“A ‘flow-constrained’ approach may improve the presentation of the measure in the dialogue with Brussels; it does not, however, transform a legally fragile measure into one that is automatically authorizable,” Piero Vigano and Francesco Mazzocchi, partners at law firm ADVANT Nctm, told ICIS.

Vigano and Mazzocchi said the resolution makes preserving Italy’s net import position and minimizing impacts on crossborder electricity flows “a central operational constraint” of the reimbursement scheme. The lawyers suggested that “the Commission could look more favourably on a mechanism in which the impact on flows is controlled, transparent and verifiable ex ante, rather than on a mechanism in which the cross-border effect is measured only ex post.”

The regulator’s resolution states that the value and frequency of the reimbursement will be calculated by Italian TSO Terna on the basis of rules defined by ARERA, while taking into account the expected price differential between electricity prices in Italy and neighboring EU countries.

“However, even a ‘flow-constrained’ design would not automatically eliminate compatibility issues, because the selective advantage bestowed on gas-fired generators, the effect on trade between member states, the distortion of competition and the effect on the ETS signal would still need to be assessed”, they added.

Read the full article here

On June 18th, the Minister of the Environment and Energy Security ("MASE") signed the long-awaited decree aimed at regulating the incentive mechanism now known as "FER-X" and dedicated to the production of electricity from renewable plants  with generation costs close to market competitiveness (the "Final FER-X Decree").

The measure follows the European Commission's decision of 8 June 2026, by which the measure was declared compatible with the internal market under state aid rules.

The most relevant data, on a systematic level, concerns the change of legal basis compared to the previous transitional regime introduced by the MASE decree of 30 December 2024 ("Transitional FER-X Decree" or "Transitional FER-X"): the latter, in fact, had been adopted as part of an emergency and crisis framework applicable only to aid granted by 31 December 2025 and aimed at dealing with the consequences deriving from the Russian-Ukrainian conflict.

The FER-X Final Decree, on the other hand, is based on the Guidelines for State aid measures in support of the Pact for Clean Industry, adopted by the European Commission on 25 June 2025 and applicable to aid granted by 31 December 2030.

The new regime, therefore, is no longer presented as  an emergency bridging measure, but as a structural tool to support the energy transition, consistent with the objectives of the Clean Industrial Deal and the Net-Zero Industry Act.

According to the European Commission at the time of the approval of the measure, the scheme has a total budget of 23 billion euros and is expected to support the construction of about 37.15 GW of new renewable capacity, equal to about 48% of the RES capacity currently installed in Italy, contributing to the achievement of the national target of 39.4% of gross final consumption of energy from renewable sources by 2030.

2. The Support Mechanism

In its basic architecture, the FER-X Final Decree replicates the already known model introduced by the transitional regime, supporting the construction of photovoltaic, wind, hydroelectric and gas-fired  plants powered by residual gases from purification processes, including the hypotheses of new construction, complete refurbishment, partial renovation and upgrading of existing plants (for the latter, limited to the new section of the plant attributable to the intervention).

Access to the mechanism continues to be divided into two directions, depending on the power of the plant:

(i) direct access for plants with a capacity of less than or equal to 1 MW that have started work after the entry into force of the decree and to which an award price is assigned administratively set by ARERA;

(ii) access through competitive procedures (downward auctions announced by  the GSE) for plants with a capacity of more than 1 MW, with power quotas distinguished by technology and whose award price is determined on the basis of the discount offered by competitors on the higher exercise price.

The support continues to be provided, except for plants with a capacity of less than 200 kW (all-inclusive tariff), through a two-way contract for difference: if the market reference price is lower than the award price, the GSE pays the difference to the producer; conversely, if the market price is higher, the producer returns the difference to the system.

The duration of the contracts and, therefore, the period of maintenance of the incentives also remains unchanged (i.e., 20 years from the date of entry into operation of the relevant plant).

Finally, there is no news even with regard to strike prices.

3. The main changes compared to the Transitional FER-X Decree

The innovations introduced by the Final FER-X Decree compared to the previous incentive scheme mainly concern the architecture of the quotas, the selection procedures and some safeguards to protect the system.

3.1 Duration and total quotas

The Final FER-X Decree significantly expands the time and size horizon of the mechanism.

In fact:

• the validity of the measure is extended from 31 December 2025 (end of the transitional regime) to 31 December 2030;

• the power quota for plants with a capacity of less than or equal to 1 MW (and, therefore, eligible for direct access to the incentive) rises from 3 GW to 10 GW;

• the total estimated quota for competitive procedures (i.e., for plants with a capacity of more than 1 MW) increases from 14.65 GW to 27.15 GW, thus bringing the total allocation of the mechanism (direct access and competitive procedures) from the previous 17.65 GW to the current 37.15 GW.

3.2 Quota allocation: more space for wind energy

The increase in the quota allocated to competitive procedures is not evenly distributed among technologies, but is almost entirely attributable to wind power.

While the quota reserved for photovoltaic (10 GW), hydroelectric (0.63 GW) and sewage gases (0.02 GW) is not changed, on the other hand, the quota reserved for wind power goes from the previous 4 GW to the current 16.5 GW.

The decree does not illustrate, in the premises, the basis of this redistribution and, on this point, more clarifications could be contained in the implementing decree of the MASE, to be adopted within 60 days of the entry into force of the Final FER-X Decree, in order to regulate the methodology for calculating the minimum and maximum target power quota.

In this regard, it should be noted that this implementing decree will have to take into account, among other elements, the expected evolution of electricity demand, the regional breakdown of national objectives, the evolution of the transmission grid and  storage resources: criteria that the transitional regime did not expressly refer to among those relevant for the definition of quotas.

3.3 NZIA procedures

Article 6 of the Final FER-X Decree provides for ad hoc competitive procedures for photovoltaic and wind power plants with a capacity of more than 1 MW, in implementation of the now well-known Net-Zero Industry Act referred to in Regulation (EU) 2024/1735 ("NZIA").

Pursuant to the Final FER-X Decree, a share equal to at least 30% of the maximum quota that can be procured for photovoltaic and wind power, during the year in which the procedure is announced, must be allocated through these procedures on the basis of which, in addition to the price, the following pre-selection and "non-price" award criteria are also relevant for the award: 

(i) responsible corporate conduct, in terms of sustainability due diligence;

(ii) cybersecurity and data security, including the maintenance of operational control of the facility by an operator established in the European Economic Area;

(iii) the ability to carry out the project completely and on schedule;

(iv) the auction's contribution to resilience;

(v) the contribution of the auction to sustainability, through scores attributed to the presence of power storage systems equal to at least 25% of the nominal power.

As regards the criterion set out in point (iv), it is specified that – if the Commission, pursuant to Article 29(2) of the Net Zero Industry Act, has established that more than 50% of the supply within the Union of final products or their main specific components originates from a single third country, or that the supply within the Union of final products or their main specific components originating in a single third country has increased on average by at least 10 percentage points for two consecutive years and reaches at least 40% of the supply within the Union – it is necessary that the products/components of the relevant installations are not assembled or originated in that third country (e.g., photovoltaic modules and cells, inverters, turbines, powertrains, etc.).

In short, unlike the transitional regime, the direct reference to China is eliminated  by using a more generic reference to "third countries" and it is expected that the possible application of this criterion derives from a specific assessment by the Commission aimed at verifying the European dependency rate in terms of imports of certain products/components with the aim of making the EU (and, therefore, Italy) less vulnerable to potential supply risks.

Compared to the previous version, a greater articulation of the NZIA mechanism has been introduced, with the aim of transposing into the national law the need to combine auctions based exclusively on price with procedures that enhance the resilience of the European supply chain and the industrial quality of projects.

3.4 Competitive procedures and preliminary qualification

The procedure for access to competitive procedures is also restructured: if in the transitional regime the operator submitted a single application for participation, including the documentation certifying the possession of the requirements, within a window of sixty days, with publication of the ranking within the following ninety days, the Final FER-X Decree instead breaks down the procedure into two distinct phases: the first, consisting of a preliminary qualification, in which the GSE verifies in advance the possession of the subjective requirements and any priority criteria, and a subsequent tender phase, in which only the already qualified entity submits the economic offer. Precisely because of this anticipation of the documentary checks, the time of the competitive phase is significantly reduced : the window for the submission of the application for participation cannot exceed ten days and the ranking must be published within the following ten working days.

In line with this acceleration, the rules on sureties are also being reviewed. The provisional deposit, equal to 5% of the investment cost (a percentage substantially in line with that already deducible from the transitional regime, where it was set at 50% of the final deposit), must now be paid already at the time of  the expression of interest, rather than at the time of the application for participation; the deadline for payment of the final deposit, equal to 10% of the investment cost calculated on the power admitted in the ranking, it is reduced from ninety to thirty days from the publication of the ranking with a positive outcome. The specific investment costs used for the calculation, shown in Table 2 of Annex 1, remain unchanged for all technologies (900 €/kW photovoltaic, 1,420 €/kW wind, 3,160 €/kW hydroelectric, 3,500 €/kW sewage gas).

In addition:

• the deadline for the adoption of the  operating rules implementing the mechanism is reduced from ninety to sixty days; the expressions of interest already submitted pursuant to the Transitional FER-X Decree, moreover, are expressly calculated within the maximum limit of three manifestations per plant also provided for by the new decree, thus ensuring continuity with the previous regime;

• the provision, present in the transitional regime, which expressly guaranteed the performance of at least two competitive procedures per year, is no longer applicable: the Final FER-X Decree merely requires compliance with the conditions of competition of the procedures, entirely deferring the definition of the related calendar to the operating rules.

Finally, the transitional regime provided for a uniform term of 36 months, starting from the publication of the ranking, for the entry into operation of all plants admitted through the competitive procedure, regardless of technology.

In this regard, the Final FER-X Decree introduces, on the other hand, differentiated terms by type of plant and category of intervention.

The penalties on the tariff in the event of delay (0.2% per month for the first nine months of delay, 0.5% per month for the following six) and the consequences of forfeiture of the ranking remain substantially similar to those of the transitional regime.

3.5 Rental signs and entry requirements for photovoltaics

The transitional regime provided, for photovoltaics only, a fixed correction of the award price according to the geographical area (+4 €/MWh for the Central regions, +10 €/MWh for those in the North), designed to compensate for the different levels of insolation. The Final FER-X Decree eliminates this fixed correction from Annex 1 and replaces it with a mechanism of rental signals integrated directly into the ranking algorithm: the Ministry, with the support of Terna and the GSE, will define specific coefficients for each market area, to be applied to price reduction offers before they are ranked in ascending order (Articles 7 and 8). It is a technologically neutral mechanism, applicable to all sources and no longer reserved only for photovoltaics, designed to provide signals consistent with the expected development of the electricity grid.

In terms of access requirements, the FER-X Final Decree also introduces a specific tightening for photovoltaics: while in the transitional regime all technologies could, at the request of the producer, participate in competitive procedures by presenting only the environmental impact assessment measure instead of the enabling title, the new decree reserves this faculty only to technologies other than photovoltaics. For photovoltaic systems, therefore, the possession of the building and operation permit remains necessary. The premises of the decree motivate the choice with reference to the large number of photovoltaic projects that have already completed the enabling process, to which it was intended to give priority access to the mechanism.

3.6 Early withdrawal, dispatching and other changes

Finally, the Final FER-X Decree strengthens some safeguards to protect the system. In the event of undue early termination of the contract, the penalty due to GSE is no longer calculated according to the proportional criterion already provided for by the transitional regime (increasing according to power, decreasing according to the remaining period, up to a limit of 20% of the standard investment cost), but corresponds to the greater of this amount and a new value commensurate with any overcompensation which the producer would obtain by exiting the contract in a context of expected market prices higher than the award price, calculated on the basis of the best available estimates of forward energy prices increased by 20%. The provision is clearly designed to discourage opportunistic withdrawals motivated by market price developments.

On the dispatching front, the new decree introduces a mechanism not present in the transitional regime, aimed at preventing plants from being incentivized to maximize production in the absence of a real system need and to prevent overgeneration phenomena: when the price of the Day-Ahead Market is significantly higher than that recorded in the most liquid sessions of the Intraday Market, the producer is required to offer  the excess quantities on the Balancing Market at a price equal to its variable cost, with suspension of differential regulation for these volumes. Specific rules are also introduced for scheduled maintenance periods and for cases of zero or negative prices on the Intraday Market in the presence of positive prices on the Day-Ahead Market.

Other significant changes include:

(i) the possibility, for all categories of intervention, to use regenerated components and not just new ones (Annex 4);

(ii) the doubling of the correction of the award price for plants built on bodies of water, from +5 to +10 €/MWh (Annex 1);

(iii) the redefinition of the notion of "newly built plant", no longer anchored to a period of absence on site of at least five years, but to the non-reuse of components, infrastructures or works of a pre-existing plant, except for regenerated (Annex 4);

(iv) the elimination, among the priority criteria applicable in the event of surplus applications, of the removal of eternit or asbestos roofs  and the presence of storage systems: the first profile continues to benefit from the tariff increase of +27 €/MWh, while the second is now included, albeit limited to the procedures dedicated to the Net-Zero Industry Act,  among the award criteria related to sustainability;

(v) the support, among the priority criteria related to location, of the new "acceleration zones" identified pursuant to Articles 11-bis and 12 of Legislative Decree No. 190 of 2024 (as amended by Legislative Decree No. 178 of 2025) to the "suitable areas", which in the transitional regime constituted the only relevant location reference;

(vi) for hydroelectric plants, the replacement of the verification of compliance with the Guidelines on water diversions, previously conducted by the National System for Environmental Protection (SNPA) through a dedicated investigation, with a verification carried out directly by the concessionaire authority at the request of the concessionaire (Annex 3).

4. Preliminary considerations and next steps

The main strategic innovation of the Final FER-X Decree is the decision to concentrate almost entirely the increase in quotas on wind technologies, whose ceiling in competitive procedures increases from 4 GW to 16.5 GW, absorbing about 74% of the entire increase in capacity allocated to auctions.

This choice appears to be consistent with the objectives of diversifying the national electricity mix and with the need, repeatedly highlighted by Terna and the energy planning scenarios, to combine the strong growth of photovoltaics with a source characterized by a more complementary production profile, especially in the evening and winter months.

However, the Decree does not provide an explicit justification for the technical and systemic reasons that led to this reallocation of quotas, effectively postponing the definition of the calculation methodology to subsequent implementing measures.

From an operational point of view, there is also a potential criticality linked to the market's effective capacity to absorb and realize, by 2030, such a significant volume of new wind capacity. Although the authorisation framework has improved significantly in recent years, there are still elements of uncertainty related to permitting times, territorial opposition, landscape constraints and the availability of the transmission grid in the areas most suited to wind development.

A further element of attention concerns the interaction between the new wind quota and the NZIA procedures. The reservation of at least 30% of annual volumes for procedures that enhance industrial resilience criteria and the origin of components could favor the European supply chain of turbines and main components, but at the same time risks leading to an increase in investment costs and a reduction in competition in the early stages of application, especially in the absence of a European production capacity fully adequate to the expected demand.

Finally, the success of the incentive scheme will depend significantly on the ability of the legislator and the competent administrations to coordinate the development of wind generation with that of grid infrastructures and storage systems. The same decree expressly recognises that the definition of future quotas will have to take into account the evolution of electricity demand, the transmission grid and storage resources, highlighting how the issue of integration into the electricity system today represents one of the main challenges for the growth of renewable sources.

Ultimately, the Final FER-X marks a paradigm shift with respect to the transitional regime: from a measure mainly aimed at supporting renewable capacity in a general sense to an instrument that identifies wind power as one of the cornerstones of the national decarbonisation strategy. However, it remains to be seen whether the ambition of the new quotas will be adequately reflected in the country's authorization, industrial and infrastructural capacity, elements that will represent the real test of the new mechanism in the 2026-2030 period.

In order to have a clear, complete and exhaustive picture of the future new regulations (and the consequent reactions of market players), it will still be necessary to wait for the entry into force of the legislation and subsequent implementing measures.

The FER-X Decree has been transmitted to the Court of Auditors and is expected to enter into force in the coming days. It is now a matter of waiting for the detailed regulations and, specifically:

• the GSE's operating rules, which should be published and approved by the MASE within 60 days of the entry into force of the Decree;

• the MASE decree, to be adopted within 60 days of the entry into force of the Final FER-X Decree, aimed at regulating:

• the distribution over time of quotas by technology and procedure;

• the coefficients for each market area;

• the methodology for calculating minimum, target and maximum contingent.

• the definition by ARERA, within 90 days of the entry into force of the decree, of the award prices for plants with a capacity of less than or equal to 1 MW.

Based on the provisions of the FER-X Decree, the GSE should publish the notice to submit requests for preliminary qualification within 30 days of the publication of the operating rules, as a result it is very likely that the "new" incentive mechanism will get to the heart of the matter starting from September/October 2026. 

These developments supplement the provisions already set forth in Decree No. 152 of 20 June 2025, adopted by the Ministry of the Environment and Energy Security (“MASE”) and the Ministry of Economy and Finance (“MEF”), in compliance with the provisions of Article 28, paragraphs 2 and 2-bis, of Legislative Decree No. 199/2021, which provided specific guidelines to Gestore dei Mercati Energetici S.p.A. (“GME”) for the establishment of a new organised market dedicated to the negotiation of PPAs (the “MPPA”) and determined the criteria and conditions under which the GSE may assume the role of guarantor of last call for PPAs negotiated on the MPPA.

