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Rimini, 21st February 2024 . Global energy in 2023 concluded with the approval of the Global Stocktake by the delegates of the countries in attendance at Cop28 in Dubai: the agreement on actions to be taken to reduce the world´s polluting greenhouse gas emissions in order to combat global warming and climate change included the term ´fossil fuels´ for the first time, although rather than their phasing out (abandonment), it spoke of a gradual phase-out (transition away), until the Net Zero goal is reached in 2050. Other main points included tripling global renewable energy capacity, doubling the global average annual rate of energy efficiency improvement by 2030, and increasing investment to speed up zero and low-emission technologies. Moreover, Cop28 gave the final green light for activating the Climate Change Loss and Damage Fund in vulnerable countries.
In Europe, 2023 was the year for submitting updated NIPECs (National Integrated Plan for Energy and Climate), which were, however, still deemed by the Commission as inadequate for meeting the targets. Overall, the submitted draft NIPECs would lead to a 51% reduction in greenhouse gas emissions by 2030 compared to 1990 levels, but the target set is -55%. Furthermore, with regard to renewables, the Plans would lead to achieving 38-39% green energy in gross final energy consumption, some 3-4 percentage points below the target set by the Red 3 directive (mandatory 42.5% with hopes to reach 45%). Energy efficiency measures were also inadequate: the target of reducing final energy consumption by 11.7% in 2030 is too ambitious for the Plans, which, as they stand, would only achieve a 5.8% reduction.
But 2023 also marked a negative record, according to the International Energy Agency´s (IEA) latest Coal Report: global coal demand increased by 1.4%, mainly due to increases recorded in countries such as India and China. The agency notes how world demand is likely to start falling as early as this year, reaching, however, only -2.6 percent in 2026.
Turning to the national scenario, data released by Terna describe a 2.8% decrease in 2023 compared to 2022 in Italian electricity consumption, which stood at 306.1 billion kWh. Renewables covered a total of 36.8% of demand (against 31% in 2022). Moreover, 2023 saw significant growth in renewable production (+15.4%) reaching a record 43.8%. At the territorial level, the change in electricity demand was down everywhere:
-4% in the North, -2% in the Centre and -0.9% in the South and Islands. Italy´s electricity demand in 2023 was 83.3% met by domestic production and the remainder (16.7%) by the balance of energy exchanged with foreign countries. Net domestic production (257 billion kWh) was 6.4% lower than in 2022 with the following breakdown by sources: hydro (+36.1%), wind (+15.1%) and photovoltaic (+10.6%) were all up while thermal
(-17.4%) and geothermal (-1.9%) were down.

NEWS FROM THE WORLD OF RENEWABLES - On November 27, 2023, the Council of Ministers approved the Energy Decree. The measure introduced, among other things: a fund of 350 million euros a year until 2032 for environmental and territorial compensation and rebalancing measures against the installation of renewable plants in eligible areas; an incentive system for installing renewable source plants aimed at about 3,800 power-intensive companies such as those in the chemical, glass and textile industries; the purchase of gas at an advantageous price for about 1,000 gas-intensive companies (such as steel, paper and glass industries) through the GSE, and the issuance of new hydrocarbon cultivation licenses; simplifications for geothermal power; and support for floating wind power in Southern Italy with the identification of two port areas in the South, functional for hosting floating platforms, to develop investments in the sector; a digital portal with data and information on the development of the national electricity grid; a transitional support system to ensure the continued operation of plants powered by sustainable bioliquids; simplifications for the development of smart grids and their resilience, as well as 15 new district heating projects; regulatory interventions and the launch of a new study to enhance the carbon capture and storage supply chain. Moreover, in 2023, the Ministry of Environment and Energy Security´s EIA-ESA (environmental impact and strategy assessments) and NRRP-NIPEC Commissions screened 221 procedures for energy production and transportation with a total value of works in the territory of more than 13.5 billion euros and energy production of about 10.5 gigawatts. To be more precise, there were 33 EIA applications screened for wind power plants with a total installed capacity of more than 2 GW and a total countervalue of about 3.5 billion. Furthermore, Terna´s development plan was evaluated under the ESA procedure with a value of about 21 billion euros. The NRRP-NIPEC Technical Commission, on the other hand, adopted 120 EIA opinions in the energy field in 2023, including 73 agrivoltaic projects, 19 photovoltaic, 16 wind, 3 off-shore wind, 3 pumped storage, 3 methane pipelines, 1 hydroelectric, 1 biorefinery and 1 power plant totalling 8.33 GW, of which 1 GW of energy storage and a total economic value of about 10 billion euros. Eighteen scoping inquiries were processed for offshore wind projects, most of them in Apulia (26%), Sicily (17%) and Sardinia (14%).
