Italy’s Final FER X Decree Enters Into Force, Establishing New Investment Framework For Renewables

The final FER X Decree entered into force on August 7, 2026, introducing Italy’s long-term support framework for renewable energy technologies with generation costs close to market competitiveness. The regime covers solar photovoltaic (PV), onshore wind, hydropower, and sewage-gas projects until December 31, 2030, supporting up to 37.15 GW of capacity: 27.15 GW through indicative auction volumes and up to 10 GW through direct access for plants up to 1 MW.

The decree is in force, but the Ministry of Environment and Energy Security (MASE), Regulatory Authority for Energy, Networks and Environment (ARERA), and the Energy Services Manager (GSE) must still adopt rules on auction volumes, strike prices for smaller plants, preliminary qualification, operating rules, balancing, and deemed production.

The structure of the new support regime

Direct access for plants up to 1 MW

Plants with a capacity of up to and including 1 MW may access the mechanism directly, without participating in a register or auction, provided that construction started after the decree entered into force and the applicable technical, environmental, and “do no significant harm” (DNSH) requirements are satisfied.

ARERA will determine the relevant strike prices, which may vary by technology and project size and must provide fair remuneration of investment and operating costs. The direct-access route will cease 60 days after the 10 GW cap is reached, if that occurs before December 31, 2030.

Competitive procedures for plants above 1 MW

Larger projects must participate in technology-specific competitive procedures. Eligibility generally requires a construction and operation permit, an accepted grid connection estimate, validated registration in Terna’s GAUDÌ system, compliance with environmental and DNSH requirements, participation in the balancing and redispatching market, and evidence of financial standing.

For technologies other than solar PV, a favorable environmental impact assessment decision may, at the developer’s request, replace the construction permit at the auction stage. Solar projects must already hold the relevant permit.

Indicative competitive auction volumes

Competitive process

Auction volumes will not be fixed in advance. For each procedure, the GSE will use a demand curve based on minimum, target, and maximum capacity levels and the relevant strike-price range.

Bids will be adjusted through market-zone coefficients set by MASE, introducing locational signals linked to grid and system needs. Location may therefore affect both connection prospects and auction competitiveness. In case of tied bids, priority may be given to projects in suitable areas or acceleration zones, projects backed by a qualifying ten-year power purchase agreement (PPA), and, for solar PV, certain replacement projects on existing agricultural sites.

Support economics

The published values will be adjusted for inflation when individual auction notices are issued. The decree also provides a EUR27/MWh premium for solar projects replacing asbestos or fiber-cement roofing, and a EUR10/MWh premium for floating solar projects.

A 20-year two-way contract for difference

For plants with a capacity of 200 kW or more, electricity remains available to the producer and is sold on the market. The GSE settles the difference between the awarded strike price and the relevant zonal day-ahead market price, subject to a floor of zero. The GSE pays the producer when the strike price is higher; the producer pays the difference back when the market price is higher.

For plants above 1 MW, the contractual rights and obligations apply to 95% of the electricity produced. The treatment of the remaining output, including its interaction with PPAs, guarantees of origin, and the measurement of deemed production, will require careful consideration in the implementing rules and project contracts.

Negative prices, curtailment, and balancing

The decree contains detailed provisions for curtailment, maintenance, zero or negative market prices, and participation in balancing and redispatching markets. In specified cases, payments may be calculated by reference to deemed production rather than actual metered output.

The commercial effect will depend heavily on the methodology to be adopted by ARERA and the GSE. For lenders and investors, the treatment of deemed production, grid constraints, and negative-price periods will be central to revenue modeling and downside analysis.

Project delivery obligations

Late completion triggers a reduction of 0.2% of the strike price for each of the first nine months of delay and 0.5% for each of the following six months. Beyond the additional 15-month period, the project loses its ranking position, the final guarantee is called, and a 5% reduction applies if the project subsequently re-enters a support scheme.

Early withdrawal also has financial consequences: 30% of the final guarantee may be called if withdrawal occurs within six months of the ranking, increasing to 50% between six and 12 months.

Net-Zero Industry Act (NZIA) procedures

At least 30% of annual solar and wind auction capacity will be reserved for dedicated NZIA procedures, requiring additional evidence on sustainability, cybersecurity, supply-chain resilience, component origin, and delivery capability. Sponsors targeting NZIA capacity should review suppliers, component origin, data hosting, and cybersecurity early in the procurement process.

What happens next?

The decree sets the framework, but key points still require implementing rules, including eligibility, project changes, auction mechanics, deemed production, NZIA evidence, and financial guarantees.

The next key steps are:

• MASE/GSE framework: auction volumes, locational coefficients, Operational Rules, preliminary qualification, and standard contracts
• ARERA measures: direct-access strike prices and rules on deemed production, balancing, and redispatching
• NZIA implementation: evidence requirements for dedicated solar and wind procedures

On the statutory timetable, the main MASE and GSE framework is expected by early October 2026 and ARERA measures by early November 2026; the first auctions will follow the Operational Rules, preliminary qualification, and auction calendar.

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.