Between July and August 2025, GME and GSE concluded two public consultations concerning, respectively, (i) the proposed operating model for the MPPA (the “Operating Model”) and (ii) the proposed operational rules for the qualification of entities intending to participate in the MPPA and for the regulation of the GSE's guarantee of last call (the “Operational Rules”). Notwithstanding the closure of both consultations, the Operating Model and the Operational Rules have not yet been officially published.

The new section of the Bacheca PPA

Pursuant to the regulations published by GME (the “Bacheca PPA Regulations”), the Bacheca PPA is divided into three separate sections: the announcements section, the contract registration section and the energy release section.

Within the announcements section, operators interested in executing long-term contracts for the purchase or sale of electricity from renewable energy sources may publish their announcements on an anonymous and non-binding basis. Among the other characteristics that the contracts forming the subject matter of such announcements must satisfy, pursuant to the technical operating provisions of the Bacheca PPA published by GME, there is the requirement of a minimum duration of no less than 5 years.

Article 4(1)of the DL Bollette provides that the Bacheca PPA shall be implemented through the introduction of a new section specifically dedicated to the execution of contracts which, on the purchase side, (i) shall have a minimum duration of no less than 3 years and (ii) may also be negotiated in aggregate form, based on location, consumption profile or membership of specific industry sectors. On the supply side, the electricity traded under such contracts shall not be, or become, subject to support mechanisms for the production of energy from renewable sources.

Such agreements are executed between the parties outside the Bacheca PPA – also with the advice of the GSE – and are subject to a mandatory registration obligation on the relevant section of Bacheca PPA.

The extension of the role of the GSE as guarantor of last call

Article 4(2) of the DL Bollette provides that the parties may request the GSE to assume the role of guarantor of last call also in relation to contracts entered into through the new section of the Bacheca PPA. To this end, the GSE shall identify forms of risk minimisation and transfer for the contracting parties within the scope of the defined contract typologies, including by availing itself of SACE S.p.A.

In particular, for the portion exceeding the available resources and only once the financial resources allocated to the guarantee of last call pursuant to Article 28, paragraph 2-bis, of Legislative Decree No. 199/2021 have been exhausted, SACE S.p.A. is authorised to issue guarantees in favour of the GSE at market conditions, for a maximum coverage percentage not exceeding 70 per cent.

Within 90 days from the date of entry into force of the DL Bollette, MASE and MEF are expected to approve the operational rules, as proposed by the GSE, to implement the foregoing with reference to, among others things, (i) the requirements to be satisfied for benefiting from the access to the guarantee of last call as well as (ii) the standard form of the contracts to access to the guarantee of last call service (the “New Operational Rules”).

The requirements for access to the guarantee of last call

The Operating Model and the Operational Rules states subjective requirements for participation in the Electricity Market and for the assumption by the GSE of the role of guarantor of last call in the MPPA that are particularly onerous.

Indeed, all participants in the MPPA, in addition to being entities duly registered as “attive” with the competent chamber of commerce and holding a rating no lower than the investment grade, shall:

1. obtain the qualification as market operators pursuant to the rules governing the Electricity Market (GME), satisfying all relevant requirements thereunder;

2. be balance responsible party of one or more renewable energy production plants that have entered into operation or have been authorised, if acting as sellers (GSE);

3. be balance responsible party of one or more offtake points, as defined in the TIT, if acting as purchasers (GSE).

As previously noted, such requirements and the related burdens (including in terms of professional qualifications and guarantee instruments) for participation in the Electricity Market and, thus, in the MPPA, may constitute an obstacle to accessing the guarantee of last call provided by the GSE, both for the special purpose vehicles that typically hold the production plants and for energy-intensive companies.

However, the Bacheca PPA and the possibility of accessing the last call guarantee instrument provided by the GSE also for contracts entered into through the Bacheca PPA may enable operators to overcome such obstacle.

Indeed, the Article 14 of the Bacheca PPA Regulations provides that the entities - which intends to participate to the Bacheca PPA - shall only have adequate professionalism and competence in the use of electronic systems and security systems, without any additional or different requirements and/or the provision of specific guarantee instruments in favour of GME, as is the case for adhesion to the Electricity Market and the MPPA.

A significant development

The provision introduced by Article 4 of the DL Bollette could, therefore, represent a significant instrument for overcoming the obstacles – at least with regard to subjective requirements – that precluded the access to the MPPA and to the GSE’s guarantee of last call, thereby enabling also those entities lacking the requirements set forth in Operating Model and the Operational Rules to benefit from the guarantee mechanism provided by the GSE.

Nonetheless, through the Bacheca PPA, only physical power purchase agreement may be entered into, with the exclusion of virtual contracts (so-called virtual PPAs) which, in light of their growing relevance in market practice, should likewise have access to such guarantee instrument.

Therefore, it will be necessary to await the publication of the New Operational Rules – or the revision of those already submitted for consultation – in order to ascertain whether the facilitations to access to the guarantee instrument set out above are effectively endorsed by the regulator and, consequently, whether the new subjective requirements for access to the Bacheca PPA will allow for an effective utilisation of the instrument, in line with the objective of promoting the long-term contracting of electricity produced from renewable energy sources.

1. ^ To this extent please see our previous article:https://www.advant-nctm.com/news-e-approfondimenti/il-mercato-organizzato-dei-ppa-in-italia-e-la-garanzia-di-ultima-istanza-del-gse 
2. ^ Within the framework of which seller operators fulfill the obligation to register long-term power purchase agreements (PPAs) for electricity generated from renewable sources that they have entered into, it being understood that the relevant contracts are signed outside the Bacheca itself.
3. ^Within the framework of which purchase offers may be submitted for the electricity made available by the GSE under the Energy Release 1.0 mechanism.
4. ^www.mercatoelettrico.org/Portals/0/Documents/it-IT/20250127DTF05rev3PPA.pdf
5. ^To this extent please consider our previous article, available at the following link:https://www.advant-nctm.com/news-e-approfondimenti/il-mercato-organizzato-dei-ppa-in-italia-e-la-garanzia-di-ultima-istanza-del-gse

The dispute arose from the failure to submit the final commissioning certificate relating to the plant built under two Simplified Authorisation Procedures (PAS). According to the authorities, such omission justified both the imposition of an administrative fine and the restoration measure.

The judgment addresses several key issues concerning the legal framework governing the PAS regime.

First, the Council of State confirms that the PAS falls within the SCIA (Certified Notice of Commencement of Activity)model. In doing so, the Council emphasises both its historical derivation from the former DIA (Declaration of Commencement of Activity) regime and the structure of administrative control, which may be exercised within thirty days following the filing of the notice. The expiry of such period does not give rise to any implied administrative authorisation; rather, it produces the typical effect associated with the SCIA regime: the private party is entitled to lawfully commence the declared activity in the absence of timely objections.

The principles affirmed by the Council of State are consistent with a series of recent rulings by Regional Administrative Courts, including:

• judgment No. 495 of 30 April 2026, whereby the Regional Administrative Court of Lazio (Latina) confirmed that, once the thirty-day period has elapsed without notification of an order prohibiting the works, the activity must be deemed definitively authorised. The exercise of administrative review powers requires the existence of a specific public interest going beyond the mere restoration of legality, as well as an effective balancing of interests taking into account the private party’s legitimate expectations;

• judgment No. 59 of 14 January 2026, whereby the Regional Administrative Court of Puglia (Lecce) annulled both the rejection order — issued after the expiry of the thirty-day period, when the authorisation process had already become effective — and the subsequent annulment measure adopted in the exercise of administrative review powers, without the necessary assessment of public interest and without taking into account the applicant’s business interests;

• judgment No. 474 of 1 April 2026, whereby the Regional Administrative Court of Lombardy (Brescia) upheld an operator’s appeal, clarifying that the alleged lack of a qualifying requirement (i.e. the availability of the relevant areas) should have been raised within the thirty-day limitation period.

Second, the judgment clarifies that the three-year period under Article 6(6) of Legislative Decree No. 28/2011 runs from the effectiveness of the PAS and relates to the material completion of the works. Failure to comply with such deadline affects only the possibility of continuing works that have not yet been completed; it does not render unlawful works already carried out in compliance with the authorisation. This interpretation is consistent with the distinction drawn by the Plenary Assembly of the Council of State in decision No. 14/2024 between incomplete works with functional autonomy and works radically departing from the approved project.

Third, the judgment addresses Article 44(2) of Legislative Decree No. 28/2011. The Council of State held that restoration measures apply solely to the specific cases expressly set out in the provision — namely, the total absence of the PAS or non-conformity of the works — and cannot be extended by analogy. Failure to submit the commissioning certificate, while constituting a breach of the obligation under Article 6(8), cannot be equated with the absence of the authorisation nor result in its lapse, since the commissioning certificate serves a certifying function but is not constitutive in nature. This reasoning is further supported by comparison with Article 23(7) of Presidential Decree No. 380/2001, which sanctions the failure to file the commissioning certificate for works subject to the alternative SCIA procedure with an administrative fine rather than demolition.

1. * * *

Once again, it is the administrative courts — and not the competent authorities — that act as “guardians” of the decarbonisation objectives underlying the regulatory framework governing renewable energy sources. 

Indeed, while case law is progressively shaping a framework of legal certainty, recognising the stability of authorisations and confining the exercise of prohibitive and sanctioning powers within the limits of the law, administrative authorities continue, all too often, to adopt restrictive measures based on broad interpretations of the applicable rules, effectively hindering the development and operation of renewable energy plants.

The result is a paradox: the energy transition, which the legislator sought to promote through the simplification of authorisation procedures, ultimately relies not on administrative action, but on the corrective function of the courts.

Against this backdrop, in the wake of European initiatives and the recent strategy published by the Italian Ministry of Enterprises and Made in Italy (MIMIT) on 5 November to attract industrial investment in Data Centers (“DCs”) to Italy, the past few weeks have seen significant developments for the future deployment of such infrastructure across the country. 

In particular, reference is made to the recent conversion into law of Decree-Law No. 21 of 20 February 2026 (the so-called “DL Bollette”) (Law No. 49 of 19 April 2026 published in Official Gazette No. 90 of 18 April 2026 – the “Conversion Law”), which has reshaped the key permitting framework governing the construction and operation of DCs.

In this analysis – which was previewed in Quotidiano Energia on 28 April (https://www.quotidianoenergia.it/module/news/page/entry/id/531283) – we focus on the potential operational implications arising from the Conversion Law with respect to the development of DCs.

The single authorisation procedure for DCs 

Specifically, in order to streamline administrative procedures relating to the issuance of permits necessary for the operation of DCs, Article 8 of the Conversion Law introduces a single authorisation procedure.

Following the simplification measures adopted in recent years for renewable energy plants, a form of single authorisation or PAUR (Regional Single Authorisation Measure) is now also envisaged for DCs, aimed at streamlining and speeding up the process for obtaining all permits and authorisations required for the construction and operation of such projects.

In particular, pursuant to the provisions of Article 8 of the Conversion Law:

• authorisation for both the construction and expansion of DCs and their connected user networks (regardless of voltage) shall be granted as part of a single authorisation procedure by the authority responsible for issuing the integrated environmental authorisation. Consequently, for DCs with a capacity of up to 300 MW, the competent authority is the relevant Region (or delegated Province), whereas for higher capacities the competent authority is the Ministry of the Environment and Energy Security (MASE);

• in accordance with the principle of suitability, in case of procedures falling within the competence of the Region or the Province, the role of competent authority may not be further delegated or assigned to other sub-provincial bodies;

• the application for single authorisation must include all the documentation and design drawings required under applicable sector legislation for the issue of authorisations, agreements, licences, opinions, approvals, clearances and consents, including, where necessary, those relating to integrated environmental authorisation, environmental impact assessment, landscape or cultural heritage clearance, water use and air emissions permits, including verification of compliance with municipal planning regulations;

• the single authorisation shall be issued following a formal “conference of services” and the relevant procedure must be completed within ten months from verification of the completeness of the documentation attached to the application. Extensions are allowed only under exceptional circumstances and for a maximum period of three months;

• if the project is subject to an EIA screening and a full EIA is required, the relevant application must be submitted within a strict deadline of 90 days, after which the application is deemed withdrawn and the procedure closed;

• for DC projects declared by the Council of Ministers to be of overriding national strategic interest (and therefore having a total value of not less than one billion Euros), the relevant single authorisation is issued by a special government commissioner in accordance with the provisions of Decree-Law 104/2023;

• for DCs that, on the date of entry into force of the Decree, have already obtained the necessary permits (including environmental approvals) for the implementation of the initiative but not yet the authorisation for grid connection works, such authorisation must be issued by the competent Region. This applies only to grid works above 220 kV, excluding lower-voltage infrastructure. 

Preliminary considerations and future outlook

As expected, the Conversion Law contains a number of open issues that will need to be clarified during the subsequent stages of its implementation and, above all, in the course of its practical application by the public authorities involved.

First of all, it should be noted that the application for the authorisation must include, inter alia, verification of the project’s compliance with municipal planning regulations.

Therefore, unlike the framework applicable to the renewable energy sector, it would appear that the relevant “single authorisation” cannot, where necessary, constitute a variation to the applicable planning instruments. 

This circumstance, even in the absence of national legislation on suitable areas (as is the case for renewables), leaves local authorities with a considerable margin of discretion.

In practice, a preliminary analysis of municipal land-use plans and the relevant technical implementing provisions will therefore be crucial in order to verify the absence of zoning constraints or urban planning parameters that may hinder the development of DCs.

Furthermore, except for projects already authorised and requiring permits for grid connection works with a voltage exceeding 220 kV, no transitional provisions or grandfathering clauses are provided for projects already underway or in the start-up phase. As a result, the so-called “tempus regit actum” principle should apply, potentially giving rise to significant coordination and jurisdictional issues among the various competent authorities.

Moreover, unlike the approach outlined in the recent MIMIT’s strategy, there are no concrete references to any incentive schemes or attraction mechanisms aimed at effectively promoting the development of DCs, which appear more appropriate than ever in light of the significant increase in energy demand expected in the coming years (e.g., through the formal recognition of DCs as “energy-intensive users”, subject on the one hand to “green conditionalities”, but on the other benefiting from reductions in system charges and, more generally, in energy prices). 

DCs represent a crucial hub for the country’s effective digital transition and, while sector operators are willing to bear traditional market risks, they are far less willing to assume risks typically associated with the discretion of public authorities.

From this perspective, the Conversion Law represents a first, albeit modest, step towards enhancing the role of DCs within the national landscape. However, a genuine shift in paradigm will require the prompt adoption of supplementary and corrective provisions or, at the very least, implementing measures.

This would help mitigating the same obstacles and uncertainties that have characterised, in recent years, the development of other strategic infrastructures (notably renewable projects), for which “single authorisation procedures” have in recent years often been perceived by market players not as an incentive but rather as a barrier to investment. This is also evidenced by the legislator’s progressive expansion of simplified regimes, such as the “free activity” scheme and the PAS (Simplified Authorisation Procedure). 

Last but not least, due consideration must also be given to issues relating to the optimisation of the electricity grid. 

While the Conversion Law on the one hand introduces significant changes to the current national framework governing grid connection with regard to feed-in aspects (i.e. generation plants), on the other hand it does not address with the same level of detail consumption units (including DCs) and their future electricity withdrawals from the national grid.

In this respect, Terna’s grid code still presents several grey areas, without clarifying whether the comprehensive regulatory framework developed in recent years for generation plants may be applied by analogy to consumption units, and, if so, within what limits.

Yet, as mentioned, connection requests are increasing at a much faster pace than actual demand and are highly concentrated in specific market zones. As a result, it cannot be ruled out that the current grid architecture may face saturation issues, with potential negative impacts on the connection of new DCs and significant delays to ongoing investments.

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The electrification of port quays, known as “cold ironing”, falls within the broader objective of “sustainable mobility” and aims to reduce the negative externalities arising from the use of fuels during the stationary phase of vessels in port.

An initial regulatory framework for the system was established by Article 34-bis of Decree-Law No. 162 of 30 December 2019, as subsequently amended by Law No. 214 of 30 December 2023, which defined cold ironing as “the set of structures, works and installations built on land necessary for the supply of electricity to vessels moored in port”, further qualifying it as a service of general economic interest.

Within this context, the recent Decree of the Minister of Infrastructure and Transport No. 10 of 22 January 2026 (hereinafter, the “MIT Decree”) was adopted to provide the Port System Authorities with specific guidance on the management of cold ironing services and to ensure full compatibility of the tariff relief measures with Article 107 of the TFEU, in compliance with the European Commission Decision of 17 June 2024, C/2024/3934.

2. On the authorization regime: the regional single authorization

Pursuant to Article 33 of Decree-Law No. 36/2022, port electrification projects have been classified as programs “of public utility,” subjecting their construction and operation to the issuance of a single authorization by the competent region, in compliance with the regulations in force concerning the protection of the environment, landscape and historical-artistic heritage, with the aim of simplifying the procedures for the construction of the infrastructure necessary for the system.

The single authorization is issued upon conclusion of the conference of services convened by the Port System Authority or the competent region, with the participation of all relevant administrations, within a maximum period of one hundred and twenty days, or one hundred and eighty days where an environmental impact assessment (“EIA”) procedure or a screening for EIA (“EIA Screening”) is required.