In addition, on 21 December 2023, Minister Gilberto Pichetto Fratin signed the decree on the National Plan for Adaptation to Climate Change (NACCP). Other legislative measures include the RES-X Decree to support green energy production; the Decree on agrivoltaics with the goal of installing at least 1.04 gigawatts of innovative agrivoltaic systems by 30 June 2026; and the draft Decree on eligible areas for the construction of RES production facilities.
The ERC Decree, which encourages the emergence and development of Renewable Energy Communities and widespread self-consumption in Italy was signed by Minister Gilberto Pichetto Fratin on 6 December 2023 and entered into force on 24 January 2024. It foresees two measures: a non-repayable contribution of up to 40% of eligible costs, worth 2.2 billion euros financed by the NRRP, aimed at communities whose plants, built in municipalities with fewer than 5,000 inhabitants, will support the development of 2 GW in total; and an incentive tariff on renewable energy produced and shared for the entire country. The measure will support the development of 5-GW renewable energy production facilities. Funding to a total of 5.7 billion euros is available: about 20,000 RECs could be established with an installed capacity of 7 GW.
Globally, according to the IEA´s Renewables 2023 Report, renewable capacity grew by 50% in 2023 compared to 2022, reaching nearly 510 gigawatts (GW) with solar photovoltaics accounting for three-quarters of the increases worldwide. The Report foresees that global renewable energy capacity will touch on 7,300 GW in 2023-28 with solar photovoltaics and wind accounting for about 95% of the growth. Moreover, renewables will become the largest source of global electricity generation by early 2025.
McKinsey´s Global Energy Perspective 2023 Report also predicts that, by 2040, solar and wind will together contribute the largest share of the global energy mix. Overall, renewables will provide between 45 and 50% of global generation by 2030 and between 65 and 85% by 2050. Substantial investment will, however, be needed to support the development of renewables: the report estimates that total energy investment will increase from $1.5 trillion in 2021 to between $2 and $3.2 trillion in 2040, growing between 2 and 4% per year.
In Europe, 2023 set three historic records for renewables: Germany, Spain and Portugal generated more than 50% of national renewable electricity. In Germany, renewables supplied about 260 TWh (a record 59.7% share of annual electricity generation) with growth of about 7.2% compared to 2022, thanks mainly to wind (32%) and photovoltaics (12%). More precisely, photovoltaics added 14 GW, exceeding the target set by the government. In Spain, renewables enabled nearly 135 TWh (50.4% of the total national electricity mix) with wind (23.3%), photovoltaics (14%) and hydro (9.5%) leading the way.
In Portugal, 61% of energy demand in 2023 was covered by renewables, with the total production of 31.2 Terawatt-hours. Specifically, 25% of the energy consumed in the country was produced by wind, 23% by hydro, and 7% by photovoltaics. Solar photovoltaics recorded a 4% increase, mainly due to an increase in installed capacity.
In Portugal, 61% of energy demand in 2023 was covered by renewables with the total production of 31.2 Terawatt-hours. Specifically, 25% of the energy consumed in the country was produced by wind, 23% by hydro and 7% by photovoltaics. Solar photovoltaics increased by 4% mainly due to an increase in installed capacity.
According to Ember´s latest European Electricity Review, fossil fuels in Europe fell by 19% in 2023 to the lowest level on record, accounting for less than a third of EU electricity generation. Renewables rose to a record 44% share, surpassing 40% for the first time, with wind and solar power hitting a record 27% of EU electricity in 2023 (up from 23% in 2022). Combined wind and solar generation increased by a record 90 TWh and installed capacity by 73 GW.
In Italy, at the end of 2023, there were 5,431 requests for high-voltage grid connection for large renewable energy plants, totalling 328 GW, of which the majority (43% and 141 GW) related to photovoltaics. Initiatives that are currently ready to start amount to 166 for 6.1 GW.
According to Terna´s findings, considering all renewable sources, there were new activations of about 5.8 GW in 2023 (+2.7 GW compared to 2022): from new activations of 1 GW in 2021, to about 3 GW in 2022. Moreover, about 6 GW obtained the Final Minimum Technical Solution for connection to the national power grid.

