On 13 December 2013, the Italian Government approved the Destinazione Italia Decree (the Decree), which, amongst other things amends the regulatory framework applicable to renewable energy source plants (RES plants).
The Decree has already been approved by the Italian government as a Law Decree. A Law Decree is a provisional legislative act that enters into force the day after its publication in the Official Gazette. Nevertheless, it still has to be approved by the Italian Parliament, which may also substantially amend it, within 60 days as of its publication, or it will lose any effect.
Under Article 13, paragraphs 3 and 4 of Legislative Decree no. 387 of 2003, RES plants have the right to sell electricity they generate to the entity entitled to grant the incentives—the Gestore dei Servizi Energetici (GSE)—under a system called “simplified purchase and resale arrangements with small producers” (the Ritiro Dedicato). The terms and conditions of these sales are regulated mainly by Resolution no. 280/07 of the Independent Authority for Electricity and Gas (the AEEG).
Under the Ritiro Dedicato, the GSE currently pays the following for electricity generated by RES plants:
- A guaranteed minimum price for RES plants up to 1 MWp
- The average local market price for RES plants above 1 MWp.
The average local market price is established on a monthly basis and relates to the area where the plant is located (prezzo zonale orario).
The guaranteed minimum prices, (prezzi minimi garantiti) are updated every year by the AEEG and are granted up to a total of 2 million kWh/year produced by the RES plant. Production exceeding 2million kWh/year is paid in accordance with the average market prices.
By way of example, please find below the 2013 minimum prices established by the AEEG in 2013:
Yearly Amount of Energy Sold to the GSE
Minimum Prices for 2013 in €/MWh
|Biomass, Biogas||Up to 2 million kWh||119.6|
|Wind||Up to 2 million kWh||80.6|
|Photovoltaic||Up to 3,750||105.8|
|Up to 3,750 to 25,000 kWh||95.2|
|From 25,000 to 2 million kWh||80.6|
The Decree cancels the guaranteed minimum prices under the Ritiro Dedicato as of 1 January 2014. This means all the energy injected into the grid by RES plants under 1 MWp will be remunerated in accordance with the average market price.
This is not a retrospective measure as the Ritiro Dedicato only lasts for one year and is renewed on a year by year basis with no guarantee for the future. In this respect, it differs from the incentives (see below), which are granted for a determined period, and cannot be amended during that period.
Under the Decree, companies operating RES plants that have green certificates, overall feed-in tariffs or premium tariffs may opt to choose one of the following options:
1. Continue with their current incentivising systems for the relevant remaining period. RES plants that choose this option will be excluded from any kind of incentivising systems for 10 years after the end of the incentivisation period.
2. Apply to the GSE for a seven year extension to the remaining period of incentives. This will be reduced on the basis of the remaining period, the type of renewable energy and the type of incentive. The option to extend the incentivising period must be exercised within 90 days of the entry into force of the Decree of the Ministry of Economic Development, which will define the reduction percentages and will be issued 60 days from the entry into force of the Destinazione Italia Decree.
The reduction levied under the second option will also take into consideration the costs for re-modulating the incentivising periods, including a premium for those plants that, at the end of the incentivising period, cannot benefit from incentives that are different to the Ritiro Dedicato system or other systems aimed at remunerating the energy produced by the plant, such as Net Metering. The percentage of incentive reduction will affect:
- The incentivising coefficient provided under Annex 2 of Law 24 December 2007, no. 244 for RES plants receiving green certificates.
- The overall tariff, net the price of selling of the energy provided by AEEG for the previous year, for plants granted with an overall tariff.
- The premium for RES plants granted a premium tariff.
The provisions above will not apply to RES plants that benefit from the incentives provided under Ministerial Decree 6 July 2012, unless they have opted for the transitory regime under Section 30 of that Decree.
Riccardo Narducci, a trainee at McDermott Will & Emery’s Rome office, also contributed to the article.