Subsidisation cost analysis of renewable energy deployment: A case study on the Italian feed-in tariff programme for photovoltaics

The feed-in tariff programme Conto Energia spurred a massive deployment of photovoltaic (PV) technology in Italy, increasing domestic PV capacity by about 17.6 GW from 2006 to 2018. While the benefits in terms of avoided greenhouse gas emissions and fossil-fuel imports and use have been numerous and obvious, the costs of this incentive scheme were hefty, reaching EUR 5.9 billion in 2018. Herein, the net subsidisation costs of Conto Energia are estimated in the frame of an ex-post scenario analysis. A counterfactual scenario having the same avoided greenhouse gas emissions as those achieved by the Conto Energia program is constructed. This alternative scenario is built on an increase in energy efficiency investments and a more linear path of PV deployment while still reaching the same level of cumulative PV capacity by 2018 as the historical pathway. The counterfactual scenario has significantly lower subsidisation costs (-70%) relative to Conto Energia, with EUR 25 billion vs. EUR 83 billion. The estimated net subsidisation cost of Conto Energia is as high as EUR 58 billion, about 3% of Italian gross domestic product.