With regard to the applicability of EIA, it is considered that the project must follow the ordinary rules of the Environmental Code (Legislative Decree No. 152/2006), where the individual interventions fall within those listed in Annexes II, II-bis, III and IV to Part II of the same Code.

3. On the regulatory framework: system charges and the relief regime

The issue of general system charges (hereinafter, “GSCs”) represents the central element of the advantageous regime granted to the cold ironing system: by ARERA Resolution 492/2024/R/eel of 29 November 2024, the provisions of Article 34-bis, paragraph 1, of Decree-Law No. 162/2019 were implemented, concerning “reductions on general system charges for electricity drawn from cold ironing infrastructure”.

The extent of the reduction amounts, for consumption in the years from 2025 to 2029, to 100% of the GSCs owed by the Cold Ironing Infrastructure Manager (“IM”), with a proportional reduction in cases where the POD is not exclusively dedicated to the supply of cold ironing infrastructure. The MIT Decree further specified the operational modalities of the regime: from 1 January 2030, the relief measures shall be granted only to vessels and in ports not subject to the obligations respectively provided for by EU Regulation 2023/1804 and EU Regulation 2023/1805, in order to limit the incentive to those cases where it is necessary to steer the conduct of operators.

The relief measures must be transferred in full to the end users of the cold ironing service, and the IM shall recognize, on a final settlement basis, any credits not passed on through the tariff, in the form of an adjustment or discount on subsequent supplies. A safeguard clause on State aid is also provided: the relief measures may not be granted to undertakings in difficulty or subject to a pending recovery order, for which purpose a self-certification shall be obtained from the beneficiary.

4. On the Cold Ironing Infrastructure Manager (IM) and the procedures for the award of the service

The IM may be an undertaking or a temporary grouping of undertakings (RTI), whether already formed or to be formed, demonstrating proven experience in the management of complex energy infrastructure, electricity distribution networks, cold ironing installations or high-power charging stations, operating in compliance with technical and safety standards equivalent to European standards.

The IM is required to ensure fair and non-discriminatory conditions of access and supply, sharing in advance with the competent Port System Authority the conditions of access to the installations, which shall be published on the Authority's institutional website, and is further required to submit semi-annual reports to the Port System Authorities, communicating data relating to the relief measures granted, the energy supplied and the tariff plan applied.

The provision of the service constitutes a service of general economic interest, the managers of which are identified by the competent Authorities through a public tender procedure pursuant to Article 6, paragraph 10, of Law No. 84/1994 and Legislative Decree No. 36/2023 (the so-called Public Contracts Code).

The optimal areas for award (so-called clusters) are identified by the competent Directorate-General, with the possibility for the relevant Port System Authorities to regulate the organization of the award through collaboration agreements pursuant to Article 15 of Law No. 241/1990. The award entails the granting to the IM of a maritime State property concession pursuant to Article 36 of the Navigation Code, while the IM shall be required to submit a balanced economic-financial plan, with tariff revenues sufficient to cover the costs of the service, including a reasonable profit margin tending towards the weighted average cost of invested capital.

5. Conclusions: an evolving regulatory framework

The regulatory framework reconstructed herein presents itself as a regulatory arrangement still in a phase of consolidation, the full definition of which remains contingent upon factors of a technical, economic and institutional nature, operating at both the national and European level. Moreover, notwithstanding the significant progress achieved to date in the subject matter at hand, certain fundamental aspects – such as the definition of the award clusters and the selection criteria for managers, as well as the allocation of responsibilities within the electricity supply chain in the context of the cold ironing system – remain at the implementation stage, and the EU framework on the energy transition of the maritime sector is itself undergoing rapid evolution.

1. ^ This refers to the Direzione generale per i porti, la logistica e l’intermodalità del Ministero delle infrastrutture e dei trasporti, which forms part of the Department for Transport and Navigation (Dipartimento per i trasporti e la navigazione).

On 20 February 2026, Decree-Law No. 21/2026 (“DL Bollette”) was approved and is currently in the process of being converted into law. The Government has called a vote of confidence in the Chamber of Deputies on the text, as approved by the Committee on Productive Activities, with the deadline for conversion into law set for 21 April 2026. The measure amends, inter alia, the provisions of Article 5-bis of Decree-Law No. 63 of 15 May 2024, converted with amendments by Law No. 163 of 12 July 2024 (“DL Agricoltura”), by setting out how biomethane producers and end customers may structure the contractual arrangements for the relevant volumes.

2. The Regulatory Framework: DM Biometano, DL Agricoltura and DM GO 

To better understand the scope of the amendment, it is useful to briefly review the regulatory developments concerning the incentive mechanism governed by the Decree of the Ministry of the Environment and Energy Security of 15 September 2022 (“DM Biometano”), with particular reference to biomethane self-consumption.

As is well known, DM Biometano defined self-consumed biomethane as the volumes of biomethane produced and transmitted, via internal networks at the relevant site, to equipment for self-consumption in the context of production processes carried out by the same producer.

Subsequently, with the entry into force of DL Agricoltura and, in particular, the provisions of Article 5-bis, paragraph 2, the legislator – in order to promote the production of biomethane from agricultural biomass and increase its use in various production sectors that are difficult to decarbonise – introduced significant changes to the definition of self-consumed biomethane within the context of DM Biometano. Consequently, as of today, the term also covers biomethane produced by an agricultural plant at the disposal of the holder of the premium tariff incentives referred to in DM Biometano and transmitted via the third-party connection obligation network to an end customer operating in so-called ‘hard-to-abate’ industrial sectors (“Hard-to-Abate End Customers”).

For the purposes of this extension, pursuant to paragraph 2 of Article 5-bis of DL Agricoltura, the average monthly price of guarantees of origin (“GOs”) shall be zero.

3. Biomethane sale and purchase agreements for self-consumption: change in law referred to in Article 11, paragraph 2, of the DL Bollette

It is precisely on the framework defined by paragraph 2 of Article 5-bis of DL Agricoltura that the DL Bollette intervenes; as clarified in the technical report, it aims to prevent any form of circumvention by producers regarding the valorisation of the GOs.

In this regard, the DL Bollette adds a final sentence to paragraph 2, clarifying that the transfer, even indirect, of the value of the GOs to other cost items in the contract is not permitted, without prejudice to the recognition of fees for the operational management of the contract.

Furthermore, the legislative amendment also introduces the new paragraph 2-bis of Article 5-bis of DL Agricoltura, which, in order to ensure an adequate level of transparency, requires that individual cost items shall be specified in the sale and purchase agreements entered into pursuant to the preceding paragraph. For the same purposes, it is also provided that ARERA, upon the proposal of the GSE, shall make available standard contractual clauses which operators may use.

The subsequent paragraph 2-ter, also introduced by the DL Bollette, limits the scope of application of paragraph 2 of Article 5-bis of the DL Agricoltura. In particular, the provision stipulates that the self-consumption regime applies to sale and purchase agreements signed with Hard-to-Abate End Customers, up to a limit of 35% of such customers’ consumption.

Finally, paragraph 3 of Article 11 of the DL Bollette governs the effective date of the provisions referred to in paragraph 2 of said Article. In the version originally approved by the Council of Ministers, paragraph 3 provided that these provisions would apply to contracts signed from the date of entry into force of the decree. However, the version currently undergoing conversion has postponed this deadline, stipulating that the same provisions shall apply to contracts signed from the thirtieth day following the date of entry into force of the law converting the decree.

The rationale behind these amendments appears consistent with the original purpose of Article 5-bis of DL Agricoltura: to ensure that the GOs are effectively transferred to the end customer, whether or not they are a Hard-to-Abate End Customer, at a zero price, so that they may enjoy the same benefits that would have been granted to the producer in the event of direct self-consumption. The regulatory amendment therefore aims to counter the negotiating practices that emerged during the initial application of Article 5-bis of DL Agricoltura, whereby the economic value of the GOs was effectively shared between the producer and the Hard-to-Abate End Customer.

4. Concluding remarks 

Pending the conversion of the decree and the GSE’s operational rules, the amendments introduced by the decree introduce significant new elements that require careful consideration by industry operators.

Firstly, the introduction of a 35% threshold for the consumption of Hard-to-Abate End Customers as the maximum limit for the application of the self-consumption scheme referred to in the DL Agricoltura entails the need to adjust the volumes that can be contracted under each individual biomethane sale and purchase agreement. However, the provision does not clarify the practical modalities through which this limitation will be applied; it will therefore be necessary to await the publication of the new implementing rules for the DM Biometano in order to fully understand the scope of the change introduced by the DL Bollette.

Secondly, the prohibition on passing on, even indirectly, the value of the GOs to other cost items in the contract has a decisive impact on the pricing structure of biomethane sale and purchase agreements, thus requiring a careful identification of the legitimately recognisable cost components. To this end, the publication by ARERA, upon the proposal of the GSE, of standard contractual clauses, together with the monitoring role assigned to the GSE, will help to define the limits within which biomethane sale and purchase agreements may be considered compatible with the regulatory provisions.

In this context, the overall framework designed by the legislator undoubtedly poses significant challenges in terms of structuring biomethane sale and purchase agreements, with particular reference to the structure of the price agreed between the parties. Nevertheless, the DL Bollette itself appears to leave considerable scope for (i) a definition of the consideration that allows for adequate remuneration of the activities carried out by the producer – or the intermediary – within the context of self-consumption, whilst expressly reserving the right to recognise fees for the operational management of the sale and purchase agreement, and (ii) for the valuation of the biomethane covered by the sale and purchase agreement as a sustainable resource. 

The correct identification of these margins, particularly in view of the standard contractual clauses that ARERA will make available upon the GSE’s proposal, will undoubtedly be of central importance to operators in the sector.

The ruling was issued in proceedings brought by a leading operator in the renewable energy sector, which was developing an agrivoltaic plant covering approximately 13.6 hectares of agricultural land.

In summary, the authority’s refusal was based on:

• the alleged unsuitability of the preliminary sale agreement to demonstrate the availability of the land;
• the applicability of Regional Law of Veneto No. 17/2022 on “non-suitability indicators”, allegedly applicable by way of derogation from the national legislation on suitable areas (Legislative Decree No. 199/2021).

In upholding the application, the Court established the following key principles:

1. (i) as a preliminary matter, the Court dismissed the objection of inadmissibility raised by the defendant local authority, which argued that the preliminary sale and purchase agreements had lapsed due to the failure to execute the final agreements within the agreed 18-month period. The Court, applying the interpretative criteria set out in Articles 1362 and 1363 of the Italian Civil Code, found that the contractual clauses granted the prospective purchaser the right to request an extension – already consented to in advance by the prospective  seller – and that the parties’ intention to maintain the contractual relationship intact was further confirmed by the subsequent execution of a specific addendum setting a new deadline for the conclusion of the final agreements.
   In the context of these arguments, the Regional Administrative Court admitted the filing of the addendum beyond the time limits set out in Article 73 of the Italian Code of Administrative Procedure, in that  (i) it came into existence after the relevant deadline; (ii)  it  became necessary in order to respond to an argument raised for the first time in the statement of defence filed by the Municipality on 26 January 2026, and (iii)  it served to demonstrate the continued interest in pursuing the application.
2. (ii) with regard to the availability of the land for PAS purposes, the preliminary sale and purchase agreement is sufficient to demonstrate the “availability of the areas concerned by the plant and related works” required by Article 6(2) of Legislative Decree No 28/2011, provided that it grants the prospective purchaser adequate rights of enjoyment to carry out the necessary steps for obtaining the authorisation.
   The Regional Administrative Court, in line with the recent case law of the Council of State (Fourth Division, 15 December 2025, No. 9891), clarified that the assessment must be conducted “not in  the abstract, based on the legal form of the transaction used by the parties, but rather in concrete terms, in relation to the scope of the rights granted”. In the present case, it was demonstrated that the preliminary agreements granted the prospective purchaser free access to the sites for inspections, surveys and activities required for obtaining authorisations, while imposing restrictions on the prospective seller, thereby ensuring effective availability of the land to the prospective purchaser.
3. (iii) the areas classified as suitable under Article 20(8)(c-ter)(2) of Legislative Decree No. 199/2021 – in this case, agricultural land lacking particular environmental value located within 500 metres of an industrial facility – retain such classification even where regional legislation (in this case, Veneto Regional Law No. 17/2022) classifies them as “valuable agricultural areas” and therefore presumptively unsuitable. The Regional Administrative Court ruled that regional legislation cannot derogate from the fundamental principles of matters reserved to the State and that the criteria introduced by the regional law “apply exclusively to agricultural areas other than those designated by national law as ‘suitable ex lege’”. Accordingly, the construction of the plant is not conditional upon the applicant meeting the requirements set out in Article 4(3) of Regional Law No. 17/2022;
4. (iv) the mere proximity of a property subject to protection under Legislative Decree No. 42/2004 (in this case, a Venetian villa) does not preclude the area from being classified as suitable under Article 20(8)(c-ter)(2) of Legislative Decree No. 199/2021.
   The Regional Administrative Court, in line with the recent case law of the Council of State (Fourth Division, Nos. 10383/2025 and 1099/2026), clarified that point (c-quater) of the same paragraph 8 is of a residual and general nature, whilst point (c-ter) is of a special nature: the safeguard clause “without prejudice to the provisions of points (a), (b), (c), (c-bis) and (c-ter)” contained in point (c-quater) prevents the latter from introducing an additional suitability requirement beyond those already governed by the preceding specific provisions.
   The Court further noted that the Municipality’s objection regarding the proximity of the Venetian villa constituted an inadmissible ex post supplementation to the grounds of the decision, since that circumstance was not included among the legal grounds on which the refusal was based, but had been mentioned only “for the sake of completeness” in the preliminary investigation section of the contested measure.

This ruling is of considerable significance for operators in the sector, as it confirms – on the merits – fundamental principles regarding (i) the suitability of preliminary agreements as evidence of land availability, (ii) the primacy of the national classification of suitable areas over more restrictive regional provisions, and (iii) the relationship between the various categories of suitability provided for in Article 20(8) of Legislative Decree No 199/2021, with particular regard to the specific nature of point (c-ter) as compared to point (c-quater).

Furthermore, from a procedural standpoint, the judgment confirms the applicant’s right to file documents beyond the time limits set out in Article 73 of the Italian Code of Administrative Procedure, provided that such documents came into existence

after the relevant deadline and are capable of demonstrating the continued admissibility of the application.

The Distinctive Features of a Hybrid PPA

A Power Purchase Agreement — PPA — is, in its most basic form, a long-term contract whereby a renewable energy producer transfers its output to a buyer — typically an industrial consumer or a trader — on predetermined terms, thereby avoiding the volatility of the spot market.

The traditional pay-as-produced PPA has features that have certainly facilitated its uptake, particularly in Italy: volume risk is clearly allocated, the bankability of multi-year contracts with creditworthy counterparties is high, and the production profile of a photovoltaic or wind plant does not necessarily match the buyer's consumption profile. It is precisely this last feature that, in future market developments, could constitute a limitation to the further expansion of long-term contracts.

The Hybrid PPA was created precisely to overcome this potential limitation, combining one or more generation sources and BESS in an integrated structure. The addition of storage makes it possible to transform an intermittent and otherwise unmanageable production profile into one that more closely matches the consumer's needs. In essence, the BESS, together with trading activities, makes the product — the energy delivered to the end customer — qualitatively different from the basic as-produced output of a single renewable plant.

The Subjective Structure of the Hybrid PPA: Actors and Rationales

From a structural standpoint, a physical Hybrid PPA may involve the interests of a plurality of parties: the holders of renewable energy generation plants, the holders of storage systems, the trader acting as aggregator, the energy-intensive end customer, and the technology supplier/EPC Contractor. It is worth pausing on each of them, as the complexity of the Hybrid PPA stems precisely from the need to balance interests that do not always converge spontaneously.

The energy-intensive end customer has a clear priority: to receive energy in baseload form, with delivery at the PCE and Guarantees of Origin in relation to the volumes covered by the Hybrid PPA.

The trader has a twofold main interest: to present the energy-intensive end customer with a product that is as attractive as possible, while at the same time maximising its own margin by keeping the prices paid to the generator under the PPA and to the storage holder under the tolling agreement as low as possible. The trader's commercial objective is to enter into a PPA that is as close as possible to a Pay as Nominated arrangement with the generator — i.e. a Pay as Produced with a guaranteed minimum monthly volume — with delivery at the PCE.

The storage holder is primarily interested in receiving from the trader a fixed fee or a floor under the tolling agreement, such as to make this solution preferable to — and compatible with — any alternative means of valorising the storage capacity, including participation in the Capacity Market.

The Plant SPV aims to stabilise its revenues by entering into a PPA at the highest possible price, while ensuring the bankability of the contract.

Protection Requirements: Guarantees and Bankability

One of the most sensitive — and practically relevant — aspects of this contractual architecture concerns risk management and the structuring of guarantees among the parties, including the technology supplier and EPC Contractors, also for bankability purposes.

The trader will seek to protect itself against the various risk fronts by requesting the delivery of guarantee instruments.

The Regulatory Framework

In this context, the enabling role of public instruments also comes into play: the Energy Release, the FER mechanisms, including FER Z, the MACSE, the Capacity Market, the MPPA and public guarantees, as well as the need to regulate the coexistence and interaction between public incentivisation and private contracting.

Will the PPA market finally take off, or will it remain marginal compared to the public schemes managed by the GSE? Will FER-Z — with its decentralised structure and incentivisation of profile delivery — contribute to the growth of the PPA market, or could it prove to be a limitation?

