PNRR as the new Marshall Plan for Europe and Italy

Energy & Infrastructure Alert | April.29.2021

On April 27, 2021, the Italian Parliament, in both Chambers, Representative and Senate, approved the National Recovery and Resilience Plan. Now the Government shall submit within April 30th the Plan to the European Commission for its final approval and the financing.

1. OBJECTIVES AND STRUCTURE

The NGEU (Next Generation EU) marks a transformative change for the EU and can be considered as the new Marshall Plan for Europe (and for Italy). The amount of resources deployed to boost growth, investment and reforms amounts to 750 billion €, of which more than half, 390 billion€, are grants.

The NGEU program includes two main instruments to support member states. The REACT-EU is designed with a shorter-term perspective (2021-2022) to help them in the initial phase of revitalizing their economies. The RRF (Recovery and Resilience Facility), on the other hand, has a six-year duration, from 2021 to 2026. Its total size is 672.5 billion€.

In particular, the RRF Regulation sets six main areas of intervention (pillars) on which the National RRPs should focus on:

  • Green Transition
  • Digital transformation
  • Smart, sustainable and inclusive growth
  • Social and territorial cohesion
  • Health and economic, social and institutional resilience
  • Policies for new generations, children and young people
  • The Italian RRP(PNRR) is divided into sixteen Components, grouped into six Missions. The latter are articulated in line with the six Pillars mentioned in the RRF Regulations.

Mission 1: Digitalization, Innovation, Competitiveness, Culture (40,73 billion€)
Component 1: digitilization, innovation and security in the public sector
Component 2: digitilization, innovation and competitiveness in the productive system
Component 3: tourism and culture 4.0

Mission 2: Green Revolution and Ecological Transition (59,33 billion€)
Component 1: circular economy and sustainable agriculture
Component 2: renewable energy, hydrogen, grid and sustainable mobility
Component 3: energy efficiency and building renovation
Component 4: protection of land and water resources

Mission 3: Infrastructures for Sustainable Mobility (25,13 billion€)
Component 1: investments in the railway network
Component 2: intermodality and integrated logistics

Mission 4: Education and Research (30,88 billion€)
Component 1: enhancement of education services: from kindergartens to universities
Component 2: research for the enterprises

Mission 5: Inclusion and Cohesion (19,81 billion€)
Component 1: employment policies
Component 2: social infrastructure, families, communities and third sector
Component 3: special interventions for territorial cohesion

Mission 6: Health (15,63 billion€)
Component 1: proximity networks, facilities and telemedicine for territorial health care
Component 2: innovation, research and digitalization of the national health service

2. REFORMS

The PNRR envisages also the need for important reforms for the Italian social and economic system, namely: horizontal reforms for improving equity, efficiency and competitiveness, as those of the public administration and of the judiciary system; enabling reforms pivotal for ensuring the implementation of  the Plan, as the simplification of public contracts, simplification and rationalization of environmental regulations, simplification in the field of construction and urban planning, simplification for investments in Southern Italy and the reforms of public procurement and competitiveness. These reforms will be matched by other reforms as the fiscal reform and the Family Act.

3. PROJECTS/INVESTMENTS

FOCUS ON MISSION 1 (Green Revolution and Ecological Transition):

COMPONENT 1 (circular economy and sustainable agriculture)

In this Component only some selected projects hold interest for renewable energy sources, as follows:

  • Parco Agrisole: the aim of the project is to promote the installation of solar energy modules on a total area equal to 4.3 million square meters, with an installed capacity of about 0.43 GW, while achieving a redevelopment of facilities subject to intervention, with the removal of asbestos on rooftops, where present, and / or improvement of insulation and ventilation.
  • Isole Verdi: the aim of the project is to make 19 small Italian islands self-reliant and “100 per cent green” through investments on power grids, infrastructures, renewable energy integration, smart grids and the monitoring of energy consumption.
  • Green communities: the project invests in “30 Green Communities” located in mountain and rural areas which will rely on, inter alia, energy production generated by local renewable sources (e.g. micro-hydroelectric plants, biomass, biogas, wind, cogeneration and biomethane)

COMPONENT 2 (renewable energy, hydrogen, grid and sustainable mobility)

Areas of intervention/measures:

1. Increase of the share of energy produced by renewable energy sources:
Agro-voltaic development: the objective of these investments is to install a production capacity from agro-voltaic plants of 2GW, which would produce around 2,500 GWh per year, with a reduction in greenhouse gas emissions estimated at around 1.5 million tons of CO2.

  • Promotion of renewable energy for energy communities and self-consumption: the investments target municipalities with a population below 5000 inhabitants. The investments shall ensure financial resources for the installation of 2,000MW of electric capacity from renewable resources. In particular, the objective is to implement photovoltaic plants with an annual production of 2,500 GWh with a reduction of 1.5 million tons of CO2.
  • Promotion of innovative plants (including off-shore): the objective of the project is to support the implementation of off-shore renewable energy generation systems integrated with storage systems. The aim is to implement plants with a installed capacity of 200 MW from FER with a production of 490 GWh per year and a reduction of 286,000 tons of CO2.
  • Biomethane development: the objective is to increase the capacity of biomethane from conversion to be used for the greening of the gas pipelines equal to approximately 2.3-2.5 billion m3.
  • Reform 1: Simplification of authorization procedures for onshore and offshore renewable plants, new legal framework to support production from renewable sources and extension of timeframes and eligibility of current support schemes (The Ministry of Ecological Transition already submitted today the decree proposal for the Government approval).
  • Reform 2: New legislation for the promotion of renewable gas production and consumption

2. Enhancement and digitilization of the grid infrastructure

  • Strengthening smart grid through twofold investments: the first one aims at increasing the grid capacity as well as integrating energy from additional renewable sources for 4,000 MW; the second one aims at increasing the electrification of energy consumptions on mobility and household heating with an impact on 1.850.000 customers.
  • Interventions on climate resilience of power grids: the aim of the investment is to improve the resilience of approximately 4,000km of power grids.

3. Promoting hydrogen production, distribution and end-uses: investments on hydrogen aim at developing 1GW of electrolysis by: i) promoting the local use of hydrogen (e.g. for local means of transport) ii) create “hydrogen valleys” namely industrial areas with an economy based on the use of hydrogen (estimated production: 1to 5 MW per valley) iii) use of hydrogen in hard-to-abate sectors (e.g. for chemicals products and oil refining) vi) implementation of refuelling station for hydrogen to be used by cars and trucks vii) to convert railways into hydrogen (most advanced projects are in Valcamonica and Salento) viii) to abate regulations that represent an obstacle for the use of hydrogen (e.g. simplifying administrative procedures for the implementation of small green hydrogen plants) ix) boost the competitiveness of hydrogen through tax incentives, “green tax” and measures that could increase the use of hydrogen in public transportation.

4. Developing more sustainable local transportations

Investments on sustainable local transports aim at, inter alia, developing: 7.500 fast recharging stations in highways, 13.755 in urban areas and 100 recharging experimental stations based on storage technologies.

5. Developing international industrial and R&D leadership in key transition supply chains

In this area of investments large private and public investments are foreseen in the following sectors: i) photovoltaic and wind power onshore (i.e. estimated increase by 15 GW by 2025 and estimated increase of photovoltaic plants capacity from 21 GW to more than 52 GW  ii) storage technologies iii) installation of 5 GW of electrolysis capacity by 2030 iv) patents for new technologies.