Italy: Revamping, The GSE Publishes The New Rules And Creates New Opportunities For Repowering: Preliminary Considerations

The GSE has finally published the new framework on maintenance and renovation of the photovoltaic plants benefiting from Conto Energia support regime (the "New DTR") 1 . The set of rules provided by the New DTR further elaborates and confirms the principles and guidelines, previously set out under Ministerial Decree 23 June 2016, which served as "temporary regulation" while the new regulation was being prepared 2.

Please find below a summary of the rules provided by the New DTR, which we have organized in the following sections:

  1. scope of application and general principles;
  2. revamping and repowering, what is and what is not allowed;
  3. applicable procedures to the interventions envisaged under the New DTR;
  4. preliminary considerations. 

1. SCOPE OF APPLICATION AND GENERAL PRINCIPLES

The New DTR applies to ordinary and extraordinary maintenance activities aimed at preserving or restoring the functionality and efficiency of solar facilities. Accordingly, the New DTR provides regulation for all such activities aimed at guaranteeing the expected plant performances (functionality) as well as safety, reliability, environmental and efficiency standards (efficiency).
Ordinary maintenance includes all the activities (i) that do not alter the plant core structure and (ii) that are aimed at (a) preserving standard levels of performance of the plant and/or (b) remedying to accidents.

By way of example, ordinary maintenance consists in:

  1. planned maintenance, i.e. periodical activities to be carried out at least annually, such as on-site inspections and plants main components condition checks; reinforcement of photovoltaic panels supporting structures; cleaning; interventions on inverters, parallel switchboard and other electrical components; measurement devices periodical setting.
  2. unplanned maintenance activities, such as, for instance, replacement of electronic components or photovoltaic panels (subsequent to malfunctioning caused by wear and tear and other events like accidents), with other components having equivalent specifications.

Extraordinary maintenance consists in the replacement of a component with a new one having different features. Therefore, it can entail an upgrade of the plant (e.g. replacement of an inverter with another one more efficient or enjoying higher technical features). Any other activity implying changes to the electric layout of the facility, and the issue of a new electrical system conformity declaration, falls, similarly, within this category.

With reference to maintenance (ordinary and extraordinary) and technological upgrading activities, please note the New DTR also applies to substantial and non-substantial interventions.

Substantial maintenance and upgrading interventions include those works altering the plants' features thanks to which the relevant plant first qualified to benefit from the feed-in tariff under the relevant Conto Energia (i.e. structure, layout and settings).

Examples:

  1. within the relevant plant's site, moving, even partially, the photovoltaic panels;
  2. replacement, removal, new installation of the plants main components (i.e. panels and inverters)
  3. in certain cases, energy sale regime variations;
  4. changes to the grid connection point ID number.

Non-substantial maintenance and upgrading interventions include those works, which do not alter the requirements and the features thanks to which the relevant plant first qualified to benefit from the feed-in tariff under the relevant Conto Energia (i.e. structure, layout and settings).

Examples:

  1. moving secondary inverters or other minor electrical components;
  2. replacement, removal, installation of minor electric components when no changes to the energy sale regime occur (off-take regime or net metering);
  3. works carried out on panels or plant supporting structures not entailing modifications of the requirements on which basis the feed-in tariff has been awarded.

2. REVAMPING AND REPOWERING: WHAT IS AND WHAT IS NOT ALLOWED.

The scope of application of the New DTR is relevant with reference to revamping and repowering.

Revamping involves intervention and/or upgrading of already existing facilities in order to improve efficiency and/or restore original performance.

Repowering involves changes to the existing modules and/or inverters, including electric layout, in order to increase the installed capacity and the annual production.

Both processes can be carried out through ordinary and extraordinary maintenance activities.