Read the February 2026 issue

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Given the extent of the innovations introduced, through this column, Energy Law Italy continues its analysis of the key measures set forth by the Decree, dedicating an analysis to each legislative amendment with particular focus on their potential practical implications (the other contributions are available at the following link).

In this analysis, we focus on the Decree's tax-related measures and in particular those concerning the IRAP rate applicable to energy sector operators. 

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Temporary increase of the IRAP rate

Specifically, Article 3 of the Decree – entitled “Provisions concerning the IRAP rate for energy sector enterprises” – provides for a two-percentage-point increase in the IRAP rate set forth in Article 16, paragraphs 1 and 1-bis, of Legislative Decree No. 446/97 establishing the regional tax on productive activities (IRAP), for the 2026 and 2027 tax years.

The surcharge applies to entities that predominantly carry out certain activities attributable to the energy sector, as identified by specific ATECO codes listed in Table 1 annexed to the Decree (further detailed below).

From an operational standpoint, the measure effectively entails:

• an increase in the ordinary rate from 3.9% to 5.9% for the generality of affected taxpayers.

• an increase from 4.2% to 6.2% in the rate applied to concessionaire enterprises, other than those engaged in the construction and management of highways and tunnels.

Effective Date

The surcharge, which is expressly temporary and non-structural in nature, applies starting from the tax year following the one in progress as of 31 December 2025.

For entities whose fiscal year coincides with the calendar year, the increase will therefore take effect as of 1 January 2026.

Subjective Scope and the Predominance Criterion

The subjective scope of the surcharge is determined on the basis of a “predominance” criterion, defined by reference to the “predominant” conduct of economic activities that must be attributable to the following macro-sectors identified in Table 1 annexed to the Decree:

• Extractive Activities (Section B):

  • 06 – extraction of crude petroleum and natural gas.

  • 09.1 – support activities for petroleum and natural gas extraction.

• Manufacturing Activities (Section C):

  • 19.2 – manufacture of products derived from petroleum refining and products from fossil fuels.

• Electricity and Gas Supply (Section D):

  • 35.1 – Production, transmission, and distribution of electric power.

  • 35.2 – Production of gas and distribution of gaseous fuels through mains.

  • 35.4 – Intermediation service activities for electricity and natural gas.

• Transportation and Storage (Section H):

  • 49.50.1 – Transport of gas via pipelines.

In the absence of further implementing guidance or criteria expressly defined by the legislature (potentially already during the parliamentary conversion process), the notion of “predominance” will likely need to be construed by reference to objective parameters, such as revenue volume or the value of production relevant for IRAP purposes. Consistent with the framework of the regional tax, it appears reasonable to consider that the decisive criterion may be identified in the percentage weight of the net production value attributable to energy activities relative to the total.

A particularly noteworthy issue concerns enterprises that, in addition to the activities falling within the ATECO codes identified by the Decree, also carry out further activities outside the energy perimeter. Based on the literal wording of the provision, it would appear that, where the energy activity is predominant, the increased rate applies to the entire IRAP tax base and not solely to the portion of net production value attributable to the predominant segment.

Such an interpretation, if confirmed in administrative practice, could give rise to significant complexities in application, particularly for multi-business groups, vertically integrated utilities, and companies engaged in mixed activities, where the delineation of the energy perimeter – for purposes of verifying predominance – may not always be straightforward, especially in the presence of functionally integrated activities or organizational models that do not allow for a clear separation of economic flows. This would indeed entail potential issues both in the subjective qualification phase and in the planning of overall tax impacts.

Impact on Advance Payments: Recalculation Using the Historical Method

A particularly significant operational aspect of the new legislative provision concerns its coordination with the mechanism for determining advance payments under the historical method. Paragraph 2 of Article 3 provides that, for purposes of calculating the advance payment due for the tax year following the one in progress as of 31 December 2025, the tax liability for the preceding period must be recalculated as if the increased rate were already applicable.

In substantive terms, this results in an acceleration of the tax burden already at the advance payment stage for 2026, with immediate effects on the liquidity and financial planning of the affected enterprises. The additional tax burden will therefore materialize before the final settlement, effectively enabling the Ministry of Economy to collect the resources as early as the upcoming June and November 2026 deadlines, and significantly impacting entities characterized by high production values and capital-intensive structures.

Allocation of Revenue and Redistributive Mechanism

The provision under review outlines and forms part of a broader strategy for the redistribution of resources within the energy sector, leveraging the IRAP tax mechanism to finance a targeted reduction in general system charges.

The Decree provides that the resources generated by the rate increase shall be entirely allocated to reducing the A_SOS component of the electricity bill for non-domestic users, excluding: (i) public lighting users, low-voltage users for other purposes, and non-domestic users connected at medium, high, and extra-high voltage; (ii) withdrawals benefiting from the special tariff regime under Article 29 of Decree-Law No. 91/2014; and (iii) users enrolled in the registry of enterprises with high electricity consumption established at the Fund for Energy and Environmental Services (CSEA) pursuant to Article 3 of Decree-Law No. 131/2023.

The benefit is therefore not absolute in scope but is directed at the intermediate productive sector that does not benefit from the preferential regimes reserved for large energy-intensive consumers and major industrial districts and that, in proportional terms, bears a significant incidence of general system charges.

In these terms, an internal reallocation mechanism within the energy system is thus established, whereby a portion of the additional tax revenue from energy supply chain operators is allocated to reducing energy costs for non-energy-intensive productive enterprises, with the stated objective of structurally mitigating the burden of general system charges.

From a systemic perspective, the measure is situated within a logic of internal rebalancing of the energy supply chain, aiming to capture a portion of the margins potentially earned in certain segments of the sector and to allocate them toward containing the energy costs borne by enterprises that are less protected against market volatility.

Although the provision does not expressly characterize the surcharge as a “solidarity contribution,” the structure of the intervention – confined to a specific sector and aimed at redistributing resources within it – recalls and presents clear substantive analogies with prior sector-specific levy measures oriented toward redistributive purposes.

It remains to be seen, however, including in light of future interpretive and implementing guidance, whether the legislative framework will succeed in reconciling the objective of equity with the need to ensure certainty and stability of the tax landscape. In particular, it will be necessary to assess whether the temporary increase in the IRAP rate may affect investment decisions and the predictability of the tax burden for sector operators, especially in an industry characterized by high capital intensity and medium- to long-term planning horizons.

Preliminary Considerations

The new regulatory framework effectively requires potentially affected enterprises to undertake a careful and timely internal analysis. In particular, it appears essential to conduct a thorough review of one's ATECO classification, also in light of the activities actually carried out and their economic significance, as well as a technical analysis of the criteria for determining “predominance,” with specific reference to the proportion of net production value attributable to energy activities.

At the same time, the economic and financial impacts arising from the rate increase must be assessed in advance, also considering the recalculation of the 2026 advance payments under the historical method, which will result in an acceleration of the higher tax burden.

In this context, a proactive and structured approach could help mitigate tax and interpretive risks, safeguard compliance requirements, and coherently and promptly integrate – although on a temporary basis - the new and increased charges into the tax and financial planning process, within an evolving regulatory environment that is moreover subject to potential amendments during the parliamentary conversion of the decree-law into statute.

Given the scope of the changes introduced, with this editorial series, Energy Law Italy launches a dedicated space for the analysis of the key measures brought in by the Decree, with a focused commentary on each legislative amendment and particular attention to their potential practical implications.

In this article, we focus on the impact of the Decree with regard to the measures aimed at reducing costs for electricity generation from gas-fired thermoelectric sources.

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Article 6 of Decree-Law No. 21/2026 (the so-called "DL Bollette") introduced a reimbursement mechanism for gas-fired thermoelectric producers that, in terms of both structure and scope, is without precedent in the European regulatory landscape. The measure, which provides, inter alia, for the compensation of direct costs incurred for the purchase of emission allowances under the EU ETS system, raises questions of primary importance regarding its compatibility with the legal order of the European Union. This contribution aims to examine the principal areas of concern arising from the provision, from its classification as State aid to its implications for the functioning of the single energy market, offering a systematic interpretive framework for a legislative intervention that is destined to fuel a debate transcending national borders.

1. Background and Purpose of the Legislative Intervention

On February 18, 2026, the Italian Government adopted Decree-Law No. 21/2026 (published in the Official Gazette No. 42 of February 20, 2026), entitled "Urgent measures for the reduction of electricity and gas costs for households and businesses, for the competitiveness of enterprises and for the decarbonization of industries, as well as urgent provisions regarding the resolution of virtual saturation of electricity grids and the integration of data processing centers into the electricity system."

Beyond the stated and commendable objective of containing energy costs for households and businesses, among the provisions that have attracted the greatest interest – and the most heated debate – within the sector are those contained in Article 6 of the decree, entitled "Urgent measures for the reduction of charges on natural gas withdrawn for the purpose of electricity generation and for the strengthening of competitiveness in wholesale electricity markets." Said Article introduces a dual reimbursement mechanism for gas-fired thermoelectric producers: (i) the reimbursement of specific components of the natural gas transportation tariff applied to withdrawals for the production of electricity injected into the grid; (ii) an additional reimbursement commensurate with the expected cost of emission allowances under the EU ETS system for an efficient combined cycle gas turbine (CCGT) plant. The latter measure is expressly conditioned upon the prior authorization of the European Commission pursuant to Article 108(3) TFEU.

2. The EU ETS System: Architecture and Fundamental Principles

The European Union Emissions Trading System (EU ETS), established by Directive 2003/87/EC, constitutes the principal instrument adopted by the European Union for the achievement of CO₂ emission reduction targets in the major industrial sectors and in the aviation sector. Operational since 2005 as the first and largest carbon market worldwide, the system was conceived to implement the commitments undertaken by the EU under the Kyoto Protocol and was subsequently aligned with the objectives of the Paris Agreement.

The system is founded upon the "polluter pays" principle enshrined in Article 191(2) TFEU, which requires the internalization of environmental costs by those responsible for emissions. The market-based approach was selected in order to achieve emission reductions in the most cost-efficient manner, allowing the market to determine the carbon price and to incentivize emission abatement wherever it proves least economically burdensome.

It is a cap-and-trade mechanism that sets an overall ceiling (cap) on the emissions permitted across European territory in the covered sectors, to which corresponds an equivalent number of emission allowances (where 1 ton of CO₂eq. equals 1 allowance), which may be purchased or sold on a dedicated market (trade). Each industrial operator active in the sectors covered by the scheme is required to offset, on an annual basis, its actual emissions – as verified by an independent third party – with a corresponding quantity of allowances. The accounting of offsets is maintained through the Union Registry, while oversight of compliance with the deadlines and rules of the mechanism is entrusted to the National Competent Authorities (NCAs).

The system has evolved through four successive phases (Phase I: 2005–2007; Phase II: 2008–2012; Phase III: 2013–2020; Phase IV: 2021–2030), with progressively more stringent caps. The overall quantity of allowances available to operators (cap) decreases over time, effectively mandating a reduction in greenhouse gas emissions in the ETS sectors: in particular, by 2030, the mechanism will ensure a 43% reduction compared to 2005 levels. The system is an integral component of the achievement of the EU's binding climate targets, including the 55% emission reduction by 2030 pursuant to the European Climate Law (Regulation 2021/1119) and climate neutrality by 2050. The Market Stability Reserve absorbs surplus allowances (24% annually) or releases them in the event of scarcity, ensuring price stability and the proper functioning of the market.

Allowances may be allocated on an onerous or gratuitous basis. In the former case, they are sold through public auctions in which accredited entities participate, purchasing primarily to offset their own emissions, but which may also supply the secondary carbon market. In the latter case, allowances are allocated free of charge to operators at risk of relocating production to countries characterized by less stringent environmental standards than those of the EU (so-called carbon leakage). Free allocations are the province of the manufacturing sectors and are calculated by reference to the emissions of the most "virtuous" installations (so-called benchmarks, predominantly based on the most efficient production processes).

For the purposes of this analysis, it is appropriate to distinguish between direct carbon leakage and indirect carbon leakage. The former refers to the risk of relocation of European enterprises to third countries with less stringent environmental standards, driven by the high direct cost of emission allowances. The latter concerns the increase in electricity prices caused by the pass-through of ETS costs by thermoelectric producers into the prices of electricity sold to end consumers, with a consequent increase in costs for European electro-intensive enterprises exposed to international competition.

The system is structured so as to incentivize greenhouse gas emission reductions and energy-efficient techniques, considering available technologies, substitute products and alternative production processes, high-efficiency cogeneration, efficient energy recovery from waste gases, the possibility of using biomass, and carbon capture and storage.

A crucial aspect for understanding the criticalities of the Italian measure concerns the regime applicable to electricity producers. Within the framework of the EU ETS, electricity producers do not benefit from the free allocation of allowances, with the exception of the specific cases provided for in Article 10c of the ETS Directive and for electricity produced from waste gases. The exclusion of the electricity sector from free allocation is based on the premise that electricity producers can pass through the cost of ETS allowances in the prices of electricity sold to end consumers (the pass-through or carbon cost transfer phenomenon), unlike other industrial sectors exposed to international competition that face the risk of emission relocation (carbon leakage).

As of 2019, Member States shall auction all allowances that are not allocated free of charge pursuant to Articles 10a and 10c of the ETS Directive and that are not placed in the Market Stability Reserve.

Accordingly, thermoelectric producers (gas-fired CCGTs, coal-fired plants, etc.) are required to:

• obtain an authorization to emit greenhouse gases and surrender emission allowances equal to the total emissions released by the installation during each calendar year, as verified pursuant to Article 15 of the Directive, by September 30 of the following year.

• bear the actual economic cost for each ton of CO₂ emitted, equal to the price of allowances purchased at auction.

• purchase ETS allowances through auctions organized by the Member States, rather than receiving them free of charge.

   

3. Anatomy of Article 6: Structure and Mechanism

Article 6 of Decree-Law No. 21/2026 is structured in six paragraphs (commi), each of which warrants detailed examination.

• Paragraph 1 – Strengthening of competition in the wholesale electricity market. For the purpose of strengthening competition in wholesale electricity markets and promoting the pass-through in offer prices of the valuation of variable costs of non-programmable renewable energy sources, ARERA is required to adopt, within three months of the entry into force of the decree, in implementation of Regulation (EU) No. 1227/2011 (REMIT), one or more measures for the assessment of economic capacity withholding conduct by wholesale market operators. In particular, the provision stipulates that, with reference to sell offers submitted in the Day-Ahead Market (MGP), opportunity costs estimable at the time of negotiation shall constitute the sole legitimate economic grounds for offering at a price above the marginal cost of generation capacity, in line with the guidelines of the European Union Agency for the Cooperation of Energy Regulators (ACER) of December 18, 2024.

• Paragraph 2 – Reimbursement of natural gas transportation tariff components. ARERA, through one or more measures, shall define the modalities by which, effective January 1, 2027, the variable unit charges of the natural gas transportation tariff – other than those serving to cover costs of a variable nature – and the additional tariff components of the natural gas transportation tariff covering general system charges of the gas system, applied to natural gas withdrawals for the production of electricity injected into the grid, in addition to those already subject to reimbursement pursuant to ARERA Resolution of March 26, 2020, No. 96/2020/R/eel, shall be included among the charges subject to reimbursement to thermoelectric producers. The shortfall in revenue resulting from the reimbursement shall be covered through components applied to electricity withdrawals, in accordance with the modalities defined by ARERA, which shall, where necessary, update the provisions set forth in Resolution 96/2020/R/eel.

• Paragraph 3 – Additional reimbursement for ETS costs. In addition to the provisions of Paragraph 2, ARERA, by means of a dedicated resolution, shall regulate the reimbursement to thermoelectric producers, for natural gas withdrawals for the production of electricity injected into the grid, of an amount determined by the Authority with adequate advance notice and for predefined time periods, in order to maximize the benefits for Italian consumers, also taking into account the expected impacts on cross-border exchanges, and in any event within the limit of the expected cost, for the same period, for an efficient combined cycle gas turbine (CCGT) plant for compliance obligations connected to ETS emissions. The shortfall in revenue resulting from such reimbursement shall be covered pursuant to Paragraph 2, last sentence.

• Paragraph 4 – Verification of full pass-through of reimbursements in sell offers. ARERA shall verify that the reimbursements referred to in Paragraphs 2 and 3 are fully passed through in the sell offers pertaining to the thermoelectric plants benefiting from said reimbursements. In the event of a negative verification, the producer shall be required to return the relevant reimbursements, increased by any penalties imposed by the Authority pursuant to Law No. 481 of November 14, 1995. To this end, ARERA, through the same measures referred to in Paragraph 1, shall define the modalities and criteria for verification procedures, as well as the offer behaviors to be deemed in any event compliant with the pass-through obligation.

• Paragraph 5 – Adjustment of the capacity market. ARERA shall adjust the economic conditions provided for in the capacity market framework pursuant to Legislative Decree No. 379 of December 19, 2003, to take into account the effects arising from the implementation of Paragraphs 1, 2, and 3.

• Paragraph 6 – Subordination clause requiring prior European authorization. The effectiveness of the provision set forth in Paragraph 3 is conditioned upon the prior authorization of the European Commission pursuant to Article 108(3) of the Treaty on the Functioning of the European Union.

