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Italy: Renewable Energy Law Adopted

(Mar. 25, 2011) The Italian government adopted on March 3, 2011, a legislative decree implementing the European Union's Renewable Energy Directive 2009/28/EC. The effective date of the decree, Il decreto legislativo sulla promozione dell'uso dell'energia da fonti rinnovabili, will be the date of its publication in the country's official gazette. The new legislation covers such topics as administrative permits, grid improvements, incentives, control, and fines. (Michelle Thomas & Guido Galeotti, United Kingdom: Italy Implements the European Renewable Energy Directive (Mar. 11, 2011).)

The aim of the new rules set forth under the decree is “to strengthen and rationalize” the renewable energy subsidy system and to reach “the double objective of increasing renewable energy production in line with European objectives and reducing the linked subsidies which are ultimately charged to the consumer,” the government was quoted as saying in a statement. (Italy Moves to Reduce Renewable Energy Handouts, PHYSORG.COM (Mar. 3, 2011).) The government also hopes it will mean the end of the “fraud and speculation” associated with the system, which has cost the public €35 billion (about US$49 billion) over the last decade. (Id.)

As one commentator pointed out, however, many details of the feed-in tariff (FIT) model that will ultimately replace the current green certificate system have been left out of the new decree. (Heather O'Brian, Italy Leaves Detail out of FIT Legislation, WIND POWER MONTHLY (Mar. 4, 2011).) Thus, the future level of aid and the eligibility criteria are to be determined by a decree to be issued at the end of April, to take effect on June 1. (Italy Moves to Reduce Renewable Energy Handouts, supra.)

FITs, also known as Electricity Feed Laws, Feed-in Laws, Advanced Renewable Tariffs, Renewable Tariffs, and Renewable Energy Payments, are “payments per kilowatt-hour for electricity generated by a renewable resource.” (What Are Feed-In Tariffs?, WIND-WORKS.ORG (last visited Mar. 22, 2011).) FIT policies have reportedly been implemented in more than 40 countries “and are cited as the primary reason for the success of the German and Spanish renewable energy markets,” as a result of which they “are starting to gain traction in several U.S. states and municipalities.” (Karlynn Cory, Toby Couture, & Claire Kreycik, Feed-in Tariff Policy: Design, Implementation, and RPS Policy Interactions, Technical Report NREL/TP-6A2-45549, National Renewable Energy Laboratory(Mar. 2009).)

In regard to solar energy, some of the incentives provided for in the March 3 decree are:

  • incentive tariffs for photovoltaic (PV) plants starting operations by May 31, 2011, in accordance with a Ministerial Decree of August 6, 2010;
  • new incentives for PV plants that begin operations after May 31, 2011 (to be adopted in a decree by the Minister of Economic Development in agreement with the Minister of the Environment by April 30, 2011);
  • eligibility of ground-based plants for incentive tariffs as of the decree's effective date, provided that 1) the plant's capacity does not exceed 1 MW and plants on the same owner's land are installed at a distance of 2 km from one another; and 2) the concerned plants do not cover more than ten percent of the land surface available. These two restrictions do not apply under certain conditions, e.g., if the land has been abandoned for five years or if the individual plant was authorized prior to, or on, the decree's effective date. (Thomas & Galeotti, supra.)

For non-renewable energy sources, the decree provides:

  • As of January 1, 2013, the renewable obligation (to provide the competent authorities with green certificates pursuant to article 11 of Legislative Decree No. 79/1999, of March 16, 1999, which enforced Directive 98/30/CE on the single electricity market) will be gradually reduced to zero in 2015. (Id.; Italian Report on Demonstrable Progress Under Article 3.2 of the Kyoto Protocol, at 11, United Nations Framework Convention on Climate Change website (last visited Mar. 24, 2011).)
  • Until 2015, Italy's State Energy Management Agency (GSE, Gestore Servici Energetici) will still be required to purchase excess green certificates at a market price 22% lower than that prescribed by article 2, paragraph 148, of Law No. 24 of December 24, 2007 (the Financial Law 2008, which changed many parts of the green certificate system and also established a new FIT system for small renewable plants). (Thomas & Galeotti, supra; Renewable Energy Policy Review: Italy, at 6; Mission, GSE website [in English] (last visited Mar. 22, 2011).)
  • As of January 1, 2013, non-solar renewable energy production will see: 1) fixed-incentive tariffs, if plant capacity is lower than 5MW; or 2) for larger projects with a minimum capacity of 5 MW, incentives awarded through reverse auctions managed by the GSE. A decree regulating the granting of these two types of incentives is to be adopted within six months after the new decree's effective date. (Thomas & Galeotti, supra.)

Although projects that seek a lower incentive payment will be favored under the new law, the document does provide for the establishment of a minimum incentive price to guarantee investors a certain return, to be determined on the basis of investment costs. The GSE buy-back of excess green certificates, at a rate equivalent to 78% of the green certificate reference price, has been described as “a partial victory for the wind industry”; the rate had been set at 70% under a draft version of the law. (O'Brian, supra.)

According to the law firm publication CLEAN TECH LAW, in 2010 “Italy again figured as host of one of the flagship renewable projects of the year, when the second-largest geothermal plant to be constructed in 2010 was competed at the Larderello field, which has been under exploitation for 80 years.” Italy also had the second largest solar PV project in 2010, according to CLEAN TECH LAW. (Wrap-Up of Largest Renewable Energy Projects in 2010, CLEANTECHLAW (Jan. 14, 2011).)