FOCUS ON ENERGY EFFICIENCY - On 29 December 2023, the Superbonus Decree on energy efficiency in buildings was published in the Official Gazette. Additional measures were included by the government in the Budget Law 2024. Specifically, the new rates were set at 70% to then go to 65% as of 2025 (compared to the previous 110% and 90%).
At the European level, on September 20, 2023, the new Energy Efficiency Directive (EED 3) was published in the EU´s Official Gazette, setting a binding EU target to reduce final energy consumption throughout the European Union by 11.7% by 2030 compared to 2020. Member States must, therefore, ensure a 1.9% reduction per year in the total final energy consumption of public bodies, renovate at least 3% of buildings owned by public administrations each year, and encourage companies to adopt energy management systems.
Moreover, an agreement was reached on the Energy Performance of Buildings Directive (EPBD), the so-called ´green homes´ directive for energy efficiency in EU buildings. The goal is to achieve a zero-emission building stock by 2050 with these characteristics featured in all new buildings constructed by 2030. In fact, buildings account for 40% of energy consumed and 36% of the EU´s direct and indirect greenhouse gas emissions. The directive stipulates that EU member states must renovate 16% of the worst-performing non-residential buildings by 2030, rising to 26% by 2033, and that new buildings must be solar-ready, i.e. suitable for rooftop photovoltaic or solar thermal installations. Average energy consumption is to be reduced by 16% by 2030 and 20-22% by 2035. Lastly, the directive calls for a stop in the sale and production of gas-fired boilers by 2040.

FOCUS ON WIND POWER. In October 2023, the European Commission presented a plan of action for wind power with immediate actions to be undertaken in order to reach 500 GW of installed wind power by 2030, starting from 204 GW in 2022. The main points of the plan regard: speeding up authorisation procedures, improved tender planning, easier access to financing . especially to the Innovation Fund -, the development of skills, and collaboration between the European Commission, Member States and companies operating in the wind power sector. Moreover, in December 2023, EU Member States (all except Hungary) signed the European Wind Charter with the aim, among other things, to boost the production of turbines by modifying the rules for renewable energy tenders. Although the 2030 goals still seem far off, according to WindEurope, in 2023, 17 new wind farms were built in Europe of which 14 GW onshore and 3 GW offshore. Furthermore, in 2023, wind power produced 19% of the EU´s electricity. Most of the new wind power capacity was installed in Germany followed by the Netherlands and Sweden. The Netherlands was also the country with the greatest number of new offshore wind farms.
Ember´s latest European Electricity Review registered wind power overtaking gas for the first time with an annual production growth record in 2023 of 55 TWh (+13%). Wind-produced electricity stood at 475 TWh, equivalent to the total electricity demand of France, compared to 452 TWh of gas.
Italy foresees reaching 2.1 GW by 2030 starting from 2025. In terms of onshore wind power, the expectation is to go from 1.5 GW in 2024 to 2.1 GW in 2026. Moreover, the new Energy Decree foresees extending the possibility of identifying ports to the entire national territory where floating platforms for developing wind power could be built.
According to Terna findings, in Italy in 2023, 82 new plants for about 488 MW became active, a drop compared to the 526 MW in 2022. In total, cumulative installed wind power in Italy currently stands at about 12.3 GW with over 6,000 operating plants. On a national level, southern Italian regions are more prevalent: Campania, Apulia, Basilicata, Calabria, Sicily and Sardinia together count over 90% of installed wind power with Apulia registering the best performances (1,386 active plants for a total of 3.10 GW), followed by Sicily (941 plants and 2.26 GW) and Campania (642 plants and 1.95 GW). Micro and mini wind power systems cover 4 MW (470 systems under 12 kW) and 1 MW (83 systems up to 200 kW in size) respectively.

FOCUS ON PHOTOVOLTAICS . According to SolarPower Europe´s ´EU Market Outlook For Solar Power 2023-2027´, in 2024 new installed photovoltaic power in EU countries should equal 62 GW with a growth of 11% compared to the 55.9 GW in 2023. Moreover, the Report foresees 73.8 GW of new installations in 2025 with an increase of 19%, 84.2 GW in 2026 and 93.1 GW in 2027. In 2023, new installed photovoltaic power was about 40% more than in 2022 with a historical record of 55.9 GW. Cumulatively, solar capacity is now equal to 263 GW. The country with the highest figures is Germany with 14.1 GW of new installed power, followed by Spain (8.2 GW) and Italy in the top 3 with 4.8 GW (more than double compared to 2022). Poland was in fourth place with 4.6 GW and the Netherlands came in fifth with 4.1 GW.