   

4. Systemic Implications of the ETS Reimbursement

The reimbursement provided for under Article 6, Paragraph 3, of the decree to thermoelectric producers for ETS costs incurred in electricity generation presents particularly significant areas of concern from a systemic standpoint.

First, the measure neutralizes the decarbonization incentive inherent in the ETS system, which requires thermoelectric producers to internalize emission costs, thereby incentivizing the transition toward lower carbon-intensity generation sources.

Second, the mechanism transfers the cost of emissions from the producers – who bear direct responsibility therefor – to end consumers, through tariff components applied to electricity withdrawals, thereby inverting the logic of the "polluter pays" principle.

Third, the measure contradicts the principle of excluding the electricity sector from the free allocation of allowances, reintroducing de facto a form of economic compensation that eliminates the exposure of thermoelectric producers to the carbon price.

5. Classification as State Aid Pursuant to Article 107(1) TFEU

For a measure to constitute State aid within the meaning of Article 107(1) TFEU, four cumulative conditions must be satisfied: (i) the measure must be granted by the State or through State resources; (ii) it must confer a selective advantage on certain undertakings or the production of certain goods; (iii) it must affect trade between Member States; (iv) it must distort or threaten to distort competition.

The reimbursement to thermoelectric producers provided for under Article 6 of the decree satisfies all of the foregoing criteria:

• State resources. The shortfall in revenue resulting from the reimbursement is covered through components applied to the electricity withdrawals of end customers, in accordance with modalities established by ARERA, thereby constituting a transfer of resources from consumers to producers mediated by a public mechanism (regulated tariff components).

• Selective advantage. The measure confers an economic advantage on thermoelectric producers by compensating costs (ETS and gas transportation) that said producers would have borne under normal market conditions. The advantage is selective insofar as it is granted exclusively to undertakings active in a specific sector of electricity generation.

• Effect on trade. The electricity sector is fully integrated at the European level through the Single Day-Ahead Coupling (SDAC), market coupling, and cross-border interconnections. Any advantage conferred on domestic producers therefore affects trade between Member States.

• Distortion of competition. The measure alters the relative competitiveness of Italian thermoelectric producers vis-à-vis those of other Member States and vis-à-vis other generation technologies (renewables, nuclear, hydroelectric).

   

6. The Notification Obligation and the Risk of Unlawful Aid

Regulation (EU) 2015/1589 provides that plans to grant new aid shall be notified to the Commission and shall not be put into effect before the Commission has taken a decision authorizing such aid (standstill obligation pursuant to Article 108(3) TFEU). Implementation of the measure in violation of the notification obligation would constitute unlawful aid, subject to a recovery order – inclusive of interest – should the Commission adopt a negative decision.

From a temporal standpoint, it is observed that the effective date of the mechanism is set at January 1, 2027, rendering uncertain the completion of the European authorization process in time for the commencement of the measure.

An aspect warranting particular attention concerns the scope of the subordination clause. Paragraph 6 of Article 6 conditions upon the prior authorization of the European Commission only the effectiveness of Paragraph 3 (reimbursement of ETS costs). However, Paragraph 2 – which provides for the reimbursement of natural gas transportation tariff components to thermoelectric producers – likewise presents the same constituent elements of State aid analyzed above (State resources, selective advantage, effect on trade, distortion of competition). The implementation of Paragraph 2 without prior notification to the European Commission therefore entails a concrete risk of illegality of the measure.

7. Principal Areas of Incompatibility with European Union Law

a. Structural Divergence from the ETS Guidelines

The European Commission's Guidelines (2022 Guidelines on State aid for climate, environmental protection and energy) authorize aid to compensate for indirect emission costs, defined as the costs of emissions passed through in electricity prices and borne by undertakings active in sectors or subsectors deemed to be exposed to a significant risk of carbon leakage due to indirect costs, as listed in the relevant Annex. The stated objective is to prevent the significant risk of carbon leakage for sectors exposed to international competition that cannot pass through such costs in product prices without losing significant market share.

The Italian measure, by contrast, provides for a direct reimbursement to thermoelectric producers for ETS costs incurred in electricity generation.

Such scheme: (i) does not fall within the category of indirect emission costs contemplated by the ETS Guidelines; (ii) compensates energy producers – who are direct participants in the ETS – rather than industrial consumers; (iii) risks undermining the carbon price signal that underpins the functioning of the ETS as a cost-effective emission reduction mechanism. The divergence is structural and without precedent among the schemes authorized by the European Commission.

The Italian measure furthermore appears to constitute a violation of marginal pricing and the Single Day-Ahead Coupling (SDAC).

The statutory imposition on gas-fired thermoelectric producers to offer in the MGP at prices stripped of actual cost components (ETS and gas transportation) conflicts with the uniform marginal pricing principle of the European day-ahead market, as established by the CACM Regulation (Capacity Allocation and Congestion Management), which may not be unilaterally derogated by a Member State. The impact of such mechanism on wholesale price formation is all the more significant given that, as noted by ARERA, in the Italian electricity market CCGT/gas plants were at the margin (price setting) in 68% of hours in 2023 and 71% of hours in 2024, confirming their determinative role in zonal price formation in the MGP.

Finally, an intervention that compels operators by law to offer prices different from those justified by actual costs creates an "artificial" price in the day-ahead market, distorting the European market coupling mechanism.

In this regard, it is significant to observe that the analogy with the "Tope Ibérico" of 2022 – the Spanish-Portuguese mechanism capping the price of gas used for electricity generation – is only partial: the Tope Ibérico was authorized by the European Commission as a temporary and exceptional derogation from the SDAC in the context of an extraordinary energy crisis (the Russian invasion of Ukraine, the surge in gas prices), whereas Article 6 of the decree appears to constitute a structural intervention without an explicit temporal limitation.

b. Incompatibility of Paragraph 1 with the Legal Order of the European Union

The provision contained in Paragraph 1 of Article 6 is entirely unprecedented and peculiar in character. For the first time, the national legislature imposes upon the national regulatory authority (ARERA) the obligation to conform to a specific interpretive reading of a European Union regulation – REMIT – prescribing that, in the exercise of its supervisory function over the conduct of operators in the wholesale market, offers formulated at prices above marginal cost shall be presumed illegitimate, unless the operator provides adequate economic justifications based on opportunity costs estimable at the time of negotiation.

This provision is consistent with the position recently expressed by ARERA in Resolution No. 302/2025/R/eel, adopted following a fact-finding inquiry into the outcomes of national short-term delivery auction electricity markets. The position taken by the Authority has provoked strong reactions from sector operators, who contend that the marginal cost criterion does not permit the recovery of fixed costs, including investment costs. This has given rise to litigation, currently pending before the Milan Administrative Court (TAR Milano), in which the applicants challenge the interpretation of Article 5 of REMIT advanced by ARERA, deeming it inconsistent with the guidance provided by ACER in its own Guidelines.

The legislative imposition upon the national regulatory authority of the obligation to interpret REMIT in conformity with governmental directives is difficult to reconcile with the normative architecture of the European Union. Within the system of EU law, a regulation is binding in its entirety and directly applicable in each of the Member States, and the competence to provide its authentic and binding interpretation rests exclusively with the Court of Justice of the European Union, in safeguard of the principles of the primacy of EU law, the autonomy of the European legal order, and the uniform application of common rules. The national legislature, while empowered to regulate aspects left to the discretion of Member States, may not therefore impose a binding interpretation of a Union regulation.

Article 6, Paragraph 1, of the decree, moreover, in prescribing a particular interpretation of REMIT, encroaches upon the sphere of independence that EU law reserves to national regulatory authorities. Pursuant to Article 57 of Directive (EU) 2019/944 concerning common rules for the internal market for electricity, such authorities shall neither seek nor take instructions from any government or from any other public or private entity when carrying out their regulatory tasks. The Court of Justice has further clarified that EU law guarantees such authorities "full independence from economic operators and public bodies, whether administrative or political, and in the latter case whether holders of executive or legislative power" (judgment of September 2, 2021, Commission v. Germany, C-718/18).

c. The Risk of Market Manipulation Under REMIT

The REMIT Regulation (1227/2011) prohibits any transaction, order to trade, or offer which secures or attempts to secure the price of one or more wholesale energy products at an artificial level, unless the person demonstrates that its reasons for doing so are legitimate and that the transaction conforms to accepted market practices.

A normative paradox arises: in the event that ARERA has identified possible discrepancies between market prices and marginal costs attributable to bidding strategies of thermoelectric producers, the statutory obligation to offer at prices stripped of actual cost components (ETS and gas transportation) could paradoxically itself constitute an "institutionalized" price manipulation, creating an artificial price level by operation of law.

The decree entrusts ARERA with the task of verifying – also on the basis of Articles 2 and 5 of Regulation (EU) 1227/2011 (REMIT) – that the reimbursements are fully passed through in the sell offers pertaining to the relevant installations, and of adopting measures to assess "economic withholding" conduct in wholesale markets. However, the verification of "full pass-through" of reimbursements in offers presents significant operational and enforcement difficulties: (i) difficulty in granular monitoring of hourly bidding strategies; (ii) risk of overcompensation if the pass-through does not occur in full; (iii) potential distortions if operators adopt arbitrage strategies between reimbursements and market prices.

d. Cross-Border Distortions and the Risk of "Energy Dumping"

ARERA is required to regulate the "additional" reimbursement taking into account the expected impacts on cross-border exchanges (market coupling). The Italian day-ahead market is part of the European Single Day-Ahead Coupling (SDAC), with rules – including uniform marginal pricing – of EU origin that may not be unilaterally derogated.

The artificial reduction of the Italian price through the stripping out of ETS and gas transportation costs would entail the following distortions:

• Increase in Italian exports: artificially lower Italian prices would render Italy a net exporter to neighboring countries (France, Austria, Slovenia, Switzerland, Greece), increasing domestic gas-fired thermoelectric production, with consequent higher emissions and ETS costs.

• Cross-subsidy paradox: Italian consumers would pay, through the components applied to electricity withdrawals, the reimbursement costs including for exported production, thereby effectively subsidizing foreign consumers – who are potentially competitors of Italian industry.

• Incompatibility with the SDAC: ARERA has indicated that in its own simulations it was not possible to fully account for cross-border exchanges due to the complexities of modeling European market coupling. A mechanism that unilaterally modifies price formation could require Italy's exit from the SDAC or the creation of "two prices" (domestic and export), both solutions of difficult compatibility with EU law. The European Parliament, in its resolution of January 18, 2024, on the reform of the EU electricity market, emphasized the importance of preserving the integrity of the single energy market and of avoiding distortions arising from unilateral national price interventions.

8. Implications for the Retail Market and Distributional Concerns

The reimbursement is financed through components applied to the electricity withdrawals of end customers, in accordance with modalities defined by ARERA. However, the decree provides no details as to how such components would be apportioned among different categories of customers (fixed-price vs. indexed contracts, "renewable" vs. conventional supplies).

With respect to the critical issues, it is observed first that customers with fixed-price contracts have already incorporated in their contractual prices the expected ETS cost for the contractual period: requiring them to contribute again to the same costs through system charges could constitute double taxation and generate litigation. Similarly, customers with certified renewable supplies could legitimately contend that they should not be required to contribute to ETS costs, inasmuch as their demand is not served – at least from a contractual standpoint – by emitting installations. Requiring such parties to pay system charges intended to reimburse the ETS costs of thermoelectric producers could therefore constitute a violation of the "polluter pays" principle enshrined in the ETS Directive.

Should the Commission declare the mechanism unlawful on grounds of incompatibility with State aid rules, customers who have already paid the tariff components could seek reimbursement, with consequent litigation and legal uncertainty.

9. Absence of Environmental Conditionalities

The indirect ETS compensation schemes authorized by the Commission for the 2021–2030 period provide for stringent conditionalities: (i) mandatory implementation of certified energy management systems (ISO 50001) or environmental management systems (EMAS); (ii) implementation of energy efficiency measures with a payback period not exceeding three years; (iii) investments equal to at least 50% of the aid received in decarbonization or energy efficiency, or coverage of at least 30% of electricity consumption from renewable energy sources.

The DL Bollette does not provide for analogous conditionalities for the thermoelectric producers benefiting from the reimbursement. Such lacuna could be regarded by the Commission as: (i) a lack of proportionality of the aid relative to the objectives pursued; (ii) an absence of incentives for the energy transition and emission reduction; (iii) incompatibility with the objectives of the European Green Deal and with the "do no significant harm" (DNSH) principle. The 2022 Guidelines recall the general principle that State aid must be necessary, proportionate, and such as not to cause undue distortions of competition, and must contribute to the objectives of the European Green Deal.

10. Comparison with Schemes Adopted in Other European Countries

To fully appreciate the innovative – and problematic – scope of the Italian measure, it is useful to compare it with the ETS cost compensation schemes authorized by the European Commission in other Member States, which present a radically different structure.

Germany: Scheme SA.36103 (2013) for the period 2013–2020, with an estimated total budget of approximately EUR 1.6 billion; Scheme SA.100559 (2022) for the period 2021–2030, with an estimated budget of EUR 27.5 billion.

Poland: Scheme SA.53850 (2019) for the years 2019–2020, with a budget of approximately EUR 417.5 million.

United Kingdom (pre-Brexit): Scheme SA.35543 (2013) for the period 2013–2020, with a budget of GBP 113 million (approximately EUR 143 million in 2013).

Other countries: The Netherlands, Finland, Spain, Belgium, France, and other Member States have notified analogous indirect ETS compensation schemes.

Fundamental common characteristic: all authorized schemes compensate the indirect ETS costs borne by electro-intensive industrial consumers – i.e., the costs of emissions passed through in electricity prices – and not the direct ETS costs borne by energy producers. None of the schemes authorized by the European Commission provides for the compensation of thermoelectric producers for direct ETS costs.

11. Concluding Observations and Outlook

In light of the analysis conducted herein, the likelihood that the European Commission will authorize the measure set forth in Article 6, Paragraph 3, of the decree appears objectively very low, although the final outcome will also depend on the definitive formulation of the measure and the implementing modalities to be defined by ARERA, as well as on the political dialogue regarding the reform of the ETS mechanism.

The criticalities emerging from the analysis may be summarized as follows. First, there is a radical structural divergence from the schemes authorized by the European Commission: the measure compensates thermoelectric producers for direct ETS costs, rather than industrial consumers for indirect ETS costs, without any precedent in the Commission's decisional practice. Second, the statutory imposition to offer at prices stripped of actual costs conflicts with the uniform marginal pricing principle of the CACM Regulation, which may not be unilaterally derogated by a Member State, thereby constituting a violation of the SDAC and of marginal pricing. Third, Paragraph 1 of Article 6 presents areas of incompatibility with the legal order of the European Union, insofar as the national legislature imposes upon ARERA a binding interpretation of REMIT – a directly applicable regulation whose authentic interpretation is reserved to the CJEU – in violation of the primacy of EU law and of the independence of national regulatory authorities pursuant to Article 57 of Directive (EU) 2019/944 and the case law of the Court of Justice (judgment of September 2, 2021, C-718/18, Commission v. Germany). To this must be added the risk of potential market manipulation under REMIT, given that the statutory obligation to offer at artificially low prices could itself constitute "securing the price at an artificial level" prohibited by Article 5 of REMIT. On the plane of cross-border effects, the artificial reduction of the Italian price would entail an increase in exports, with Italian consumers financing through system charges the emissions attributable to exported production, giving rise to distortions and cross-subsidies. There is further the absence of any environmental conditionality whatsoever, the decree providing for no obligation in terms of energy efficiency, decarbonization, or investment in renewable sources, in contrast with the requirements of the 2022 Guidelines and the DNSH principle. Finally, Paragraph 2 of the same Article, concerning the reimbursement of natural gas transportation tariff components to thermoelectric producers, in all likelihood satisfies the requirements of State aid, yet is not conditioned upon the prior authorization of the European Commission, with a consequent risk of illegality, compounded by the temporal uncertainty connected to the effective date of the mechanism of January 1, 2027.

In conclusion, in light of the comprehensive legal analysis conducted herein, the measure introduced by the Italian Government would appear destined not to withstand scrutiny by the European institutions, presenting areas of incompatibility so radical and structural as to render its approval an entirely improbable outcome. It would, however, be reductive to confine the assessment to one of mere legality. On the political-institutional plane, Article 6 of the DL Bollette represents an unequivocal signal of the growing pressure exerted by Member States for a profound revision of the current architecture of the EU ETS system – a pressure that could find its first, decisive manifestation as early as the European Council of March. The debate that will ensue, at both the national and European levels, is destined to redefine, perhaps in ways unforeseen today, the boundaries of the relationship between national energy policy and the constraints of the single energy market.

LONDON (ICIS)–Legal experts told ICIS that article 6 of the Italian “DL Bollette” energy decree – which introduces an ETS-linked compensation mechanism for gas-fired power producers – is unlikely to be approved by the European Commission because of its selective and structural, rather than exceptional, nature.

ICIS spoke to Piero Vigano, partner and coordinator of the energy and infrastructure department, and Francesco Mazzocchi, counsel in competition and European Union law at law firm ADVANT Nctm, who said that, as the decree stands, “the likelihood that the European Commission will authorize the measure does not appear to be high.”

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Such right – which originated as early as Law No. 109/1994, but has no equivalent in EU law – entitles the promoter, if not awarded the contract in the tender procedure launched by the contracting authority, to adjust its offer to match that of the successful tenderer or, where the pre-emption right is not exercised, to obtain reimbursement of the costs incurred in preparing the bid.

