The European Commission, in a note dated 22 November 2023, announced the approval of Italy's draft decree for improving energy self-use from renewable sources ("Decree") pursuant to EU State aid rules.
This is a very important step on the path mapped out by the European Green Deal for 2030, whose decarbonisation goals could also be achieved by encouraging the spread of green energy self-production, use and sharing configurations ("CACER"), among which renewable energy communities ("RECs") have central importance.
The measures proposed by the Italian Ministry for the Environment (Ministero dell'Ambiente) include incentives amounting to Euro 5.7 billion, of which: Euro 3.5 billion, financed by a withdrawal on electricity account of all users, will be allocated in support of RECs for 20 years, on the basis of the amount of renewable energy produced and shared by them in that period; Euro 2.2 billion, taken from PNRR funds, will be used to finance, through capital grants of up to 40% of eligible costs, projects for the construction, or upgrading, of energy production plants from renewable sources in municipalities with less than 5,000 inhabitants.
The Decree, which will be published and followed by the technical rules of the Gestore Servizi Energetici ( the Italian agency for renewable energy, "GSE"), will include the following provisions.
Self-use configurations
There are three different configurations of self-use eligible for the incentives:
- "individual remote self-use systems of renewable
energy," i.e., systems that provide self-use, remotely and
without a direct line, by a single end-customer, through the use of
the existing distribution network to connect the site of production
and the one of use;
- "collective self-use systems from renewable sources,"
i.e., systems realized by groups of self-consumers acting
collectively pursuant to Article 30, Paragraph 2, of Legislative
Decree No. 199/2021;
- "renewable energy communities," i.e. systems realized by end customers pursuant to the Article 31 of Legislative Decree No. 199/2021.
Renewable energy communities are autonomous legal entities based on open and voluntary participation, whose main purpose is to provide environmental, economic or social benefits to their members or to the local areas in which they operate.
Natural persons, PMI (as long as the renewable energy community adhesion does not constitute their main commercial and/or industrial activity), cooperatives, associations, territorial and local authorities, research and training institutions, religious bodies, and third sector bodies (NGOs, charities and voluntary aid), among others, are eligible to participate in RECs.
By establishing an REC, its members produce energy for self-use, access incentives provided for the energy transition, and can store any excess energy produced in storage systems or feed it into the grid for sale.
Incentives
The Decree provides two different measures to support the spread of self-use of energy from renewable sources:
- an incentive rate recognized, for 20 years, on the portion of electricity shared by the REC. The rate consists of a fixed section, which depends on the power of the plant, and a variable section, which is related to the market price of electricity. It is also provided an improved rate for plants located in the Central and Northern Italy;
- a capital grant for the construction, or upgrading, of plants with a maximum capacity not exceeding 1MW.
Incentive rate: beneficiaries, access conditions and cases of forfeiture
All the different configurations of self-use provided by the Decree are eligible for the incentive rate under the following conditions:
- the maximum nominal power of the individual renewable energy
plant, or the upgrading operation, may not exceed 1 MW;
- CACER that access to the incentive rate must own the
requirements provided by the Articles 30 and 31 of Legislative
Decree No. 199 of 2021 and must operate, in interaction with the
energy system, pursuant to the Article 32 of the same Legislative
Decree;
- REC must have already been duly established on the date of
submission of the application for access to the incentive
rate;
- production plants and withdrawal points that are part of CACER
must be connected to the distribution network through connection
points that are part of the area underlying the same primary
cabin;
- plants must own the performance and environmental protection
requirements, necessary to comply with the principle "Do No
Significant Harm" (DNSH) and the construction requirements
provided in the operating rules pursuant to the Article 11 of the
Decree;
- the CACER must ensure, by means of an explicit bylaws
disposition, private agreement, or, in the case of individual
self-use, a Self-declaration of affidavit, that any amount of the
premium rate in excess compared to that determined by application
of the shared energy share threshold value expressed as a
percentage in Annex 1 of the Decree, is allocated only to consumers
different from companies and/or used for social purposes having an
impact on the territories where the sharing plants are located; the
CACERs must also ensure full, adequate and prior information to all
final consumers, whether they are partners or members or
self-consumers acting collectively as part of the same
configurations, on their benefits of accessing the incentive
rate;
- plants must comply with the requirements provided by Article 8, Paragraph 1 (a) of Legislative Decree No. 199/2021;
Access to incentive rate is not allowed:
- to companies in difficulty as defined in the Commission Communication on Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty, published in the Official Journal of the European Union C 249 of July 31, 2014;
- to applicants for whom one of the causes of exclusion referred to in Article 80 of Legislative Decree No. 50 of April 18, 2016 is applicable;
- to applicants who are subject to the causes for prohibition, disqualification or suspension pursuant to Article 67 of Legislative Decree No. 159 of September 6, 2011
- to companies against which a recovery order is pending as a result of a previous decision of the European Commission declaring the incentives received illegal and incompatible with the internal market;
- to hydrogen-related projects that result in greenhouse gas emissions exceeding 3 tCO2eq/t H2.
In order to access to the incentive rate, it is necessary to submit an application to the GSE within 120 days after the date of commissioning of the plant, providing the necessary documentation to comply with the access requirements. The GSE, by the last day of the third month following the receipt of the application, verifies the completeness of the submitted documentation and, in case of a positive verification, awards the incentive tariff.
It is provided the forfeiture of the incentive rate and recovery of any amount already disbursed, in cases of loss of one, or more, of the eligibility requirements, as well as false statements at any stage of the proceedings.
Capital grants: beneficiaries, eligible interventions and cases of revocation
The beneficiaries of the capital grant are renewable energy communities and collective self-use systems from renewable sources located in municipalities with a population of less than 5,000.
The cost on renewable energy facilities, including upgrades, are eligible for capital grants if the following conditions are met:
- existence of the prerequisites pursuant to letters a) to g) of Article 3, paragraph 2, of the Decree (these are, therefore, the same requirements provided for access to the incentive rate, with the sole exclusion of that relating to compliance with the requirements of the plant referred to in Article 8, paragraph 1, letter a) of Legislative Decree 199/2021);
- non-existence of the same exclusion causes provided for the incentive rate;
- the beginning of the work must be after the date of submission of the application for the grant by the beneficiary;
- Possession of the permit for the construction and operation of the plant, if required;
- Possession of the finally accepted grid connection quote, where applicable.
Plants eligible for the capital grants must operate within eighteen months from the date of eligibility, but no later than 30th June 2026.
Access to the capital grants, the granting of which is arranged by ministerial provision, takes place through the submission of an application to the GSE.
The application must be completed with the required documentation to comply with access requirements. The application deadline is 31st March 2025, subject to the depletion of available resources.
The capital grant shall be withdrawn in the following cases:
- loss of one, or more, of the eligibility requirements
- false statements in the application for access to the grant or made at any other stage of the process;
- violation of the general principles of DNSH and climate tagging;
- non-compliance with the maximum deadlines set for the implementation of the interventions;
- in the other cases that will be identified with the ministerial decree that, upon proposal of the GSE, will set the technical rules for access to benefits.
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.
