On 24th June 2014, the Italian Government enacted the Law Decree no. 91 on "Urgent provisions for agricultural sector, environment, companies development and, inter alia, reduction of energy bills" (the "Law Decree"), entered into force on 25th June 2014 and shall now be converted into a law by the Italian Parliament within 60 days from its publication on the Italian Official Gazette. The Law Decree has however immediate effect.
With particular regard the PV energy sector, the Law Decree provides for the following amendments:
I) Amendments to PV plants with a capacity above 200 kW
For PV plants having a capacity greater than 200 kW, the Law Decree provides for:
a) a re-modulation (better known as "spalmaincentivi") of the feed-in-tariffs (FIT) generated by the PV plants. Starting from 1st January 2015, the current FIT will be in fact reduced (on the basis of Annex 2 of the Law Decree, see table below) and distributed over a period of 24 years starting from the grid connection date. The State incentive will pass therefore from 20 years to 24 years.
As to the reduction, Annex 2 provides for different percentages of reduction depending on the actual remaining period of life of the plant. The percentages are as follows:
|% of FIT reduction|
More than 19
According to press releases of the industry associations, the following will be the example: in case a plant has a remaining period of life of 12 years (out of the current 20 years), the GSE will grant to the owner an annual FIT equal to 75% of the current FIT (applying therefore a reduction of 25%) for the next 16 years (ie the remaining 12 years plus the new four years added by the Law Decree).
In the light of the above, the Regions and the other competent authorities shall automatically adjust the term of the various authorisations to the new period of life of the plant.
As to the omni-comprehensive tariffs under the Fifth FIT Decree (Ministerial Decree of 5th July 2012), the reductions above will be applied only to the incentive component (as defined by said decree).
b) as an alternative to the re-modulation scheme referred to a) above, the owners can expressly opt for a reduction of the current FIT of 8%, but in such a case the GSE will grant the reduced FIT for the current remaining life period of the plant (still calculated on the 20 years period).
Such option shall be exercised and communicated to GSE by and no later than 30th November 2014 and will apply starting from 1st January 2015.
The Law Decree provides also that the owners, who will follow the new re-modulation of FIT, can apply for new banking financing for a maximum amount equal to the difference between the current FIT and the reduced FIT. Such financing can benefit, cumulatively or alternatively (on the basis of specific agreements with the credit system), of dedicated funding or guarantees by the Cassa Depositi e Prestiti SpA. The exposure of Cassa Depositi e Prestiti SpA will be guaranteed by the State, in accordance with the criteria and modalities to be laid down by the Economic and Finance Minister.
II) For all PV plants
The Law Decree finally states that, starting from the second semester of 2014, FIT will be paid by GSE, in monthly instalments, in a percentage of 90% of the estimated annual average production of each plant for a specific year and then the GSE will pay the balance, on the basis of the actual production, within the 30th of June of the subsequent year. The GSE will publish the operating guidelines in the next 15 days (from the publication of the Law Decree).
The Law Decree has already been criticized by the industry since it will heavily affect the already operating and grid connected plants. Needless to say that it will affect the business plans of many plants since even option a) (which will not reduce the aggregate amount of incentives) will at least cause material problems in respect of the financing agreements already in force and the capabilities of companies to timely and duly fulfill their repayment obligations.
Certainly there are doubts about the compliance of the Law Decree with the principle of non-retroactivity of the law. The industry hopes that the Parliament will soon amend the Law Decree.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.