The Court of Justice, following a referral from the Italian Council of State, held that the pre-emption mechanism is contrary to the principle of equal treatment in procedures for the award of concession contracts. In particular, the Court highlighted that such a mechanism may overturn the outcome of the tender and that, where the pre-emption right is exercised, the unsuccessful promoter’s offer is substantially altered at a stage subsequent to the award, an amendment expressly prohibited by EU law (and on which the Court of Justice has already ruled on several occasions: see judgments of 13 June 2024, BibMedia, C-737/22, EU:C:2024:495; 25 April 1996, Commission v Belgium, C-87/94, EU:C:1996:161).

The Court also found the pre-emption right incompatible with the freedom of establishment under Article 49 of the Treaty on the Functioning of the European Union, insofar as the advantage granted to the promoter is liable to discourage economic operators from other Member States from participating in project financing procedures, thereby producing an anti-competitive effect. Finally, the Court excluded that such regime could be justified on grounds of efficiency and cost-effectiveness of administrative action and subsidiarity, objectives typically associated with project financing procedures, in which the private operator bears the costs of works and services of public interest, as well as of the design phase preceding the tender. These principles, in fact, do not fall within the exhaustive list of derogations from the freedom of establishment under EU law.

The Court of Justice ruled only on the incompatibility of the former project financing framework. In the meantime, the Italian legislature has sought to address the issue by amending Article 193 of Legislative Decree No. 36/2023, introducing a sort of simplified public tender procedure for the selection of the promoter. However, on the one hand, the Court of Justice’s reasoning may also apply where the promoter is selected through such competitive procedure. The Court’s judgment of 5 February 2026 is based on the “distortion” of the tender process caused by the pre-emption right, a factor which is independent of the method used to select the holder of the pre-emption right. On the other hand, the European Commission has initiated infringement proceedings against Italy, also contesting that the promoter selection procedures fail to comply with the minimum requirements of transparency and impartiality under EU law (the initiation of the infringement procedure, concerning a number of provisions of the current Public Contracts Code, is available here).

The issue therefore also arises in relation to the current version of Article 193 of Legislative Decree No. 36/2023. In any event, it is worth considering more broadly the potential impact of the judgment on the use of project financing at the initiative of a private operator. If, as we believe, the judgment marks the end of the pre-emption right, it is not a given that the institution of project financing will suffer the same fate. It is time to consider that the essential element of this procedure lies in the possibility granted to private operators to design, or, in most cases, even conceive, a public work or service. The freedom of initiative of private operators is rooted in Article 41 of the Italian Constitution, with a driving force that constitutes a unique feature in the current public procurement framework. In the past, this prerogative gave the parties submitting the proposal a clear advantage over other market operators, since the contracting authority could assess the proposal, deem it to be of public interest or feasible, and proceed to launch the tender without ever inviting other potential bidders. However, the provisions introduced by the so-called Corrective Decree ensure, from the outset, the possibility of comparing multiple proposals, thereby increasing the transparency of the procedure. It is clear that, for private operators, the risks associated with a potential failure of the initiative increase significantly, together with the substantial costs of the preliminary phase, which are nevertheless mitigated by the statutory possibility of submitting a simplified project.

However, it cannot be overlooked that any public tender procedure, launched on the basis of the promoter’s project and the other documents forming part of the proposal, including the summary of the economic and financial plan, would take place in a context where the aforementioned operator would enjoy a form of “substantive pre-emption right” stemming from the competitive advantage ensured by its full knowledge of said documents (and of any scope for their optimisation). Such an advantageous position is further reinforced by the obligation to award project financing procedures on the basis of the criterion of the most economically advantageous tender, identified according to the best quality-price ratio.

Moreover, it is worth noting that, the Court of Justice, in the judgment under review, did not call into question the right of the unsuccessful promoter to reimbursement of costs incurred in preparing the proposal – up to a maximum of 2.5% of the investment value, pursuant to Article 193 of the current Public Contracts Code – at the expense of the successful tenderer.

These factors are likely to be particularly attractive to more structured operators, willing to assume risk and equipped with adequate financial resources.

In conclusion, while the abolition of the pre-emption right may act as a barrier, making project financing less viable than in the past, it may also represent a new beginning for project financing, which could evolve towards transactions supported by the legal, economic, and technical prerequisites whose absence has often, in the past, led to the failure of hundreds of initiatives and to an enormous waste of public and private resources.

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As is well known, the draft decree law introducing urgent measures for the implementation of the National Recovery and Resilience Plan (PNRR) has recently been made public.

The decree gives effect to the sixth revision of the Plan, approved on 27 November by the European Council, which became necessary in light of the acknowledged impossibility of achieving, within the originally envisaged timeframes and modalities, also following previous revisions of the Plan, the objectives initially set for 30 June 2026.

A step back: the origin of the sixth revision of the PNRR

With the Communication NextGenerationEU, the road to 2026 (COM(2025) 310 final) of 4 June 2025, the Commission provided Member States with guidance on how to further rationalise their respective recovery and resilience plans (RRP).

In this context, the European Commission identified a number of possible actions, including: (i) strengthening existing measures, reallocating resources to measures that have delivered results beyond expectations; (ii) reducing resources allocated to measures that cannot be implemented within the required timeframes; (iii) using financial instruments managed by independent entities under the facility model, in order to stimulate private investment in response to market failures.

Within the scope of such investments, the RRP milestones would cover: (a) the transfer of funds to the implementing partner through the execution of implementation agreements; and (b) the execution of contracts with final beneficiaries for the use of the full amount of the transferred funds.

In order to introduce such a financial instrument or grant scheme, Member States should identify the market failure they intend to address and the related market demand, ensure that decisions on the award of the implementing partner are independent from the government and that financial management is separated from the Member State, as well as assess the operational capacity of the implementing partner to deploy the instrument.

The GSE facilities for biomethane, agrivoltaics and energy communities

Against this background, Article 29 of the draft decree introduces into the Italian legal system the facility mechanism envisaged by the European Commission for three strategic sectors: biomethane, agrivoltaics and energy communities (CACER).

The mechanism provides for the establishment of specific grant programmes financed by the PNRR and aimed at granting capital contributions.

Specifically, the measures already in place will be included in an incentive programme with a total value of EUR 4.130 billion in non-repayable grants, resources already allocated to Italy under the PNRR, broken down as follows: EUR 1.1 billion for agrivoltaics, EUR 795 million for energy communities and EUR 2.2 billion for biomethane.

The management of the programmes is entrusted to the GSE, and, for each measure, specific implementation agreements will be executed between the GSE and the Ministry for the Environment and Energy Security (MASE), setting out the rules for selection, assessment, control, monitoring, reporting and financial management.

The agreements must also provide for the substitution of the GSE for the MASE in the disbursement of grants and in relations with entities already selected or beneficiaries on the basis of measures adopted prior to the entry into force of the decree, as well as for the transfer of the related financial resources.

The investment programmes originally envisaged and governed by the relevant implementing decrees (namely, Ministerial Decree of 15 September 2022 for biomethane, Ministerial Decree of 22 December 2023 for agrivoltaics and Ministerial Decree of 7 December 2023 for energy communities) will remain unchanged in substantive terms, with regard to objectives, beneficiaries and eligible costs.

The novelty instead concerns the deadlines for entry into operation of the plants. The 30 June 2026 deadline set by the ministerial decrees is superseded. The new deadline will be established in the grant awards or in the related addenda and, in any event, may not exceed 24 months from the notification of such acts, under penalty of forfeiture of the incentives.

The date of 30 June 2026 remains relevant exclusively as a deadline for the execution of the financing agreements between the GSE and the operators

The entry into operation of the plants may therefore occur up to 24 months after notification of the contracts, potentially extending to 30 June 2028.

This approach reduces the risk that PNRR financed projects may fail to meet the 2026 deadlines, a risk widely highlighted in recent months in light of delays by suppliers, contractors and network operators, both gas and electricity, in the construction and energisation of the plants.

The facility system, managed by the GSE, in fact allows incentives to be effectively reserved until 2028, ensuring greater implementation flexibility for beneficiaries.

Decisions on the allocation of capital grants by the GSE will be adopted by majority vote of an independent investment committee established within the GSE, without government control.

Eligibility requirements 

In order to access the funding, beneficiary projects must comply with certain fundamental requirements. In line with the original decrees, the new measure provides for:

• the principle of do no significant harm (DNSH), therefore excluding projects involving fossil fuels, installations subject to the EU emissions trading system with emissions above permitted thresholds, as well as waste management facilities such as landfills and incinerators.

• the prohibition on cumulation of grants, whereby non repayable PNRR funding may not be combined with other European funding to cover the same costs.

Operational uncertainties

Despite the definition of the general framework, several uncertainties remain regarding the concrete operation of the measure.

On the one hand, the implementation agreements between the GSE and the MASE have yet to be executed, which will define the rules for selection, control and management of the grants. On the other hand, the operational regulations still need to be published, setting out, inter alia, detailed technical and procedural rules, including disbursement timelines, obligations of beneficiaries during and after the construction of the plants, procedures for reporting eligible costs, and the modalities and timing for the payment of capital grants, expected within 45 days from the execution of the agreements between the MASE and the GSE.

Pending the transfer of resources to the GSE, the latter is nevertheless entitled to advance the grants using resources at its disposal, up to a limit of ten per cent of the overall amount of the grant programmes, thereby providing some relief to the cash flows of awarded companies (it should be recalled that, under the operating rules of the Ministerial Decree of 15 September 2022 for biomethane, the capital contribution is recognised only upon completion of the works).

Until these instruments are defined, it is not possible to have a clear picture of the actual functioning of the facility, nor of the timing and modalities for the identification of any new beneficiaries, in particular with reference to the sixth biomethane auction, which was announced but never launched.

It should also be noted that on 19 June 2025 the MASE already intervened on agrivoltaic deadlines with ministerial decree no. 149 under which it was allowed to admitted companies to end the electric construction work by 30 June 2026, whereas commissioning of the plants was to achieve in the following 18 months. It shall now be clarified by the authorities whether this ministerial decree shall be considered entirely repealed by the new law-decree or coordination measures between the two provisions.

Finally, it is unclear what role will be assigned to the independent investment committee established within the GSE, considering that, at present, the beneficiaries of the biomethane and agrivoltaic measures have already been identified through the relevant competitive procedures.

It is therefore necessary to clarify whether such committee will operate exclusively with regard to CACER or whether it may also affect projects already admitted to incentives, notwithstanding that their bankability should be considered definitively secured due to the consolidation of the right to receive the incentive following successful inclusion in the ranking lists, as confirmed by the GSE in July 2025 with reference to plants ranked between positions 149 and 298 of the fifth auction[1].

A measure that circumvents, but does not resolve, structural problems

Beyond the uncertainties still surrounding the operational functioning of the facility, one key point emerges. The sixth revision of the PNRR makes it possible to formally comply with European deadlines but does not ensure the actual achievement of energy policy objectives.

The milestones set by the Plan are now limited to two formal steps: the transfer of funds to the implementing partner upon execution of the implementation agreements and the execution of contracts with final beneficiaries for the use of the full amount of allocated funds.

What is missing is the core objective, namely the entry into operation by 2026 of a defined capacity of renewable energy generation. In other words, resources are committed in the expectation that plants will be built, without any guarantee that all projects will be completed within the envisaged timeframe.

The central issue remains the complexity of the permitting framework and delays in grid connections by electricity and gas network operators, both transmission and distribution.

In particular, the gas network has proven insufficiently widespread and capable of absorbing new production capacity regardless of plant location. The electricity network, on the other hand, is affected by a high level of saturation and an ever-increasing number of connection requests (280,000 new connections for e distribution in 2024, an increase of 22.4 per cent compared to 2023[2]).

Significant technical difficulties associated with the development of advanced agrivoltaic plants should also not be overlooked.

All these factors have led to delays in achieving the relevant milestone and have made activation of the above-mentioned facility mechanism unavoidable.

Ultimately, the adopted strategy allows compliance with the letter of European deadlines but leaves the substance unresolved. Without structural interventions on permitting and infrastructure, there is a concrete risk that part of the estimated production capacity will fail to enter into operation even within the extended deadlines.

It should be noted that a further measure related to the implementation of the PNRR (Measure M7 6 Reform 3, scheduled for the third quarter of 2025) was adopted by the legislature through the 2026 Budget Law (Law no. 199 of 2025). Said law provides, with regard to connection to the natural gas transmission and distribution networks, and with the aim of addressing the current infrastructural constraints affecting the admissibility of biomethane into the networks and of promoting the widespread use of biomethane, for the following obligations to be imposed on network operators:

• on the one hand, the obligation to connect to their networks, within mandatory time limits and subject to penalties, with substitute procedures provided for in the event of inaction, both newly built biomethane production plants and plants resulting from the upgrading of pre-existing biogas production facilities, in accordance with the rules set out by the Regulatory Authority for Energy, Networks and Environment (ARERA);

• on the other hand, the allocation to transmission or distribution system operators of 70 per cent of the costs of investments for connection to transmission or distribution networks and 100 per cent of the costs relating to metering systems and compression, depending on the identified connection solution, with the remaining 30 per cent of the connection investment costs borne by producers.

ARERA is required to update its regulation concerning the technical and economic conditions for the provision of connection services for biomethane production plants to natural gas networks whose operators are subject to third party connection obligations by 15 February 2026.

Without prejudice to the clearly positive impact of this measure also with reference to ongoing and forthcoming extraordinary transactions, publication of the decree and, subsequently, of the agreements between the MASE and the GSE is awaited, as well as, with specific regard to the biomethane sector, the new ARERA regulation.

[1] https://www.gse.it/servizi-per-te/news/sviluppo-del-biometano-ok-del-consiglio-ue-a-risorse-aggiuntive.

[2] Source, e-distribuzione S.p.A., Annual Report and Financial Statements as at 31 December 2024: https://www.e-distribuzione.it/content/dam/e-distribuzione/documenti/e-distribuzione/Bilancio_esercizio_2024.pdf

With the enactment of Decree No. 175 of 21 November 2025, originally intended to regulate exclusively the tax credits under the Transition Plan 5.0 (the “Decree”), a sense of discouragement and disillusionment spread among market operators, due to yet another setback resulting from the new regime governing suitable areas for the development of renewable energy plants in Italy.

Specifically, the Decree

• repealed the provisions on suitable areas set out under Article 20, paragraph 8 of Legislative Decree No. 199 of 2021 (and, as a consequence, also the Agriculture Decree, which is currently pending constitutional review), as well as the criteria and parameters laid down in the Ministerial Decree of 2 July 2024 (the “Suitable Areas Ministerial Decree”, already partially annulled by the Lazio Regional Administrative Court in May 2025 and currently sub judice before the Council of State);

• introduced into Legislative Decree No. 190 of 2024, also known as the Consolidated Act on Renewable Energy Sources (“TU FER”), a new normative framework governing suitable areas (Articles 11-bis et seq. of the TU FER).

As noted, the amendments introduced by the Decree generated significant concerns and uncertainties, in particular, on the one hand, due to the introduction of the requirement of an Integrated Environmental Authorization (“AIA”) for industrial plants, within which a radius of suitability had to be assessed, and, on the other hand, due to the absence of a transitional regime applicable to projects already undergoing authorization procedures under the repealed framework.

With the conversion into law of the Decree, currently under publication in the Official Gazette (the ConversionLaw), while these critical issues have, on the one hand, been resolved, on the other hand further concerns of no minor relevance have emerged for future development initiatives.

In this respect, the full list of the various categories of suitable areas, as amended by the Conversion Law, is set out below.

Specifically, the following are deemed suitable areas.

• Sites where plants producing energy from the same renewable source are already installed and where modification works, including substantial ones, are carried out, provided that they do not entail an increase in the occupied area exceeding 20 percent, with the clarification, not included in the previous Article 20 of Legislative Decree No. 199 of 2021, that such variation in area is not permitted for ground mounted photovoltaic plants installed in agricultural areas. In addition, for the newly occupied areas, compliance is required with the provisions of Legislative Decree No. 42 of 2004 concerning cultural heritage and landscape authorizations (see Article 11-bis, paragraph 1, letter a of the TU FER).

• Sites subject to remediation identified pursuant to Legislative Decree No. 152 of 2006 (the Environmental Code), exhausted quarries and mines, not restored or abandoned or in conditions of environmental degradation, or portions of quarries and mines no longer capable of further exploitation, as well as, in addition to what was previously provided for under Legislative Decree No. 199 of 2021, closed or remediated landfills or landfill lots (see Article 11-bis, paragraph 1, letters b, c and d of the TU FER).

• Sites and facilities available to companies of the Ferrovie dello Stato group, railway infrastructure operators, motorway concessionaires, airport management companies, as well as State owned assets used by the Ministry of Defense or the Ministry of the Interior, and certain real estate assets identified by the State Property Agency, after consultation with the Ministry of Economy and Finance, and, as introduced at conversion stage, the Ministry of Agriculture, Food Sovereignty and Forestry, in the case of State owned assets with an agricultural designation not included in enhancement or disposal programs falling within their respective competences (see Article 11-bis, paragraph 1, letters e, f, g, h and i).

Photovoltaic plants

Article 11-bis, paragraph 1, letter l provides for further and additional cases of suitability specific to photovoltaic plants. These include

• areas adjacent to the motorway network within a distance not exceeding 300 meters.

• buildings, constructed structures and their related external appurtenant surfaces.

