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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 general principle of legal acts not being retroactive (Article 11 of the preliminary provisions of Civil Code), but also the general principles of certainty of laws and legitimate expectation of the citizens (Regional Administrative Court of Milan, Sez. IV, 10 November 2006 n. 2125, as confirmed by Cons. Stato, Sez. VI, 4 April 2008 no. 1435). Based on these rulings, the GSE continued to publish the inflation-adjusted FiT rates for early generation Conto Energia I plants year by year until 2012.

In a parallel proceeding, however, the Consiglio di Stato decided not to follow its own 2008 decision and submitted the question to the Plenary Chamber. In May 2012, the Chamber ruled the opposite of the Consiglio di Stato’s 2008 decision and confirmed the legitimacy of the retrospective abolition of the inflation adjustment relating to early generation Conto Energia I plants. The Consiglio di Stato argued that the Ministerial Decree of 6 February 2006 did not actually modify a previous legal provision but only interpreted it in a different, and acceptable, manner (Cons. Stato, A.P., 4 May 2012, no. 9).

It took until 26 March 2013 for the GSE to react to the Plenary Chamber’s reversal of the Consiglio di Stato’s decision. On that date, it released the news bulletin, in which it stated it would no longer adjust the Conto Energia I FiT rates in line with inflation. The GSE did, however, continue to pay the increased rates that had already been generated by the inflation adjustments.

Current Situation

The GSE has now sent out the letters referred to above, informing early generation Conto Energia I plant owners that the GSE will i) readjust the FiT to its original amount, prior to any adjustment for inflation, and ii) claim reimbursement of, or set-off with, all excess payments made until now. The GSE also invites recipients of these letters to submit comments and observations within 10 days.

There are a number of questions that can be legitimately raised with respect to the GSE’s latest [...]

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Italy: Euro 6.7 billion Cap for Photovoltaic Incentives Reached

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).

Exceptions

Notwithstanding the Euro 6.7 billion cap being reached, certain PV projects are exempted from the 6 July deadline:

  1. 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.
  2. 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.  




Fifth Italian Conto Energia for Photovoltaic Plants Signed

by Carsten Steinhauer and Anna Vesco

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.

Immediate Impact

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 [...]

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Italian Senate Approves Draft Revision of Restrictions to PV Plants on Agricultural Ground

by Carsten Steinhauer

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 [...]

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Italian Government Stops Incentives for Ground-Mounted PV plants on Agricultural Lands

by Carsten Steinhauer

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.
 




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