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.
by Carsten Steinhauer and Riccardo Narducci
On June 6, 2013, the Italian Authority for Electricity and Gas (AEEG) announced that the overall annual expense cap of €6.7 billion for incentive payments payable to photovoltaic (PV) plants in Italy has been reached.
As a consequence, the latest feed-in tariff (FiT) regulation—the Conto Energia V—will cease to apply on July 6, 2013, i.e., 30 days from the AEEG’s announcement. PV plants that connected to the grid and started operations before July 6 will remain entitled to the currently applicable FiTs, as long as the relevant application is filed with the Gestore dei Servizi Energetici (GSE) before July 6. Any application received after July 6 will be rejected.
The July 6 deadline also relates to PV plants installed on public land or public buildings that, pursuant to Section 1, Paragraph 425 of Legislative Decree no. 3584/2012 (the Stability Decree 2013), were entitled to an extension of the FiTs under the Conto Energia IV (see our Hot Topic from January 3, 2013).
Notwithstanding the Euro 6.7 billion cap being reached, certain PV projects are exempted from the 6 July deadline:
- PV plants that are included in the first or second GSE register under Conto Energia V remain entitled to the Conto Energia V FiT and can apply to the GSE even after July 6, 2013, provided they start operations within one year of the publication of the register.
- Special extensions also apply to PV plants that are located in certain Municipalities in the regions of Emilia Romagna and Lombardy, which were struck by earthquakes on May 20 and May 29 2012:
a) Roof top PV plants that started operating prior to the earthquakes remain entitled to the applicable FiT rate, even if they have to be rebuilt.
b) PV plants that were authorized on or before 30 September 2012, but had not started operating before the earthquakes, remain entitled to the FiT provided by the Conto Energia IV for the first semester 2012, provided they start operations before December 31 2013.
c) PV plants located on agricultural land are only entitled to the extension in b) above if the projects were authorised on or before March 25, 2012. They must still conform with the limits set forth under Article 10, Sections 4 and 5 of Legislative Decree no. 28/2011.
Finally, it is worth noting that the 6 July deadline does not apply to PV plants that applied for incentives or to be included in the registers but were rejected unlawfully. In these cases, where the applicant wins the appeal against the GSE, they will benefit from the FiT and the timelines provided under the Regulations as they were in force at the time of application.
- 31 March 2013 for all PV plants that are not subject to an Environmental Impact Assessment (Valutazione di impatto ambientale)
- 30 June 2013 for all PV plants that are subject to an Environmental Impact Assessment (Valutazione di impatto ambientale) and have obtained the relevant building permit on or before 31 March 2013
- 30 October 2013 for all PV plants that are subject to an Environmental Impact Assessment (Valutazione di impatto ambientale) and have obtained the relevant building permit after 31 March 2013.
The final draft of the fifth Italian Feed-In Tariff (FiT) system for photovoltaic (PV) plants (the Conto Energia V) was signed on 6 July 2012 by the relevant ministers. It will enter into force after its publication in the Italian Official Gazette, which is expected to happen in the next few days.
Under the new Conto Energia V, in order to be eligible for the FiT, ordinary PV projects must be registered with the Gestore dei Servizi Energetici (GSE) and ranked according to certain priority criteria in order to fall within the following budgets:
- First registration period: €140 million
- Second registration period: €120 million
- All subsequent registration periods: €80 million
Separate budgets of €50 million each are reserved to building-integrated PV plants with innovative features, concentrated PV plants and PV plants built by the Public Administration. Rooftop PV plants of up to 50 kWp installed in combination with the removal of asbestos and small PV plants of up to 12 kWp generally do not fall under any budget restrictions.
The Conto Energia V will expire once the overall annual expense cap of €6.7 billion for incentive payments payable to PV installations in Italy has been reached.
We will analyse the new FiT system in detail after the publication of the final version of the Conto Energia V in the Official Gazette. In the meantime, however, it is worth looking at its potential impact on projects currently under development or construction.
The new FiT system will apply 45 days after the publication by the Italian Authority for Energy and Gas (AEEG) of the notice that the annual aggregate value of FiT payments for PV plants in Italy has reached the €6 billion threshold. PV plants that start operations on or before 31 December 2012 will fall under the new FiT unless they are installed on property belonging to the Public Administration, in which case they will continue to be eligible for the FiT under the Conto Energia IV.
All previous drafts of the Conto Energia V contained a transitional rule, pursuant to which the FiT of the Conto Energia IV continued to apply to all PV plants that start operations prior to the application of the Conto Energia V FiT system. The final version of the Conto Energia V, however, includes a dramatic exclusion to this rule. Large PV plants that have not obtained a ranking position in the GSE register for 2012, and are not built on Public Administration property, will no longer be eligible for the 2013 FiT provided by the Conto Energia IV, even if they start operating prior to the application of the new FiT system under the Conto Energia V. The only form of protection that the Conto Energia V reserves to these plants is a special priority right in the ranking of the first GSE registration period under the Conto Energia V.
The unexpected exclusion from the tariff protection rules of large PV [...]
On March 1, 2012, the Italian Senate approved the draft text which will transpose into law Decree no. 1/2012, the Liberalisation Decree. The draft text still needs to be approved by the Italian Chamber of Deputies. The approval must be granted by March 24, 2012 at the latest. Once the text is approved, it will then be published in the Official Gazette before entering into force. If not approved by March 24, 2012, the Liberalisation Decree will lose its efficacy as of the date of its publication (January 24, 2012).
The draft text provides a number of modifications to the original version of Article 65 of the Liberalisation Decree, which initially introduced the ending of the feed-in tariff (FIT) for newly-installed ground-mounted photovoltaic (PV) plants on agricultural land.