Common provisions on revamping and repowering

  1. Except for cases of force majeure, unforeseeable events or circumstances not dependent on the producer, moving the plant from its original site is forbidden.
  2. Single or group of components, being them main or minor ones, can be moved when necessary in order to optimize the plant performance (such as in case of shading issues) and to improve the value of the assets holding the plant (e.g. building raising or space use reorganization), provided that the relevant framework under the relevant Conto Energia decree, on building authorizations or technical settings is complied with.
  3. Main plant components (i.e. panels and inverters) as well as minor ones (all the others) can be replaced with technologically more advanced parts. In this respect, photovoltaic panels must be new or regenerated (which is an addition, since the previous framework was not allowing the use of regenerated components) and consistent with the requirements set forth under Fifth Conto Energia. Inverters must respect the applicable technical regulations and Italian Energy Authority (AEEG) resolutions.
  4. Spare parts can be used for replacement, but they must at least comply with the features provided under the relevant Conto Energia applying to the relevant plant. Additionally, spare parts (muletti) can be installed to promptly restore those plants affected by extended malfunctioning or damaged by fire. However, in this case, they cannot be used for more than six months, must comply with the same technical requirements of the temporarily replaced components and cannot cause a plant's power increase. If spare parts are used for replacement, the interested party has the duty to prove the relevant date of acquisition by providing relevant written documentation; if the spare parts have been acquired by a third party (EPC, asset manager), the interested party has to prove – even by the O&M agreement - that the relevant spare parts have been specifically acquired for the relevant solar plant.
  5. Works, involving a variation of the grid connection point, identified with (and thus a variation of) the ID code, are allowed. They may include the following scenarios such as:
    1. grid connection voltage variations;
    2. energy sale regime (off-take regime or net metering) modifications;
    3. connection point material relocation;
    4. changing from provisional to final connection point.

In the above scenarios (from a. to d.), the connection point shall remain unique to the relevant plant, otherwise all plants connected to the same connection point will lose the right to benefit from the relevant feed-in tariff previously awarded under the relevant Conto Energia.

Repowering: new opportunities

The GSE confirmed that interventions causing a capacity increase up to 5%, for plants below 20 kW, and up to 1%, for plants with a capacity higher than 20 kW, are allowed. In this respect, the "added" capacity will benefit from the feed-in tariff awarded to the plant (which will be adjusted to the new capacity).

Please note that the above threshold (5% and 1% on the basis of the plant's size) are overall caps which may not be exceeded during the whole plant feed-in tariff period (meaning that, regardless the number of changes done during the plant's life, the nominal power cannot in any case exceed the above mentioned thresholds).

Additionally, the most important news for potential investors is that the New DTR provides for and encourages expressly repowering activities involving a capacity increase beyond the abovementioned thresholds.

Although the power increase will not benefit from the original feed-in tariff awarded to the relevant plant, the PV owner can, in any case, access the off-take regime upon request. The result is that interesting perspectives for an effective and actual repowering market unfold.

In addition to the above, the New DTR introduces an element of flexibility compared to the previous regulation, allowing producer to replace plants components albeit these are not defective.

For the purposes of implementing repowering interventions, the producer is required to install proper devices able to measure, independently, the "incentivized" energy (up to the 1% and 5% thresholds, as applicable) and the "non-incentivized" energy (exceeding the 1% and 5% thresholds, as applicable) generated by the plant as a result of the works performed.

3. APPLICABLE PROCEDURES TO THE INTERVENTIONS ENVISAGED UNDER THE NEW DTR

The applicable authorization procedures vary depending on the scope of the intervention as detailed below:

  1. Substantial interventions: the relevant works shall be authorized by the Region or the Province, if the relevant competences have been transferred to the latter.
  2. Non-substantial interventions: a simplified authorization procedure (called "PAS") applies, according to which the plant's owner shall communicate to the competent municipality the prospected change (attaching the required documentation) and, if the relevant authority does not raise objections within the following 30 days, the plant's owner can commence the relevant works. In the event the relevant solar plant has been originally authorized through the sole authorization (autorizzazione unica), it is suggested to notify the Region (or the Province if the relevant competences have been transferred to the latter) in this respect.

Without prejudice to the different kind of authorization procedures that the producer shall complete before carrying out any relevant intervention on the plant, it is evident the New DTR offers more clarity as well as certainty to the relevant market and represents a new driver for investments, especially thanks to the regulation on repowering. The New DTR is, in fact, a set of rules that, at least at first glance, seems completely independent from the substantial or non-substantial nature of the variations included in the relevant authorization whereby the competent authority will allow the power increase. Indeed, it is essential to highlight that, once the producer has obtained the required authorization, the installation of a second and independent measurement device for the "non-incentivized" energy seems the only criteria in order not to lose the feed-in tariff awarded to the plant. The above is valid notwithstanding the competent authority considerations on the substantial character of the changes approved.

GSE procedures

There is no requirement to inform in advance the GSE about the relevant intervention. Rather, producers will have to: (i) inform the GSE once the interventions' related works have been completed 3 and (ii) file with the GSE the documentation specified in the annexes of the New DTR (a copy of which must be kept on site) 4. Please note the GSE does not have to reply on the compliance of the intervention carried out vis-à-vis the preservation of the relevant feed-in tariff within a specific timeframe, which may generate uncertainty for the relevant operator, especially in case of transactions involving the interested assets with regard to the relevant transaction economics determination. 

