Italy: Revised decree on the transfer of additional profits from renewable energy plants | Denton

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On February 25, 2022, the Italian government issued Decree-Law no. 23 (Decree), which repeals and entirely replaces Article 16 of Legislative Decree no. 4 of January 27, 2022 (known in Italian as Decreto Sostegni-ter), which had introduced an obligation for renewable energy producers to transfer the additional profits generated by exceptionally high electricity prices to the Gestore dei Servizi Energetici (GSE) to help finance the lower cost of electricity (see our previous post here).

The new decree responds in part to the proposals made by the Italian Regulatory Authority for Energy, Networks and the Environment (ARERA) in its statement of February 18, 2022 regarding art. 16 of Decreto Sostegni-Ter, reducing the scope of the measure and providing simplified rules for the calculation of additional profits.

Indeed, under the new decree, the mandatory transfer of additional profits generated by electricity sales between February 1, 2022 and December 31, 2022 now applies:

  1. photovoltaic installations with a capacity greater than 20 kW and which benefit from the Conto Energia fixed tariff mechanism, as well as from
  2. solar, hydroelectric, geothermal and wind power plants with a capacity greater than 20 kW whose production began before 1 January 2010 and which do not benefit from incentives.

In other words:

Among the subsidized power plants, only photovoltaic power plants benefiting from feed-in tariffs from Conto Energia are concerned by the measure.

Among the non-subsidized power plants, only those commissioned before January 1, 2010 are concerned. It seems that this affects not only geothermal and hydroelectric power plants, but also photovoltaic and wind power plants whose incentives have been revoked by the GSE.

The “reference price” for the calculation of additional profits is now determined by the decree itself and differs according to the geographical location of the plant:

Zoned CNOR CSUD NORTH SARD SICI SOUTH
€ /MWh 58 57 58 61 75 56

Based on the production data submitted to the GSE, the GSE will calculate the delta between:

  1. the applicable reference price and
  2. the current zonal hourly prices or, in the case of PPAs entered into before 27 January 2022, the price of the agreed PPA, provided that it is not linked to spot market prices and does not exceed the reference price by 10 % or more.

If the delta b) minus a) is positive, the GSE will request payment of this amount from the producer or offset it against the payments due to the producer. In the only likely hypothetical case of a negative difference, the GSE would have to pay that difference to the producer.

Once again, this new decree was promulgated without the approval of Parliament; thus, the parliament will have to convert it into law within 60 days of its entry into force, i.e. before April 27, 2022.

In the meantime, the Italian Energy, Networks and Environment Regulatory Authority (ARERA) has yet to issue a regulation to implement the provisions of the decree.

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