In Italy, 2023 was a record year for photovoltaic energy production (30.6TWh). According to Terna data, 373,929 new photovoltaic systems for a total power of 5.2 GW were connected to the grid in 2023. The greatest increase was recorded by small systems producing between 20 and 200 kW and 200 kW and 1 MW of power. In total, at the end of 2023, Italy counted 1.6 million photovoltaic systems for a cumulative power of 30.2 GW, but the new draft of the NIPEC foresees reaching 79.1 GW of active systems by 2023. On a regional scale, the Region that increased the most was Lombardy with 907 MW of new power, followed by Veneto (680 MW), Piedmont (562 MW), Emilia-Romagna (515 MW), Sicily (422 MW) and Lazio (321 MW).

FOCUS ON ELECTRIC STORAGE . To keep the rise in global temperature under the 1.5°C limit, IRENA has estimated that, by 2030, the entire world will need 360 GW of batteries for storage. The Climate Investment Funds (CIF) has launched a 400-million-dollar, one-of-a-kind programme called GESP (Global Energy Storage Program) dedicated to innovative storage solutions. It is the world´s largest funding machine for climate focused exclusively on energy storage. Twelve new projects have already been approved and are currently being developed throughout the world, including Bangladesh, Brazil, Colombia, Haiti, Honduras, India, Indonesia, the Maldives and Ukraine. In the next three years, the CIF foresees creating 1.8 GW of new storage capacity and to integrate a further 16 GW.
According to McKinsey, in 2022 over 5 billion dollars were invested globally in BESS (BESS . Battery Energy Storage Systems). The study estimates that the global BESS market will reach 120-150 billion dollars by 2030. As for long duration energy storage systems (LDES), McKinsey estimates that, by 2040, adopting them could lead to avoiding about 10-15% of energy sector emissions.
On a European level, the Commission has implemented a list of recommendations to guarantee a wider diffusion of energy storage: the market is developing strongly with 2.8 GW (3.3 GWh) implemented in 2022 for an estimated total of more than 9 GWh. Ember´s latest European Electricity Review estimated that the EU will need 200 GW of storage by 2030 in order for renewable energies to be efficiently integrated into the electricity grid.
The sector is also growing in Italy albeit with some regulatory uncertainties: data presented by Althesys show that, in the first half of 2023, projects for 560 MW were authorised and added to the 90 MW already authorised in 2022. In total, only a little over 500 MW utility scale were connected to the grid in Italy in 2023. Of the authorised 9.5 GW, in May 2023, 8.8 GW were still to be created (of which 2.3 GW in construction). By 2024, at least 3-4 GW could potentially be built and connected. Moreover, the updated NIPEC (National Integrated Plan for Energy and Climate) foresees reaching about 22.5 GW of installed storage by 2030 of which 11 GW of utility scale storage. At the end of 2023, the European Commission gave the green light to the Italian plan for the development and management of a centralised electrical energy storage system that would promote new investments in electro-chemical and hydro-electric pumping for at least 70 GWh of accumulated energy and an overall value of 17 billion euros over the next ten years.

FOCUS ON HYDROGEN . The future of energy includes hydrogen, so much so that the global level should cover 14% of energy consumption by 2050. At the end of 2023, the Ministry for the Environment and Energy Security published an announcement for the selection of investment projects regarding the development of the renewable hydrogen supply chain. The initiative is part of the investments foreseen by the NRRP with funding for a total 100 million euros. The Ministry has also allocated a further 100 million euros to select investment projects to build electrolyser production plants with the aim of having factories in Italy able to produce at least 1 GW of electrolysers a year by June 2026. In fact, the NRRP foresees investments of 3.64 billion euros to develop the hydrogen supply chain of which 450 million will go towards creating 54 Hydrogen Valleys, 1 billion for decarbonising hard-to-abate sectors; 250 million for the development of filling stations and 200 million for industrial plans to produce electrolysers and their components. The Minister for the Environment and Energy Security, Gilberto Pichetto, recently confirmed that, in line with the RepowerEU plan, the aim is to produce 10 million tons of renewable hydrogen and import 10 million tons into the European Union by 2030: a process in which Italy is in the running to become one of the main European hubs through the development of the ´Southern corridor´ for hydrogen.