Although the ending of the FIT for ground-mounted PV plants on agricultural land has been confirmed, two categories of PV plants will continue to be able to avail of the FIT:
- PV plants located in areas owned or leased by the Italian military; and
- PV plants that were authorized previously, and will commence operations within 180 days of the entry into force of the amended Decree being transposed into law.
However, these two categories of plants remain subject to the restrictions that were introduced by the Renewables Decree, dated March 28, 2011, namely that PV plants located on agricultural land must not exceed 1 megawatt (MW), nor cover more than 10 percent of the available land, and must be at least 2 kilometers (km) from PV plants located on land belonging to the same owner. It is not entirely clear if the restrictions will apply to both types of PV plants benefitting from the exemption: if interpreting the provision literally, the restrictions should apply in both cases. However, it would appear that the legislatures’ intention was different. In both circumstances, the restrictions do not apply if the land has been abandoned for at least five years.
As expected, the retrospective cut of the FIT for previously-authorized PV plants benefiting from a safe harbor provision under the Renewables Decree has been abolished. Instead, the safe harbor has been extended by a further 60 days to compensate for the uncertainty during the period between the enactment of the Liberalisation Decree and the amended text coming into force. However, the revised text also abolishes the increase of the FIT for PV plants located on greenhouses, as introduced by the Liberalisation Decree.
In summary, by applying Article 65 of the Liberalisation Decree, as amended, ground-mounted PV plants located on agricultural land will be entitled to the FIT as outlined below.
Entitlement to FIT for Ground-Mounted PV Plants on Agricultural Land
Agricultural land belonging to the Italian military
Any other agricultural land
Irrespective of date of authorization or grid connection
Authorization before the entry into force of [...]
As part of the liberalisation package adopted on 20 January 2012, the Italian Government has decided to stop incentives for ground-mounted photovoltaic (PV) plants on agricultural land.
The previous Government had already introduced limitations to photovoltaic plants located on agricultural land by limiting the incentives to only those not exceeding 1 MWp and on the condition that they did not cover more than 10 per cent of the available land. An exception was made where the land had been abandoned for at least five years. These limitations were set out in paragraphs four, five and six of Article 10 of legislative decree no. 28 of 3 March 2011 (the Renewables Decree), which have now been abolished.
The current Government has now decided to eliminate incentives for all ground-mounted photovoltaic plants on agricultural land. Article 65 of the Liberalisation-Decree (the Decree) provides that the new rules will apply to all new installations, except those for which the request for authorisation was filed before the entry into force of the Decree and provided that operations start within one year from the entry into force of the Decree. The PV plants that do not fall under the application of Article 65 shall, in any case, comply with the limitations under paragraphs four, five and six of Article 10 of legislative decree no. 28 of 3 March 2011.
In turn, the Government has increased incentives for photovoltaic plants installed in greenhouses, by providing that they will receive the full tariff for rooftop PV plants instead of the currently applicable rate, an amount between the tariffs awarded for rooftop and the tariffs for ground-mounted facilities.
The Decree has now entered into force following its publication in the Official Gazette. Parliament has 60 days, as of the publication, to approve and convert the Decree into law. During such period, Parliament may introduce further amendments. It remains to be seen whether Parliament will approve the increase of the incentives for greenhouse PV plants.
On January 20, 2012, Gestore dei Servizi Energetici (GSE), the publicly-owned company that promotes renewable energy sources in Italy, announced that the budget for the second half of 2012 for large solar photovoltaic (PV) plants has already been used up by excessive demand in 2011. Consequently, there will be no registration procedure for the second half of 2012, and large PV solar plants that have not been registered previously with the GSE will only be eligible for the 2013 feed-in tariff.
The Fourth Italian Feed-In Tariffs system (the so called “Fourth Conto Energia”) established the following budgets for large solar PV plants between June 2011 and December 2012:1/06/2011 – 31/12/2011 1st Half 2012 2nd Half 2012
TOTALFeed-in Premium Budget 300M 150M 130M 580M Indicative Cumulative Nominal Power 1.200MW 770MW 720MW 2.690MW
In order to ensure the fair distribution of the budgets for 2011–2012, the Fourth Conto Energia introduced a procedure of registration, and subsequent ranking by the GSE of the registered plants for each of the three periods, based on certain priority criteria.
The Fourth Conto Energia affirmed that the budget for the second half of 2012 will be reduced by the excess amount awarded to large PV plants that began operating between June 1 and August, 31, 2011, or registered with the GSE between September 2011 and December 2011. Accordingly, the budget for the second half of 2012 has been reduced to zero, and the GSE will not start the procedure for new registrations.
As a consequence of this development, PV projects that are defined as “large PV plants” that have not obtained a favorable ranking in one of the GSE registers in 2011, or in the first half of 2012, will now only be eligible for the 2013 feed-in tariff. In fact, the GSE has clarified that those PV plants that started operations in 2012 without being ranked in a GSE register will be deemed to have started operations on January 1, 2013, and will therefore obtain the 2013 feed-in tariff for the 20 years starting January 1, 2013.
Unlike the 2012 feed-in premium, the 2013 feed-in tariff will already include the price for the sale of electricity. For, instance, the all-inclusive feed-in tariff for PV plants with nominal peak power above 1 MW will be as follows:
PV Plants Installed on BuildingsOther PV Plants
“Small PV plants” (i.e. <1000 kWp on rooftops / ground mounted <200 kWp using net-metering system / placed on buildings or areas owned by the public sector) are not subject to the budget restrictions and will be eligible for the incentive.