Italy: Re-Modulation Of Feed-In-Tariffs In Italy For Renewable Energy Plants

Last Updated: 11 November 2014
Article by Elisabetta Ventrella

New provisions on re-modulation and payment of incentives for photovoltaic and other renewable sources plants in Italy.

07.11.2014 - On 16th and 17th October 2014 the Ministry of Economic Development has issued three Ministerial Decrees implementing the general provisions contained in the Law Decree no. 145/2013 and in the subsequent Law Decree no. 91/2014 on re-modulation of feed-in-tariffs for photovoltaic and other renewables sources plants. The Decrees will become effective the day after their publication on the Italian Official Gazette (the first two Decrees analysed below have already been published on 24th October 2014 and therefore already entered into force).

In particular, the three Decrees provide for a specific regulation of:

  1. re-modulation of feed-in-tariffs for photovoltaic plants with a capacity above 200 kW;
  2. new payment modalities of feed-in-tariffs for photovoltaic plants; and
  3. voluntary re-modulation of feed-in-tariffs for other renewable sources plants (different from PV source).

From the above mentioned measures, the Ministry of Economic Development will expect annual savings of about 500-700 million of euro per year, starting from 2015, which will allow the consequent reduction of the energy bills.

Below a summary of the main provisions of the above mentioned Ministerial Decrees.

I) Re-modulation of feed-in-tariffs for photovoltaic plants with a capacity above 200 kWI)

On 17th October 2014, the Ministry of Economic Development has finally issued the Decree on the re-modulation of feed-in-tariffs for photovoltaic plants with a capacity above 200 kW.

As already mentioned (for more details on this, please click here to read our previous article), the Law Decree no. 91/2014 (as subsequently amended by Law no. 116/2014 of 11th August 2014) introduced a third option for the payment of feed-in-tariffs by GSE (the selection among the three options shall be communicated by the owner of the plant to GSE within 30th November 2014). The selected option will apply starting from 1st January 2015.

Said third option provides that the current incentives granted will be reduced for an initial period by a certain percentage and increased, of same amount, at a later stage. The incentives will be granted for the remaining life period of the plant (still calculated on the 20 year period). From the reading of the Decree, it seems that the reduction period is 2015-2019, while the subsequent increase period will be after 2019.

As to the actual percentage of decrease/increase, Annex 1 of the Ministerial Decree contains a specific mathematic formula to calculate the new feed-in-tariffs (ie Inew = Iold * (1-Xi)), without however specifying the percentage of increase/decrease. In this respect, Article 3 of the Decree refers, on its turn, to a subsequent communication from GSE, already published on 27th October 2014, on the multiplication criteria to be applied to the previous incentive for the calculation of the new incentive. Please click here to read the criteria.

II) New payment modalities of feed-in-tariffs for photovoltaic plants

The second Ministerial Decree concerns the new modalities of payment of feed-in-tariffs from GSE for photovoltaic plants.

In particular, it provides that, starting from 1st July 2014, the feed-in-tariffs will be paid by GSE, as an advance, in a percentage of 90% of the actual production of the previous year of a specific plant or, if not available, on the basis of the regional forecast. Annex 1 to the Decree contains a table summarizing the average production hours for each region for 2014.

The GSE will pay then the balance within 60 days from the sending of the actual production data and in any event within the 30th June of the subsequent year. The aim of such Decree is to allow an efficient scheduling of the feed-in-tariffs payment by ensuring, as far as possible, the correspondence between the annual production forecast of a plant and the actual annual production of said plant.

It is worth noting that such Decree shall apply to all photovoltaic plants under the Feed-in-Tariffs Regulations (the so-called "Conto Energia"), independently of the capacity and/or the type of plant.

As to the payment terms, the Decree provides that the advance of the feed-in-tariffs will be paid at the following frequency:

  1. every four months for plants up to 3 kW;
  2. quarterly for plants above 3 kW and up to 6 kW;
  3. every two months for plants above 6 kW and up to 20 kW;
  4. monthly for plants above 20 kW.

In certain events (such as the assignment of receivables, the change of ownership or other amendments of the owner data) the payment of the feed-in-tariffs could follow a different payment frequency (in order to link the payment procedure to the specific event).

The Decree provides also specific mathematic formula for the calculation of the advance and the inspections from GSE to verify an adequate correspondence between the production forecast of a plant and its actual production (and consequently avoid undue payment). For 2014, the first inspection from GSE will be made in December 2014 in respect of the production data for the period July-October 2014.

III) Voluntary re-modulation of feed-in-tariffs for other renewable sources plants (different from PV source)

Finally, the third Ministerial Decree regards the voluntary re-modulation of the feed-in-tariffs for other renewable sources.

In particular, the owners will be offered to opt for a re-modulation of the incentives they get from the plant, providing the granting of a reduced annual incentive for the remaining life of the incentive scheme but extended for an additional 7 year period.

If the owner accepts the new mechanism they will get further benefits for any improvement they will made to the existing plant. On the contrary, if the owner decides to remain with the current incentive scheme, it cannot get further benefits (including the simplified purchase and resale arrangements -ritiro dedicato- and net metering -scambio sul posto-) for the ten-year period after the current life of the incentive scheme.

In case the owner accepts the new mechanism, it shall submit a specific application to GSE within 90 days from the entry of the Decree (in accordance with the guidelines that GSE will publish soon on its website) and the new reduced incentive will be paid starting from the first day of the month subsequent the above mentioned 90-day period.

Within 6 months from the entry into force of the Decree, GSE will notify to the regions and other competent authorities the list of the plants which have opted for the new mechanism, so that they can extend the validity of the authorizations to the new incentive period.

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.

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Elisabetta Ventrella
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