• areas designated for industrial, office, artisanal, commercial and logistics uses, as well as areas intended for the installation of Data Centers.

• areas used as parking facilities, limited to covering structures.

• water reservoirs, quarry lakes and decommissioned mines or mines in conditions of environmental degradation.

• areas within the perimeter of competence of the integrated water service.

• areas located within industrial plants and facilities not intended for agricultural or livestock production, nor for the production of energy from renewable sources pursuant to Article 268 of the Environmental Code, as well as agricultural zones enclosed within a perimeter of 350 meters from such plant or facility (during the conversion process the requirement that the relevant facility be authorized by means of an AIA was removed, while the reduction of the buffer zone from 500 to 350 meters was confirmed).

Even at conversion stage, the previous Article 20, paragraph 8, letter c-quater, considering as “suitable” those areas not included within the perimeter of assets subject to protection pursuant to Legislative Decree No. 42 of 2004, was not reinstated. This provision was recently confirmed by the Lombardy Regional Administrative Court, Milan, Section III, judgment No. 4300 of 30 December 2025, in continuity with other administrative case law (see Piedmont Regional Administrative Court, Section II, 19 October 2023, No. 808 and Tuscany Regional Administrative Court, Section II, 8 July 2024, No. 844), as constituting an additional category of suitable area, expanding the list set out in paragraph 8.

Furthermore, the text approved by Parliament eliminated existing renewable energy plants from among the reference points for identifying suitable areas for the development of new renewable plants, thus curbing the expansive interpretation that had consolidated following the MASE ruling No. 130318 of 8 August 2023 and had subsequently been endorsed by administrative case law as well (inter alia Regional Administrative Court of Lazio, Rome, judgment No. 4994 of 2025, and Regional Administrative Court of Lecce, judgment No. 1113 of 2025).

Agricultural areas and agrivoltaic plants

As is well known, the Decree finally introduced the long-awaited definition of standard agrivoltaic plants, defined as “photovoltaic plants that preserve the continuity of agricultural and pastoral activities at the installation site. To ensure such continuity, the plant may provide for the rotation of modules installed in an elevated position above ground and the application of digital and precision agriculture tools”.

On this point, the Conversion Law introduces important clarifications to be borne in mind during the authorization phase:

• For the installation of agrivoltaic plants, project developers are required to obtain a sworn technical statement, to be attached to the project submitted during the authorization phase and in any event to be made available to the administration for control activities, drafted by a qualified professional, certifying that the plant is suitable to preserve at least 80 percent of the gross marketable production.

• The municipality with territorial jurisdiction is granted a five-year power, following the construction of an agrivoltaic plant, to verify the continued suitability of the installation site for agricultural and pastoral use.

• The restoration of the site is provided for, together with the application of an administrative pecuniary sanction ranging from EUR 1,000 to EUR 100,000, in relation to agrivoltaic installations that do not ensure the preservation of the continuity of agricultural and pastoral activities at the installation site[1].

These amendments raise significant concerns, given the structural limitations in terms of resources and expertise of municipal technical offices, as well as the intrinsic difficulty of certifying ex ante a value that is heavily influenced by unpredictable factors, such as climate, and that can only be determined ex post, all the more so in relation to land currently uncultivated or where crop use will change.

Further critical issues arise from the novelty related to the five year verification power granted to municipal administrations which, in addition to being potentially used instrumentally by local authorities, risks conferring considerable uncertainty on the robustness of projects acquired or developed by market players, precisely due to the generic and abstract nature of the parameters to be applied under the Conversion Law.

Biomethane production plants

Regarding biomethane production plants, the amendments to the regulatory framework introduced by the Decree appear limited but not without consequences. In particular, the following are deemed suitable.

• Agricultural areas within 500 meters of zones designated for industrial, artisanal and commercial use, corresponding to the former Article 20, paragraph 8, letter c-ter, number 1 of Legislative Decree No. 199 of 2021, which, as noted, no longer applies to photovoltaic plants.

• Areas located within industrial plants and facilities referred to in Article 268 of the Environmental Code, as well as areas classified as agricultural enclosed within a perimeter whose points are no more than 500 meters from the same plant or facility.

• Areas adjacent to the motorway network within a distance not exceeding 300 meters.

As with photovoltaic technology, also for biomethane production projects the areas referred to under the former Article 20, paragraph 8, letter c-quater, namely areas not included within the perimeter of assets subject to protection pursuant to Legislative Decree No. 42 of 2004, are no longer included among suitable areas.

The role of the Regions

In line with the provisions of the former Article 20, paragraph 4 of Legislative Decree No. 199 of 2021, read in conjunction with the Suitable Areas Ministerial Decree, it is provided that within 120 days from the entry into force of the Decree, that is by 22 March 2026, the Regions, and within 180 days from the same date, that is by 21 May 2026, each autonomous province, ensuring the appropriate involvement of local authorities, shall identify suitable areas by means of their own legislation, on the basis of the principles and criteria set out in the new Article 11-bis, paragraph 4 of the TU FER, including, inter alia, the following:

• Regions may not qualify as suitable those areas included within the perimeter of assets subject to protection pursuant to the Cultural Heritage and Landscape Code, nor those included within a buffer zone of three kilometers, in the case of wind plants, and 500 meters, in the case of photovoltaic plants, from the perimeter of such assets, nor may they identify suitable areas where the characteristics of the plants to be developed conflict with the implementing rules provided for under landscape plans (see Article 11-bis, paragraph 4, letter m of the TU FER).

  On this point, industry associations have also expressed their views, highlighting the critical issue reported by certain Regions regarding the difficulty of identifying enough suitable areas in relation to the assigned regional targets. In practice, these difficulties result in a substantial impossibility of achieving renewable energy development targets within the prescribed timeframes, with the consequent risk of undermining national and European objectives.

• To preserve the agricultural designation of land, agricultural areas that may be classified as suitable areas at regional level must not be less than 0.8 percent nor more than 3 percent of the utilized agricultural area (SAU)[2], including the surface occupied by agrivoltaic plants, as specified by the Conversion Law.

• A different maximum limit may be provided for each municipality, without prejudice to the regional limits set out above, namely between 0.8 percent and 3 percent of the SAU. This wording was introduced during parliamentary review to replace the previous formulation which merely stated that specific percentages of SAU exploitation could be defined at municipal level, to expressly attribute such competence to regions and autonomous provinces and to overcome potential interpretative uncertainties as to the authority responsible for determining thresholds at municipal level.

• The introduction of general and abstract prohibitions on the installation of renewable energy plants is precluded, without prejudice to the prohibitions and limitations prescribed for the installation of photovoltaic plants in agricultural areas pursuant to Article 11-bis, paragraph 2, and to the provisions of Article 11-quinquies of the Decree, pursuant to which within the protection zones of UNESCO sites only renewable energy plants eligible for authorization under free building activity pursuant to Annex A of the TU FER are permitted.

Offshore suitable areas

The Decree introduces the concept of offshore suitable areas, pursuant to Article 11-ter of the TU FER, providing that these include areas identified by maritime spatial planning management plans, as well as decommissioned oil platforms and ports. The latter are eligible for wind plants with a capacity of up to 100 MW, subject to a port master plan amendment to be approved within six months from the submission of the application for the single authorization.

Simplified regime

In line with the former Article 22 of Legislative Decree No. 199 of 2021, Article 11-quater of the Decree provides that a simplified authorization regime applies to projects located entirely, and not partially, within suitable areas.

Specifically, for such projects it is not necessary to obtain a landscape authorization. Any opinion issued by the competent authority is not binding. Moreover, in the case of projects subject to a single authorization, the procedural time limits are reduced by one third.

The introduction of transitional provisions and the disappearance of the former c-quater areas

Initially, the Decree repeated the same error as the Suitable Areas Ministerial Decree, by failing to provide any safeguarding regime for ongoing procedures, thus giving rise to a potential retroactive effect of the new limitations on numerous pipeline projects not compliant with the revised siting criteria. It should be recalled that the Regional Administrative Court of Lazio, by judgment No. 9155 of 2025, partially annulled the Suitable Areas Ministerial Decree on this very point. Parliamentary review has now introduced a transitional regime aimed at safeguarding all projects whose authorization procedures were already underway as of the entry into force of the Decree.

Specifically, it is established that the provisions set out under Articles 11-bis, paragraph 1, and 11-quater of the TU FER, as introduced by the Decree, do not apply to procedures pending as of the date of entry into force of the Decree, that is 22 November 2025, which shall therefore continue to be governed by the previous regulatory framework. It is further clarified that pending procedures include enabling or authorization procedures, including environmental assessment procedures, for which the verification of the completeness of the documentation submitted in support of the project has been completed as of the date of entry into force of the Decree. In addition, in cases of high agricultural value of the area, the competent Region or autonomous province may resort to the opposition remedy provided for under Article 14-quinquies of Law No. 241 of 7 August 1990.

However, the issue immediately arises as to how to determine when the completeness of the documentation submitted in support of the project is deemed to be completed for all simplified procedures, such as the simplified authorization procedure (PAS), for which the completeness check is not, in practice, formally carried out. Depending on a systematic or literal interpretation of the provision, this could lead either to considering as safeguarded all projects whose filing was completed at least thirty days prior to 22 November 2025, in compliance with Article 8 of the TU FER, or, conversely, to considering the completeness of documentation not verified for all those procedures for which no formal confirmation of completeness has been issued, even though the thirty day term has already elapsed.

Finally, about the former c-quater provision, which had been the basis for numerous project initiatives since its introduction, the exclusion from the list of suitable areas of those not included within the perimeter of assets subject to protection pursuant to Legislative Decree No. 42 of 2004 has been confirmed.

Agricultural areas

Although the Agriculture Decree is currently subject to constitutional review, the Decree unfortunately appears to essentially reintroduce the same general prohibition on the construction of ground mounted photovoltaic plants in agricultural areas.

The only positive difference lies in the introduction of the long-awaited definition of standard agrivoltaic plants, which should be eligible for installation in agricultural areas by way of derogation from the prohibition.

Nevertheless, significant margins of uncertainty remain also in this respect. Indeed, the derogation applies only where the modules are installed in a position adequately elevated above ground, which leaves extensive discretion to local administrations as to what should be considered an adequately elevated position.

It is appropriate, if not necessary, for clear and concrete technical criteria and parameters to be provided, aimed at limiting the uncertainty of administrative procedures and, at the same time, facilitating operators in planning their investment strategies.

Particularly perplexing are the constraints imposed on Regions in terms of agricultural areas that may be classified as suitable within their territory, which, as noted, must not be less than 0.8 percent nor more than 3 percent of the SAU, that is the aggregate surface area designated for agricultural production, while also providing for the possibility for municipalities to define a different maximum limit, without prejudice to the regional limits set out above.

This mechanism risks triggering, within each Region, a genuine race to initiate authorization procedures on agricultural land to prevent potential risks of refusal deriving from the erosion of the 3 percent threshold.

Although the range identified for suitable areas, while presented as a measure to protect agricultural land, does not in reality constitute an effective constraint on the growth of utility scale photovoltaic installations from a purely quantitative perspective, given that 3 percent of the SAU would be sufficient to develop far more capacity than required to meet energy demand, it is reasonable to expect that a significant portion of the areas theoretically deemed suitable will not present technically and economically sustainable grid connection conditions. This would result, as is already the case, in opportunistic project development, excessive micro zonal concentration and a loss of efficiency of the authorization and energy system, to the detriment of the community as a whole.

Conclusions

The regulatory framework outlined by the Conversion Law undoubtedly marks a turning point in the discipline of suitable areas for the development of renewable energy sources, addressing some of the most evident critical issues that emerged in the original version of the measure.

In particular, the introduction of a transitional regime for ongoing procedures and the removal of disproportionate requirements, such as the mandatory possession of an AIA for the identification of industrial buffer zones, represent corrective measures that are both welcome and, in several respects, necessary to restore a minimum level of legal certainty for operators.

Nevertheless, the overall structure of the reform continues to present significant areas of friction.

The definitive exclusion of the former Article 20, paragraph 8, letter c-quater of Legislative Decree No. 199 of 2021 significantly reduces the scope of areas that may be classified as suitable, in apparent misalignment with the case law that had emphasized its expansive and systematic function. Similarly, the continuing general prohibition on ground mounted photovoltaic plants in agricultural areas, mitigated only by the derogation for standard agrivoltaic plants, continues to rely on elastic and indeterminate formulations that risk translating, in practical application, into an excessive expansion of administrative discretion.

The decision to bind Regions to rigid percentage thresholds of SAU qualifying as suitable areas also appears particularly delicate.

Although formally oriented towards the protection of agricultural land, this mechanism risks producing distortive effects, encouraging anticipatory competition among projects, suboptimal locational concentration and an increase in initiatives lacking genuine technical and economic sustainability, with negative repercussions on the overall efficiency of the authorization system and on the achievement of decarbonization objectives.

In conclusion, the legislator has taken a step forward in the attempt to rationalize a stratified and highly contentious field. However, the outcome still appears far from a framework that is truly stable, coherent and functional to national and European objectives, and responsive to the concerns of market operators.

Much will depend, in the coming months, on the regional implementation of the new regulatory framework, on the adoption of digital tools supporting territorial planning and, not least, on the clarifying contribution that may be provided by administrative case law.

In the absence of further fine-tuning interventions, the risk remains that the discipline of suitable areas will continue to represent not so much a factor of acceleration, but rather an additional source of uncertainty for the orderly development of renewable energy sources in Italy.

[1] Such administrative sanction is also provided for the construction of ground mounted photovoltaic plants carried out in breach of the prohibition set forth under Article 11-bis, paragraph 2 of the TU FER.

[2] Currently equal to 12,3 million hectares, source ISTAT (2025): https://www.istat.it/storage/ASI/2025/capitoli/C13.pdf compared with a renewable energy generation target for 2040 ranging between 144 GW and 170 GW, source Terna (2025): https://download.terna.it/terna/Terna_Prospettive_Sviluppo_Sistema_Energetico_2050_Copertura_domanda_elettrica_8de15802728e7d1.pdf.

The ruling originates from an appeal against the refusal to grant an extension pursuant to Article 10-septies of Decree Law No. 21/2022 (also known as the “DL Ucraina”), based on (i) failure to meet the deadline for the start of works authorised in PAS and (ii) non-compliance of the project with the new urban plan adopted. 

The Court clarified that: 

• pursuant to Article 10 septies of Decree Law No. 21/2022, “the extension constitutes a mandatory act and does not require formal approval by the proceeding authority” (see TAR Campania, Salerno, Section II, 17 October 2025, No. 1701) upon the occurrence of the strictly prescribed conditions, including that the deadline to be extended has not expired and that “the authorisations are not in conflict, at the time of notification by the subject, with new urban planning instruments approved”; 

• for works that can be authorised with a PAS (generally assimilated in case law to a SCIA), there is no deadline for the start of works under Article 6 of Legislative Decree 28/2011, while it is required that they be completed within three years of their finalisation; 

• the mere “adoption” of an urban planning variation (not yet approved) that conflicts with the authorisation already issued is not sufficient to prevent the extension of the authorisation itself ex lege. 

This is clearly a ruling of considerable importance, especially in light of the significant practical and economic implications for players in the sector, as it clarifies fundamental aspects – which until now have remained uncertain – that are destined to have a concrete impact on projects currently under development. 

We are now waiting for the hearing, scheduled for 18 June. 

Below is a summary of the main arguments put forward by the Court, together with our preliminary considerations on the implications of the ruling in question.

* * *

On the application of the Law to authorisation procedures that have already been completed

The Court deemed unlawful the provision (Article 1, paragraph 2) of the Law that required its application also to procedures already completed. 

This provision would, in fact, violate the principles of legitimate expectations and free economic initiative, as well as that of maximum dissemination of renewable energy sources.

In the Court's opinion, the regional provision “goes beyond a regulation that unreasonably limits legitimate expectations, conflicting with the principle of legal certainty as it nullifies all authorisation measures issued for the construction and operation of plants powered by renewable sources, without this reversal being justified by technical or scientific reasons (ex plurimis, judgment no. 88 of 2025)”.

With regard to the prohibition on the construction of plants in areas classified as unsuitable

In line with the Court’s position, it was reiterated that ”unsuitability can never be equivalent to an absolute and a priori prohibition (judgment no. 134 of 2025)”.

The classification of an area as unsuitable determines, at most, the impossibility of accessing the simplified authorisation procedures provided for by the national legislator in suitable areas to speed up the spread of renewable sources.

In such areas, in fact, the installation of a plant may be authorised, but on the basis of an appropriate assessment and a reinforced justification.

According to the judges, “the final decision on the construction of RES plants in areas designated as unsuitable must, in any case, be taken at the end of the individual authorisation procedure concerning the specific plant project, within which reasons in favour of its construction could still be highlighted”.

In fact, it is during the procedure that the objective reasons preventing the construction of the plant in an unsuitable area must emerge. In the Court's opinion, the authorisation procedure allows for a concrete assessment of the relationship between suitable and unsuitable areas, as well as a complete balance between nature conservation and environmental protection through the reduction of polluting energy sources.

This approach makes it possible to counteract the Nimby phenomenon and thus prevent the wishes of certain regional political bodies seeking to obstruct the construction of plants in their respective territories from being indulged.

In light of these arguments, the provision imposing an absolute ban on the installation of RES plants in unsuitable areas was therefore declared unconstitutional.

