Balkans Loom Large in Italy’s Green Energy Goals

Italy’s recent investments in the Montenegrin energy sector, such as the partial buyout of Elektroprivreda Crne Gore EPCG,  and the planned Tivat- Pescara cable, have turned Italy into Montenegro’s biggest foreign investor.

But investments in Montenegro are just part of Italy’s wider strategy in neighbouring countries, aimed at making Italy “the energy hub of Europe”.

To assure itself of greater independence in the supply of lower cost energy, Italy plans a series of international connections in the oil, gas and electricity sector.

In electricity, Italy’s focus is on reaching the EU goals known as 20-20-20. This target requires the EU by 2020 to reduce carbon emissions by 20 per cent, increase energy efficiency by 20 per cent and raise the level of use of energy from renewable sources to 20 per cent of total consumption – up from an average of 8.9 per cent prior to the setting of the strategy.

To reach this collective goal, member countries have been set national goals based on the particular circumstances of each country. Thus, Italy is obliged to reach a target of 17 per cent of renewable energy consumption by 2020, up from 5.2 per cent in 2005.

Italy, which has been lagging behind many EU members in terms of renewable energy, is one of five EU countries - the others are Belgium, Denmark, Luxembourg, and Malta - which have said they cannot reach the 20-20-20 goals without buying renewable energy from third countries.

Therefore, it has said it will meet the requirements by importing energy from Albania, Croatia, Montenegro, and Tunisia.

The EU allows the meeting of the renewable energy targets through partial imports from a third country under certain conditions, one of which is that energy is imported from plants built after the setting of the EU targets.

After the 20-20-20 target was set in 2007, Italy started a series of negotiations with countries in the Balkans and North Africa about laying energy interconnections and investing in renewable energy production.

While meeting EU standards, Italy also plans to make an additional profit by importing cheaper energy from Montenegro and other neighbouring developing countries.

Furthermore, Italy plans to import a portion of energy from non-renewable sources, like fossil fuel, through the new interconnection lines. Therefore, in some of the listed countries it also plans investment in “non-renewable” plants such as coal plants.

At the same as time as negotiating with Montenegro over the Tivat-Pescara submarine cable, Italy negotiated the laying of submarine energy cables with Albania, Croatia, and Tunisia, as well as land interconnections with Slovenia. It has also considered the possibilities of underwater power lines to Libya and Algeria.

North Africa and Middle East

In 2010, Italian Enel Green Power, controlled by Enel, [link to Enel profile], and Terna [link to Terna profile] became shareholders in the ambitious Desertec project to produce solar and wind energy from the Sahara desert and other regions in North Africa and Middle East.
Decertec international consortium, set up in 2009, already includes some of the most prominent European companies. The aim is to provide 15 per cent of Europe’s energy needs by 2050. In the first phase Desertec is supposed to satisfy the local needs of the North African countries in which the energy is produced. Desertec’s estimated investment worth is 400 billion euro. The project is still in the preparatory phase. The exact plan is expected to be ready in 2012.