2023 was decisive for the sector in Europe too. During the Hydrogen Week in Brussels, Ursula Von Der Leyen announced the European Hydrogen Bank´s tenders for 2024 with 2.2 billion euros allocated. Moreover, the obligation for Member States to develop National Strategic Plans for Hydrogen was also introduced.
On a global scale, the IEA´s Renewables 2023 report estimates a decrease (about -35% compared to 2022 forecasts) in the production capacity of green hydrogen. The study talks of 45 GW more by 2028, mainly in the USA, Saudi Arabia and China. In regard to the latter, the IEA foresees that the production capacity of renewable installed hydrogen energy will exceed 24 GW.

FOCUS ON SUSTAINABLE MOBILITY . According to Motus-E estimates, in 2023 the number of fully electric cars circulating in Italy was just over 220,000 with full electric registrations equal to 66,276 units (+35.11% compared to the same period in 2022). Figures that show a slow growth in the sector compared to other European markets, also confirmed by the market share of electric cars (4.1% in Italy against 18.1% in Germany, 16.4% in France, 16.3% in the United Kingdom and 5.6% in Spain). A lot will depend on the incentives that the Government is working on: a minimum of 6,000 euros to a maximum of 13,750 euros is being spoken of for full electric cars; a minimum of 4,000 euros to a maximum of 10,000 for hybrids; a minimum of 1,500 euros to a maximum of 3,000 for low-emission cars. The initiative aims to renew the car stock currently circulating in Italy, which is one of the oldest in Europe, support the less wealthy families with extra bonuses and encourage the purchase of cars produced in Italy. Overall, 950 million euros have been placed at disposal, including the 610 million already set aside for the incentives that are currently in force.
On a global level, IEA´s ´Global EV Outlook 2023 - Catching up with climate ambitions´ registered an exponential growth in electric cars with sales exceeding 10 million in 2022. At the top of the world ranking was China representing about 60% of global sales. Europe was the second largest market and sales increased by over 15% in 2022 (more than one car in every five sales was electric).
However, according to the Electrified Transport Market Outlook 4Q 2023 by BloombergNEF (BNEF), although sales continue to increase, going from 14 million vehicles (full electric and hybrid plug-in) sold in 2023 to 16.1 million in 2024, the growth rate will be slower.
As for charging stations, at the end of 2022, the IEA Report counted 2.7 million public charging points worldwide of which over 1,800,000 were slow chargers (up to 22 kW) and about 850,000 were fast chargers. Of these, more than half were in China and 460,000 were in Europe (the Netherlands in first place with 117,000 slow chargers, followed by France with about 74,000 and Germany with 64,000). In Italy, according to Motus-E data, the number of charging stations installed for public use at the end of 2023 exceeded 50,000 (50,678 units) with 13,906 new installations in the last quarter alone. Figures that put Italy among the most virtuous in Europe. The Italian recharging grid grew by 38% last year, substantially doubling compared to 2021 (+94.7%). More than 23% of all charging stations are located in the South and on the Islands, 19% are in the Centre and 58% are in the North of the peninsula. The Region with the most charging stations is Lombardy (9,395), followed by Piedmont (5,169), Veneto (4,914), Lazio (4,659) and Emilia-Romagna (4,253). Campania was in second place in terms of infrastructure growth in 2023 with 2,691 newly installed charging stations. On a local level, Rome is the city that has the most charging stations installed (3,588), ahead of Milan (2,883) and Naples (2,652).
Charging stations along the motorways have increased considerably with a total of 932 at 31 December 2023 while in 2022, there were 496. With 23 public charging stations for every 100 electric cars in circulation, Italy is ahead of France, Germany and the UK, confirming its first place in Europe, even considering the average number of charging stations compared to road length (1 charging station every 5 km of road).

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This press release contains forecast elements and estimates that reflect the management´s current opinions (´forward-looking statements´), particularly regarding future management performance, realization of investments, cash flow trends and the evolution of the financial structure. For their very nature, forward-looking statements have a component of risk and uncertainty, as they depend on the occurrence of future events. The effective results may differ (even significantly) from those announced, due to numerous factors, including, only by way of example: food service market and tourist flow trends in Italy, gold and jewellery market trends, green economy market trends; the evolution of raw material prices; general macroeconomic conditions; geopolitical factors and evolutions in the legislative framework. Moreover, the information contained in this release, does not claim to be complete, and has not been verified by independent third parties. Forecasts, estimates and objectives contained herein are based on the information available to the Company as at the date of this release.