Data Envelopment Analysis to Compare Renewable Energy Efficiency in the Italian Regions

The growing concern in the negative effects of fossil fuels on the environment and the heavy dependency on fossil fuels imports has forced many countries to use renewable energy sources. The Kyoto Protocol and the EU policies are examples of political goals fostering the use of these green sources. In Italy in the past three years, electricity generation from renewable recorded high growth rates. In 2011, it continued to have an upword trend (+7.8% on 2010), reaching 82,961 GWh. The EU directive on “renewable” requires to increase renewable energy with a target of 19.6% of total electricity consumption from renewables. In 2011, Italy recorded 23.5%, surpassing by wide margin the proposed target. Moreover the year 2011 represents a turning point since until 2010, the extent of renewable generation was mostly affected by the behavior of the hydro source, while in 2011 the hydro output is stable and the new renewables (solar, wind and biomass) increase. At the same time the effort of management science to assessing efficiency is reaching its goals with the use of Data Envelopment Analysis, a mathematical programming technique able to estimate the comparative efficiency of a set of units which, though distinct production processes and technology, take a given level of inputs to produce a given quantity of outputs. In this paper the efficiency of renewable energy technology (photovoltaic, wind, biomass, hydro) is evaluated with Data Envelopment Analysis at regional level in Italy considering installed power capacity, investment and operating costs as inputs and energy intensity and the CO2 avoided as outputs. For each sources the more and the less efficient region is selected and an accurate analysis of the obtained results is outlined. Moreover the analysis is repeated at municipal level only for the photovoltaic source since the lack of data avoids to extend the same analysis for the other renewable sources.The policy implications of the obtained results conclude the paper.