Energy Update February 2022

Legislation

Sostegni Ter Law Decree 

On 27 January 2022 the Law Decree no. 4/2022 ("Sostegni Ter"), issued by the Italian Government with the aim to implement economic measures due to Covid-19 as well as electricity price increases, was published in the Official Gazette no. 21 and entered into force. 

First, please note that the Law Decree will cease its effect if not converted into law within 60 (sixty) days from its publication and during this period it remains subject to amendments.

With reference to the renewable sector, the Law Decree introduces a specific provision, namely the price of electricity produced by plants powered by renewable sources.

Two-way electricity price "compensation mechanism"

In particular, pursuant to Article 16 of the Law Decree a two-way electricity price "compensation mechanism" shall apply from 1 February 2022 until 31 December 2022 to:

1. photovoltaic plants, having power capacity exceeding 20 kW, which benefit from fixed prices deriving from the "Conto Energia" system (i.e. feed-in tariff (tariffe incentivanti) not depending on market prices); and
2. plants, having power capacity exceeding 20 kW, supplied by solar source, hydroelectric, geothermal-electric and wind power, which do not have access to incentives mechanisms.

In order to apply the aforesaid two-way compensation mechanism, the Gestore dei Servizi Energetici ("GSE") shall calculate the difference between the following values:

1. an average reference price (i) equal to the average of the hourly zonal prices recorded from the date of entering into operation of the plant until 31 December 2020 or (ii) in case the plant entered into operation before 1 January 2010, equal to the average of the hourly zonal prices recorded from 1 January 2010 until 31 December 2020, revalued according to FOI ISTAT index;
2. the hourly zonal market price of electricity applicable to the plant or, in case of PPA executed before the entering into force of Sostegni Ter Law Decree (i.e. 27 January 2022) and related to a plant that does not meet the requirements listed as a cause of exclusion (please see below), the average price indicated in the PPA.

In case the difference between a) and b) results in a positive amount, the GSE shall pay the relevant amount to the producer; otherwise, in case the difference between a) and b) results in a negative amount, the GSE shall compensate (by way of set off with the feed-in tariff or other incentives to be paid to the producer) or request the producer to pay the amount equal to the result of the difference.

Exceptions

The provisions of Article 16 of the Law Decree shall not apply to PPA executed before its entering in force, providing that such contracts:

1. are not linked to the price trend of energy "spot" markets; and
2. in any case, are not executed at an average price that is not 10% higher than the average reference price referred to letter a) above (i.e. the average reference price indicated in the previous paragraph), within their term of duration.

Implementing regulation 

Within 30 (thirty) days from the entering in force of the Law Decree, the relevant regulation authority, ARERA, shall clarify the implementation of the two-way compensation mechanism and the modalities by which the relevant earnings are paid into a special fund set up at the Cassa per i Servizi Energetici e Ambientali.

Comments and renewable market reactions 

Notwithstanding the Law Decree aims at reducing an increase in the energy prices, its provisions may not be in accordance with the Italian Constitution principles and the European Union regulation, with particular reference to the certainty of law, the ownership right and legitimate expectation on the stability of the incentives regime. 

Indeed, targeting both the plants benefiting from the incentives and the plants which do not have access to incentives mechanisms causes a lack of trust of the investors. 

As a consequence, there is the concrete risk of jeopardizing not only the decarbonisation goals and the threshold of energy produced by renewable sources provided by the European Union, which have to be met by 2030, but also the objectives of the PNRR for the obtainment of the European funds. 

Another reason for which the Law Decree has been strongly criticized is the lawfulness of the intervention by which the State interferes in the regulation of a liberalized market, such as the energy market. 

Lastly, one of the main critical elements, raised by the relevant energy and environmental associations, deals with the purpose to target the extra profit deriving from the selling of electricity produced by renewable energy sources. 

The measures contained in the Law Decree only impact on renewable energy producers, without affecting the fossil fuels and hydrocarbon sector causing a difference in treatment among energy operators.

Italia Solare and Coordinamento Free (i.e. two important renewable energy associations) request the State to act also on hydrocarbon electricity producers whose (i) contracts contain specific criteria that allow the calculation of the exact extra-profit and (ii) materials did not suffer any variation in prices. 