Substantial interventions are subject to a fee to the GSE to cover the evaluation procedure carried out after the filing of the relevant communication and documents 5. Specifically, the producer shall pay a fixed fee equal to € 50.00 plus € 2.00 for each kW up to 20 kW and € 1.00 for each kW beyond 20 kW (calculations are made on the capacity admitted to the feed-in tariff). In case of replacement of the main components (i.e. panels and inverters), the fee at stake is applied on the power of the components under replacement.

4. PRELIMINARY CONSIDERATIONS

As of today, the Italian repowering market has been subject only to minor developments and exploitation; this is due to several reasons of technical, economic and legal nature. In this respect, there are no specific fast-track procedures for works concerning a plant already authorized.

Italian solar portfolios aging process is still at a relatively early stage and the majority of the installed modules are still covered by warranties. Even when the relevant warranties have expired, plants' owners often decide to keep old modules (clearly to the extent these are still performing according to their estimates) considering the costs of modules replacement and the fact that repowering is not duly incentivized.

However, the New DTR has made significant steps forward with respect to the applicable regulation and it has laid down solid foundations for a proper development of the Italian repowering market.
In particular, the New DTR has overcome the uncertainties over repowering's compatibility with the support scheme regulation of the Contos Energia and has provided economic support to repowering (by providing that the extra power generated by repowering interventions may benefit of the energy sale regime), giving to the market reasonable economic prospects.

In light of the above, although repowering will probably start achieving higher margins in a 5/8-years period, considering that the governments are realizing that the existing portfolios are not performing as much as they expected and that there is an actual need to increase the energy production from renewable sources, there could still be interesting opportunities for an "early" repowering. The easiest solution to increase such energy production is indeed to focus on the plants already constructed through their optimization. Clearly, the success of this strategy will depend, further to the legal framework, on governments' incentives schemes and modules replacement cost-effectiveness.

Footnotes

1The previous regulation, named "Regole per il mantenimento degli incentivi in Conto Energia - Documento tecnico di riferimento", was suspended on 9 July 2015 due to illegitimacy claims concerning the retroactive limitation to the possibility for revamped or repowered plants of benefiting from incentives.

2Article 30 of Ministerial Decree 23 June 2016 lists the following principles:

  1. components used for maintenance and upgrading intervention which consist in the definitive replacement of the plant's components shall be new or regenerated and shall meet the newest quality standards
  2. maintenance interventions are allowed to the extent the increase of the nominal power does not exceed 1% (or 5% for plants below 20 kW)
  3. notification to GSE in case of replacement of the main components of the plants (i.e. panels and inverters). Simplified procedures for plants below 20 kW;
  4. no notification obligations for plants below 3 kW;
  5. temporary replacement components must comply with the same technical requirements of the replaced parts and cannot imply a power increase.

3The term is 60 days in case of substantial interventions.

4The most relevant and recurring documents are: (i) communication of works performance as per the relevant draft attached to the New DTR; (ii) plant as built layout subsequent to the intervention; (iii) technical report on the intervention carried out; (iv) pictures before and after the intervention; (v) excel file with data on the replaced components and the newly installed; (vi) documentation showing the reasons underlying the intervention; (vii) list of main components installed for the repowering intervention with specification of technical features thereof; (viii) plant as built electric works layout.

5Please note the GSE may ask for clarifications or additional information if necessary. In this case, the "integration phase" must be concluded by the GSE within 90 days as of commencement thereof.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
25 Oct 2018, Workshop, Las Vegas, United States

The BLX/Orrick Workshop offers timely discussions of topics related to post-issuance compliance and tax law for the public finance and 501(c)(3) communities who borrow on a tax-exempt basis.

30 Oct 2018, Speaking Engagement, New York, United States

Employment partner Mike Delikat is participating in a discussion hosted by Cornell University’s School of Industrial and Labor Relations led by Counsel to New York State Governor Cuomo and chair of the Governor’s workgroup on the deregulation of adult marijuana use, Alphonso David.

6 Nov 2018, Other, Dusseldorf, Germany

Orrick is proud to present the second event in the series Fashion Revolution Düsseldorf, once again in cooperation with WHU - Otto Beisheim School of Management.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions