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Key Developments in the Photovoltaic Sector in Italy

The regulatory framework for solar photovoltaic plants in Italy is constantly evolving. Plant owners, asset managers and investors need to stay informed in order to adapt to developments in this sector and avoid adverse outcomes. The following highlights the key updates in this market in the last 12 months. Read the full article.

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Italy withdraws from the Energy Charter Treaty

Italy is reported to have given formal notice to withdraw from the Energy Charter Treaty (ECT). Rumours of Italy’s intention to leave the ECT had been circulating since last autumn. IAReporter now revealed that Italy has delivered its official notice of withdrawal in January 2015. According to the journal, Italy’s decision to withdraw, is to save on costs associated with its membership. This is certainly an unusual justification for a developed country’s withdrawal from a multilateral investment protection treaty. Pursuant to article 47 of the ECT, Italy's withdrawal will take effect upon the expiry of one year after the date of notification, thus in January 2016. However, the provisions of the Treaty will continue to apply to investments made in Italy before such date for a period of further 20 years. As a consequence: With respect to past energy investments, investors can continue to bring their claims against Italy until January 2036. In particular,...

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Italy: GSE Claims Reimbursement of FiT Payments from Conto Energia I Plant Owners

Owners of early generation Conto Energia I photovoltaic (PV) plants are currently receiving letters from the Gestore dei Servizi Energetici (GSE) announcing that it will adjust the Feed-in Tariff (FiT) downwards and claim reimbursement of, or set-off with, the excess payments it made in past years. An example of one of these letters is attached here. Background The Ministerial Decree of 28 July 2005 (the original version of the Conto Energia I) provided for an annual adjustment of the FiT to account for inflation. The Ministerial Decree of 6 February 2006 removed this adjustment for inflation with retrospective effect. This even applied to PV plants that had already qualified for the FiT under the original version of the Conto Energia I. At first instance, in 2008, the Administrative Court of Milan and the Highest Administrative Court (Consiglio di Stato) ruled the Ministerial Decree of 6 February 2006 null and void, stating that it violated not only the...

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Italian Decree on the Cut of Incentives for Photovoltaic Plants Enters into Force

by Carsten Steinhauer, Sabine Konrad, Anna Vesco, Arne Fuchs and Riccardo Narducci On 25 June 2014, Law Decree no. 91 /2014 (the “Decree”) regarding among others “urgent measures … for the limitation of costs applied to electricity prices” has entered into force. The Parliament has now 60 days to confirm and convert the Decree into law—possibly with amendments—or to repeal it. A repeal is unlikely, considering that these measures are politically strategic to the Renzi Government, which has invested its credibility in the reduction of electricity bills for small and medium-sized enterprises through a reduction in the annual cost of PV incentives. Please click here to read the full article.

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Council of Europe adopts MiFID II

by Simone Goligorsky and Robert Coward In October 2011, the European Commission released a proposal to amend and extend the Markets in Financial Instruments Directive (MiFID), referred to as MiFID II. The MiFID II proposals consist of revisions to MiFID, along with the introduction of the Markets in Financial Instruments Regulation (MiFIR). Whilst MiFID sought to increase competition and consumer protection, the purpose of MiFID II is to make financial markets more efficient, resilient and transparent and to improve investor protection, with the reform being driven by commitments made by the EU to tackle less regulated and more opaque parts of the financial system at the G20 summit in Pittsburgh in 2009. MiFID II will impose a series of changes, including, inter alia: creating of a new type of trading venue, the organised trading facility (OTF); extending the scope of products and activities that are subject to regulation; prohibiting the use of inducements...

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EMIR Trade Reporting Requirements Come Into Effect 12 February 2014

by Prajakt Samant and Simone Goligorsky Following the European Securities and Markets Authority’s (ESMA’s) approval and registration of the first four trade repositories (TRs) in November 2013, counterparties to all types of over-the-counter (OTC) and exchange-traded derivatives contracts will be required, from 12 February 2014, to report certain details of their trades to a registered or recognised TR. All counterparties, even those exempt from the clearing obligation, should take note that they will not be exempt from the reporting obligation. To facilitate the process, counterparties will, however, be permitted to delegate trade reporting requirements to third parties or their respective counterparties. Background The reporting obligation forms part of the requirements imposed by the EU Regulation on OTC derivative transactions, central counterparties (CCPs) and TRs (Regulation 648/2012), also known as the European Market Infrastructure Regulation or EMIR....

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Agreement Reached on Revised European Rules for Markets in Financial Instruments

by Prajakt Samant and Simone Goligorsky The European Commission announced on 14 January 2014 that the European Parliament and Council had reached an agreement in principle on revised rules for markets in financial instruments (MiFID II). Under the revised regime, limits will be placed on taking financial positions in commodity derivatives, with a view to preventing market abuse and helping to restore investor confidence following the financial crisis. Background The current Markets in Financial Instruments Directive (MiFID) governs the provision of investment services in financial instruments and the operation of stock exchanges and multilateral trading facilities (MTFs). MiFID has long been regarded as not being fit for purpose—both in light of the fallout from the financial crisis and the evolution of international financial markets—hence the Commission’s proposals to revise the regime. In the wake of major changes in financial markets through new trading...

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United Kingdom Government Confirms Change to Sustainability Criteria for Biomass

by Caroline Lindsey The Department of Energy and Climate Change (DECC) in the United Kingdom published its response to its “Consultation on proposals to enhance the sustainability criteria for the use of biomass feedstocks under the Renewables Obligation (RO)” on 22 August 2013 (the Response). The original consultation was published on 7 September 2012. In the Response, the UK Government confirms that it will proceed with its proposals to revise the content and significance of the sustainability criteria applicable to the use of solid biomass and biogas feedstocks for electricity generation under the Renewables Obligation (RO). The RO is currently the principal regime for incentivising the development of large-scale renewable electricity generation in the United Kingdom. Eligible electricity generators receive renewables obligation certificates (ROCs) for each megawatt hour (MWh) of renewable source electricity that they generate. Biomass...

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Possible UK Power Shortages Raise Concerns

by Thomas Morgan and David McDonnell  A warning from the UK’s energy regulator, Ofgem, on 27 June 2013, that the ‘buffer’ capacity of spare electricity on the UK’s national power grid could drop to as little as 2% of national supplies by 2015, has raised concerns in relation to the possibility of widespread disruptions in service. This spare capacity currently stands at about 4%. The warning was linked to an extensive Electricity Capacity Assessment Report, also published by Ofgem that same day. Revised studies have indicated that power supplies will shrink considerably by 2015, as electricity demand in the United Kingdom is not decreasing in the manner previously foreseen by successive governments. This is due to a variety of factors, among them, the low uptake by residential households of environmentally friendly incentives and energy-efficient practices. Ofgem recommends the implementation of far-reaching market changes...

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Transatlantic Derivatives Consensus: Landmark Step for EC/US Cooperation

by Simone Goligorsky and David McDonnell On 11 July 2013, the European Commission (EC) and the United States Commodity Futures Trading Commission (CFTC) announced a high-level joint understanding, known as the “Path Forward”, which details the shared future vision on the cross-border regulation of over-the-counter (OTC) derivatives (click here for the full announcement). This is a welcome announcement, given the concerns that many market participants had regarding the possibility of certain derivative transactions being subject to regulation on both sides of the Atlantic. The Path Forward has been produced as part of the package that was developed in order to promote the transparency of OTC derivatives markets and to lower the risks associated with them.  At the core of the Path Forward is the objective of avoiding what was viewed by some market participants as the ‘double treatment’ of derivatives, whereby the derivatives would...

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