Renewables and against the “Quinto Conto Energia”, and has shown great suppor towards the need for a rapid transition to the new distributed model and towards a modernization in energy and production processes.
To understand the strategic role of the renewable energy sector, let's just consider that PV proved to be an incredible decreaser of peak energy prices, which forced ENEL to compensate the loss by increasing the price of electricity at night. For the first time this year, in Sicily, on April 8th and 9th, 2012 (Easter day and Monday) and on May 2nd and 3rd in the whole South of Italy, the regional energy price from 14:00 to 16:00 was ZERO EURO (!).
Do we really want to accept the fact that technologies which could achieve this extraordinary result using simple solar thermodynamics will only be Chinese or American?
Do we actually think that it is not strategic for Italy to maintain a strong and innovative presence in sectors such as as photovoltaic, wind, hydrogen, smart grids?
Is it strategic instead to prolong the agony of conventional power plants, destined to succumb in any way, either because they pollute or because the market punishes them?
In front of the vile employment blackmail of monopolists, the institutions and the Unions should respond by taking this as an opportunity to engage the Country in a great process of manpower and industry re-conversion towards distributed energy technologies.
The modernization of the country begins from its main asset: human capital. It's bad to see that chemicals trade unions are prisoners of this language of blackmail and pollution and that they continue to defend the existing system and the interests of their counterpart, not realizing that the world is going in another direction.
For all these reasons, the Third Industrial Revolution European Society says NO to the Capacity Payment, stigmatizes the bipartisan agreement on the amendment Saglia, and put their technical expertise available to the consumer groups who wish to report it to European Antitrust.
* The latest feed-in tariff bill released by the Italian Government, which is the 5th version of a first one created in 2005, tremendously jeopardize the future of distributed small photovoltaic plants for citizens by introducing instruments, like the “registro degli impianti”, whose onlypurpose seems to be the hardening of legal procedures to obtain authorizations for PV plants, making the green option less suitable for domestic photovoltaic rather than for larger plants. Here the full text
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