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GSE Incentives and Sanctions: New Important Provisions For Renewable Energy Projects

06 November 2019
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With Law no.128 of 2 November 2019, published on the same day as the Official Gazette of the Italian Republic and entered into force the day following its publication, the Italian Parliament has enacted the Law Decree no. 101 of 3 September 2019 introducing new important provisions for the renewable energy sector.

The Law, "containing urgent provisions on employment protection and the resolution of corporate crisis", has approved changes in article 42 of the Legislative Decree no. 28/2011 with particular reference to the  incentives and the sanctioning powers of the GSE. 

The main novelties are as follows:

  1. The redetermination of the curtailment of the incentives following a finding of a material breach by the GSE between 10% and 50% (instead of 20% and 80%, as previously established). Additionally, in the case of a spontaneously reported infringement, the curtailment of the incentive will be further reduced by 50% (instead of a one third reduction, as previously established);
  2. The curtailment of the incentives is reduced even in the case of modules with "false" certificates: from 30% to 10% for small systems and from 20% to 10% for systems with a power exceeding 3 kW. Furthermore, it is specified that these reductions also apply to installations for which the curtailment of the incentives has already been applied;
  3. The measures referred to in point 1) will apply to all installations "built" and "in operation" and, "at the request of the party concerned", it will also apply to those established by the GSE as having been forfeited, provided that no judgment that has become final (sentenza passata in giudicato) or the opinion of the Council of State (Consiglio di Stato) has been handed down in an extraordinary appeal. Please note that the request made by the party concerned is legally equivalent to the "acquiescence to the violation alleged by the GSE, as well as a waiver of action";
  4. The possibility of imposing a sanction proportionate to the violation (with the revival of the decaying power of the GSE) is expressly excluded in the case in which the operator's conduct is the subject of criminal proceedings and the proceedings in progress, even if it is not definite.

All these changes will have an immediate impact on the renewable energy operators and on their relationship with the GSE. It is important to specify that (i) the GSE will be required to apply the new provisions to all pending administrative proceedings, regardless of a party's request, and (ii) with regard to the pending judgements, the party's request will result in a waiver of judgement.

Finally, it is important to note that with these regulatory changes, the principle that the sanctioning powers of the GSE must be in compliance with the principle of proportionality has been reaffirmed, in order to safeguard the investments made by private operators in the renewable energy field.

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