Read the text >

New Apulia Regional Law no. 51/2021 – On 30 December 2021, Apulia Region published on the Official Regional Bulletin no. 164, the Regional Law no. 51/2021. The new legislation provides that, until further notice, reference will continue to be made to Regional Regulation no. 24 of 30 December 2010 and to the Regional Landscape Plan (PPTR) for the identification of unsuitable areas, with the following exceptions. In detail, pending the lack of regulation on the suitable areas:

1. only non-substantial modification interventions - pursuant to Article 5, Section 3 and following, Legislative Decree no. 28/2011 - are allowed on unsuitable areas (ref. Article 26, Section 1);   
2. interventions for the construction of plants for the production of renewable energy and storage systems are allowed in the sites subject to restoration procedure (including sites of national interest) located within the unsuitable areas (ref. Article 37, Section 1);
3. interventions to be carried out in areas affected by quarries and mines ceased, not recovered or abandoned or in conditions of environmental degradation, provided that they are the subject of a preliminary intervention of recovery and environmental restoration, in accordance with regional regulations, with charges borne by the applicant, are not precluded even if falling on unsuitable areas (ref. Article 37, Section 2). Read the text >

New Lazio Regional Law no. 20/2021 – On 30 December 2021, Lazio Region published on the Official Regional Bulletin no. 124, the Regional Law no. 20/2021. The legislation confirmed the interruption of the authorization process concerning wind farms and photovoltaics plants until June 2022, as already provided by Regional Law no. 14/2021. It should be noted that Regional Law no. 14/2021 has been challenged before the Constitutional Court by the Council of Ministers and the validity of the provision contained therein are currently being considered by the court. Read the text >

New Umbria Regional Resolution no. 1176/2021 – On 24 November 2021, Umbria Region pre-adopted the Regional Resolution no. 1176/2021. The new legislation aims at amending the Regional Regulation no. 7/2021 concerning the regional legal framework for the installation of plants for the production of renewable energy. In particular, Regional Resolution no. 1176/2021 provides a reduction to 5% of the area that can be used for the installation of photovoltaic plants on agricultural land. With reference to agrivoltaic plants, the percentage of area that can be assigned, with respect to the entire plot of land, is equal to 20%. It should be noted that similar legislation in Lazio Region and Friuli Venezia Giulia Region, blocking the full development of the renewables energy on agricultural areas, has been challenged before the Constitutional Court by the Council of Ministers and is currently being considered by the court.

Caselaw

• The Administrative Regional Court of Lazio gives its positive outcome to the construction of an agrivoltaic plant located in the Municipality of Montalto di Castro (Province of Viterbo), after the opposition expressed by the Ministry of Cultural Heritage – The Court acknowledged the inadmissibility claimed by the government with regard to the negative opinion expressed by the Ministry of Cultural Heritage to the authorization issued by the Region for the agrivoltaic plant. Precisely, pursuant to Article 30 of Law Decree no. 77/2021, the opinion of the Ministry of Cultural Heritage, expressed during the steering committee in relation to areas not affected by any landscape and environmental constraints, is not binding. In such case, the Ministry of Cultural Heritage shall not carry out the remedy provided for by Article 14 quinquies, Law no. 241/1990 - TAR Lazio, Sez. I no. 12549/2021 dated 6 December 2021.
• The Administrative Regional Court of Tuscany ruled on the actual applicability of the regional classification of areas considered unsuitable for the installation of renewable energy plants – The fact that an area is classified as unsuitable does not preclude the construction of renewable energy plants therein, since (i) the perimeter delineation made by the Region is indicative and useful for accelerating the authorisation procedure, (ii) the applicant can prove that the area has not a significant value from a landscape or agricultural point of view, (iii) the Region shall carry out a detailed investigation, in order to verify the effective extent of the classification. - TAR Toscana¬¬, Sez. III no. 1727/2021 dated 31 December 2021. 
• The Administrative Regional Court of Lazio ruled on the veracity of the declaration provided by the application aimed at obtaining the GSE incentives – The GSE rejected the application for the access to the incentives, based on the assumption that the declaration provided by the applicant shall be considered false. The court stated that the declaration having as object the undertaking of the applicant to install the PV plant in favour of the related building, cannot classified as false declaration. Indeed, the applicant declared that the PV plant would be install in favour of the building at the completion of the building itself in compliance with the GSE regulation, that does not provide the prior completion of the building. – TAR Lazio, Sez. III no. 624/2022 dated 19 January 2021.

Other news

• PNIEC – PNRR technical commission – On 18 January 2022 the PNIEC – PNRR technical commission has been appointed and is now ready to operate. The PNIEC – PNRR technical commission is run by Mr. Massimiliano Atelli and it shall be composed by a maximum of forty experts. Read the text > 
• Hydrogen action plan – Confindustria, supported by the scientific contribution of Enea (the National Agency for the new technologies, energy and sustainable economic development), published an action plan for hydrogen, focusing on market regulation. The plan promotes the reduction of costs by supporting the supply, demand and technological chain of hydrogen and by preferring a market model that reduces the redistributive impacts. Read the text >