On the limits for revamping and repowering interventions

The regional regulation introducing different types of limits on repowering and revamping activities, based both on the size of the areas concerned and, in fact, on the number of new-generation wind turbines that can be authorised, is constitutionally illegitimate due to its violation of the division of legislative powers, thus adopting a criterion that differs from and conflicts with that established by the state legislator. 

Offshore plants and state jurisdiction

The Court clarified that the identification of suitable areas for the installation of offshore RES plants falls under the jurisdiction of the Ministry of Infrastructure and Transport.

It follows that the regions, including Sardinia, cannot independently identify suitable sites for the installation of such plan.

* * *

The Court upheld most of the objections raised by the Government against the Sardinian regional law, confirming and reinforcing the national and European approach in support of the energy transition.

In this regard, it is desirable that some of the ideas offered by the ruling in question be taken up and incorporated into the current conversion of Decree Law 175/2025 into law.

As is well known, this decree has significantly redefined the legislation on suitable areas, leaving some significant concerns, especially with regard to certain aspects examined in depth by the constitutional judges, including the absence of transitional provisions and the regulation of projects that only partially fall within unsuitable areas.

The shared objective must be to achieve a regulatory framework that is as clear and unambiguous as possible in order to prevent operators from constantly resorting to the courts to assert principles that should be undisputed. 

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The launch of Fer Z depends on EU clearance, which Viganò describes as “the key step in the process of starting the Fer Z mechanism, without which it cannot be implemented”. He recalls that the European Commission has “expressed reservations about the technological efficiency and compatibility of Fer Z with the EU State Aid Guidelines, as well as the effectiveness of the mechanism in relation to the planned maintenance aspects of the facilities”. Given the innovative nature of the model, he also expects that approval of the GSE and ARERA operating rules “could take quite a long time”.

As for its interaction with existing schemes, Viganò sees Fer Z not as conflicting with Fer X but as “competition among operators for the capacity quotas offered by the various schemes, and of simultaneous competition between the schemes themselves”. He adds that while “the Fer X capacity quota could over time decrease and be partially transferred to Fer Z”, “for the moment it is not possible to envisage migration scenarios because reference tariffs are not known”.

Published in icis.com:

New Fer Z incentive mechanism could reduce renewable curtailment in Italy

Complexity of new Italian Fer Z mechanism could delay implementation

The Amendment, published just six days after the recent measures on suitable areas (for further details, please refer to our previous article Suitable areas: significant regulatory changes are underway. News and impacts on future investment strategies) and which will come into force on 11 December 2025, further amends the TU FER with potential significant implications that are far from marginal on current market practices. 

Below is a summary of the main regulatory changes, together with some preliminary considerations on their potential practical implications.

1. Storage systems

At the express request of industry associations, the Amendment modifies Article 1, paragraph 1 of the TU FER by introducing an explicit reference to storage systems.

This definitively clarifies that the administrative regimes provided for in the TU FER also apply to this type of asset, which, moreover, by virtue of the reference in Article 2, paragraph 2, must be considered to be of public utility, urgent and cannot be postponed.

As is well known, the annexes to the TU FER already covered interventions on electrochemical storage systems, but there was no provision that unequivocally confirmed the extension of the administrative regimes to them.

2. Titles suitable for the availability of the area

The amendments introduced to Articles 8 and 9 of the TU FER (relating to PAS and AU procedures) definitively clarify that preliminary contracts are suitable titles to demonstrate the legitimate availability of the area.

This is, of course, the concrete transposition into law of recent court rulings on the subject.

Finally, the Regional Administrative Court of Palermo, in its rulings nos. 2131 and 2133 of 30 September 2025, confirmed that preliminary contracts duly registered and transcribed in accordance with Article 2645-bis of the Italian Civil Code may also be considered suitable, since “with regard to the principle of proportionality, requiring the conclusion and production of final contracts even before the authorisation is issued would place an unjustified burden on the operator, forcing it to incur costs and financial constraints without any certainty of a favourable outcome to the proceedings, with an excessive sacrifice in relation to the protection sought by the legislator. In this sense, [...], the filing of final contracts may be postponed until after the authorisation has been issued”.

These principles have also already been implemented at regional level, by Circular No. 39593 of 14 November 2025, in which the Sicilian Region ordered the adaptation of the checklist of documentation required for authorisation procedures to the aforementioned rulings.

3. Environmental compensation

Article 7 of the Amendment introduces changes to letter m) of paragraph 4 of Article 8 of the TU FER, providing for new methods for determining the amounts to be allocated to finance the territorial compensation programme to the municipality in whose territory the plant will be installed.

As is well known, the previous regulatory framework (represented by the Ministerial Decree of 10 September 2010 and the TU FER) generically provided that this percentage should be calculated on the basis of “revenues including current incentives, deriving from the valorisation of the electricity produced annually by the plant” without, however, clarifying the scope of this term (e.g., whether it referred to annual revenues, revenues from energy production or company profits).

As a result of the changes introduced by the Amendment, in the case of projects subject to the PAS regime, the previous "territorial compensation programme for the municipality concerned of not less than 2 per cent and not more than 3 per cent of the income" is replaced by the new thresholds, not less than 1 per cent and not more than 3 per cent, taking as a benchmark the "value of expected production during the useful life of the plant, net of the value of any energy consumed by the plant itself".

The same applies to projects subject to the Single Authorisation regime, with the difference that the maximum percentage threshold has been raised to 4% (see Article 9, paragraph 10, letter d, TU FER).

The amendments will enter into force on 11 December 2025 and further criteria regarding the application of compensation measures will be specified when the 2010 Guidelines will be updated pursuant to Article 14, paragraph 5, of the TU FER. 

4. Alternative Dispute Resolution 

With the inclusion of Article 12-ter in the TU FER, the Amendment introduces a significant innovation to reduce litigations.

A new dispute resolution mechanism has been introduced, which will be managed by the Single Buyer and defined by ARERA with other measures.

This mechanism should be applied with reference to the administrative regimes connected with interventions on renewable energy plants, settling disputes relating, for example, to the assessment of the existence of territorial constraints, the verification of the completeness of the documentation accompanying the PAS or the AU application, and the application of the simplified rules for interventions in suitable areas.

5. Application of the abbreviated procedure pursuant to Article 119 of the Administrative Procedure Code

In order to ensure the fastest possible resolution of disputes relating to procedures and measures adopted by the public administration in relation to RES plants, the Amendment introduces Article 10-bis into the Consolidated RES Act. 

This article establishes that the provisions of Article 119 of the Administrative Procedure Code (relating to the summary procedure for administrative proceedings) apply to the aforementioned disputes.

As a result of this provision, all ordinary procedural deadlines are halved, except, in first instance judgment, those for the notification of the appeal, the incidental appeal and the additional grounds, as well as those for the filing of a precautionary appeal.

6. Further changes

Other new changes worth mentioning include:

• the increase from 10 to 12 MW of the threshold for the application of the PAS regime with regard to photovoltaic solar plants located in areas suitable pursuant to Article 11-bis of the TU FER, to be submitted to PAS (Annex B, Section I of the TU FER) in order to bring the text into line with the provisions of Article 13 on the exemption of such projects from environmental procedures;

• the introduction of the definition of “connected works” to be understood as 'the works connecting the plant to the electricity distribution network or to the national transmission network necessary for the injection of the energy produced or stored into the aforementioned networks, as well as the works connecting to the natural gas or hydrogen distribution network for biomethane or hydrogen production plants, with the exception of building works';

• The clarification that the assessment of EIA applicability, where necessary, must precede the beginning of the AU proceding and must last no longer than 90 days from the verification of document completeness referred to in Article 19, paragraph 2 of the Environmental Code.

Conclusions

The innovations introduced by the Amendment – although not equal with those recently discussed in relation to suitable areas – would appear to have a significant impact on the regulatory framework for the sector and, consequently, on future investments in the renewable energy sector.

Certainly, the provisions aimed to clarify (once and for all) that preliminary contracts can be used to demonstrate the availability of the area could be seen positively.

Another positive change could be the raising of the threshold for interventions subject to PAS and the definition of related works.

On the other hand, the following provisions are questionable:

• the negative changes made, compared to the latest version of the Amendment circulated in recent weeks, with regard to environmental compensation measures. In fact, compared to the previous text, at the instigation of ANCI:

  • the minimum threshold applicable to projects authorised in PAS has been raised from 0.5% to 1% and the maximum threshold for projects in AU from 3% to 4%. In this regard, in the absence of clear transitional provisions, it will be necessary to understand, at the time of application, whether the new 4% threshold for AU will be taken as a reference by municipal administrations only with regard to future authorisation procedures or, conversely, also with reference to procedures already in progress and to procedures for the revision/renegotiation of agreements concerning exclusively financial measures in violation of Law No. 145/2018 (later deemed legitimate by the Constitutional Court in its ruling No. 46 of 23 March 2021).

  • the reference parameter has returned to being 'the value of expected production during the useful life of the plant' instead of the previous 'value of expected production for the first five years of operation of the plant';

• the changes introduced on the judicial and extrajudicial fronts. On the one hand, there are the provisions that recognize the application of a summary procedure (without prejudice to the 60-day deadline for notification of the appeal) and even an alternative dispute resolution mechanism; on the other hand, it has once again confirmed the possibility of challenging both administrative measures and those issued by the Single Buyer through the extraordinary appeal to the President of the Republic (which must be filed within 120 days from the date of full knowledge of the act presumed to be harmful), with a considerable expenditure in terms of time and costs for operators in the sector;

• the introduction of storage systems among those to which the TU FER expressly applies, without however specifying which areas are suitable for this type of asset, with considerable uncertainty regarding the application of the law in the context of scouting for land to be dedicated to such initiatives.

Without wishing to overlook the legislator's commendable ambitions for regulatory reform and the aforementioned potential clarifying effects that could result from the Amendment, for now, it seems that has been done 'too little, too late'.

In fact, in view of the ambitious targets set for 2030, the regulatory framework for the sector still appears to be marked by numerous inconsistencies and grey areas that are likely to continue to have a negative impact on the investment strategies of market operators. 

In any case, in order to have a clear, complete and comprehensive picture of the future new regulations (and the resulting reactions of market players), it will still be necessary to wait and see if and how local administrations will implement these regulatory changes and, as regards the new form of ADR, the subsequent implementing measures of ARERA.

Written by Giovanni Battista De Luca, Lorenzo Piscitelli and Ludovica Petrucci.

In recent weeks, a new draft of the aforementioned decree has circulated which, if on one hand it did not seem to bring substantial changes on the saturation and DC front, on the other hand it has been enriched, introducing a substantial reorganization of the so-called "suitable areas" for the installation of renewable plants.

From the "Energy Decree" the measures in question have now formally migrated to Decree no. 175 of 21 November 2025 also known as "Transition 5.0 Decree" and originally intended, precisely, to regulate only the tax credits referred to in the Transition 5.0 Plan (the "Decree").

The Decree, published in the Official Gazette on November 21 last, introduces multiple amendments to Legislative Decree no. 190/2024 (also known as "TU Renewables") substantially going to abrogate the rules of the game as we currently know them and, in detail:

• the discipline of suitable areas ope legis referred to in art. 20, co. 8 of Legislative Decree 199/2021 (and, consequently, also the DL Agriculture, pending, as is known, constitutional scrutiny);

• the criteria and parameters referred to in the DM of July 2, 2024 (the "DM Suitable Areas") already partially annulled by the TAR Lazio in May of this year and currently sub judice before the Council of State.

The new regulation is now set out in arts. 11-bis and following of the TU Renewables.

Notably, similar to what was provided by Legislative Decree 199/2021, the following are considered suitable areas:

• sites where plants of the same source are already installed and where modification interventions are carried out, even substantial ones, that do not involve a variation of the occupied area exceeding 20%, with the specification (this not present in the previous Art. 20 of Legislative Decree 199/2021) that such variation of the area is not allowed for photovoltaic plants installed on the ground in agricultural areas and that, for the new occupied areas, what is provided by Legislative Decree 22/2004 regarding cultural and landscape authorizations must be observed (cf. Art. 11-bis, co. 1, lett. a) of the TU Renewables);

• sites subject to remediation identified pursuant to Legislative Decree 152/2006 (the "Environmental Code"), ceased quarries and mines, not recovered or abandoned or in conditions of environmental degradation, or portions of quarries and mines not susceptible to further exploitation as well as (in addition to what was provided by Legislative Decree 199/2021) landfills or closed or restored landfill lots (cf. Art. 11-bis; co. 1, lett. b), c) and d) of the TU Renewables);

• sites and plants available to companies of the State Railways group, railway infrastructure managers, highway concessionaires, airport management companies as well as state property assets in use by the Ministry of Defense or the Ministry of the Interior and certain real estate assets identified by the State Property Agency (cf. Art. 11-bis, co. 1, lett. e), f), g), h) and i)).

Photovoltaic plants

The Decree then provides in art. 11-bis, co. 1, lett. l) ad hoc provisions for photovoltaic plants.

In essence:

• areas adjacent to the highway network within a distance not exceeding 300 meters, buildings and industrial areas (to which are added areas destined for Data Center installation, areas used as parking lots, water reservoirs and areas within the perimeter of competence of the integrated water service) are confirmed as suitable areas;

• the prohibition of installation of photovoltaic plants in agricultural areas within 500 meters from zones with industrial, artisanal and commercial destination appears confirmed (i.e., the previous prohibition introduced as a result of the DL Agriculture and relating to Art. 20, co. 8, lett. c-ter), 1) of Legislative Decree 199/2021);

• the suitable areas referred to in the previous art. 20, co. 8, lett. c-ter, n. 2) are remodulated, in a restrictive key, (i.e., areas internal to establishments referred to in art. 268 of the Environmental Code and agricultural zones enclosed in a perimeter of 500 meters from the establishment) providing as conditions: (a) that the relative establishment is not destined for agricultural production and has been authorized with Integrated Environmental Authorization ("IEA"); (b) for agricultural zones a compression of the buffer zone from 500 to 350 meters;

• those referred to in the previous Art. 20, co. 8, lett. c-quater (i.e., areas not included in the perimeter of assets subject to protection pursuant to Legislative Decree 42/2004) no longer appear to figure among the suitable areas.

Agricultural zones and agrivoltaic plants

The Decree appears to provide (finally) a definition aimed at identifying the so-called agrivoltaic plants different from advanced ones (for which an analytical illustration has been provided from the beginning for access to PNRR measures).

Specifically, the new art. 4, co. 1, lett. f-bis) defines as "agrivoltaic plants" photovoltaic plants that preserve the continuity of cultivation and pastoral activities on the installation site and that may (not must) provide for the rotation of modules placed in elevated position from the ground and the application of digital and precision agriculture tools.

This is a novelty of non-marginal importance considering that if, on one hand, the new discipline substantially confirms in art. 11-bis, co. 2, the generalized prohibition of installation of photovoltaic plants in agricultural areas, on the other hand, it provides an express derogation (in addition to CER and advanced agrivoltaic plants like the previous regulation) also for "standard" agrivoltaic plants as defined above provided that the modules are "placed in adequately elevated position from the ground".

Plants for biomethane production

With reference to plants for biomethane production, the previous discipline is essentially confirmed, although with some clarifications. In particular, the following continue to be suitable:

• agricultural areas within 500 meters from zones with industrial, artisanal and commercial destination (i.e., the previous Art. 20, co. 8, lett. c-ter), 1) of Legislative Decree 199/2021);

• areas internal to industrial plants and establishments referred to in art. 268 of the Environmental Code as well as areas classified as agricultural enclosed in a perimeter whose points are no more than 500 meters from the same plant or establishment with the specification, already mentioned for photovoltaic plants, that such establishments must be authorized under the IEA regime;

• areas adjacent to the highway network within a distance not exceeding 300 meters.

As seen for photovoltaic technology, also for the projects in question those referred to in the previous art. 20, co. 8, lett. c-quater (i.e., areas not included in the perimeter of assets subject to protection pursuant to Legislative Decree 42/2004) no longer appear to figure among the suitable areas.

Regional Implementation

Following the pattern of what was provided by the previous art. 20, co. 4 of Legislative Decree 199/2021 in combination with the DM Suitable Areas, it is provided that within 120 days from the entry into force of the Decree (i.e., indicatively by May 22, 2026) the Regions shall provide, with their own law, for the identification of suitable areas based on the principles and criteria referred to in the new art. 11-bis, co. 4 of the TU Renewables, among which it is worth mentioning the following:

• Regions cannot qualify as suitable areas included in the perimeter of assets subject to protection pursuant to the Code of cultural heritage and landscape nor those included in a buffer zone of three kilometers, in the case of wind plants, and five hundred meters, in the case of photovoltaic plants, from the perimeter of the same assets, nor identify suitable areas where the characteristics of the plants to be built are in contrast with the implementation rules provided by landscape plans (cf. Art. 11-bis, co. 4, lett. m) of the TU Renewables);

• in order to preserve the agricultural destination of soils, agricultural areas qualifiable as suitable areas at regional level must not be less than 0.8% of the Utilized Agricultural Surfaces (UAS) nor more than 3% of the same UAS and specific percentages of UAS exploitation can be defined at municipal level;

• impossibility of providing general and abstract prohibitions on the installation of renewable energy plants, without prejudice to the prohibitions and limitations prescribed for the installation of photovoltaic plants in agricultural areas pursuant to art. 11-bis, co. 2 and what is provided by article 11-quinquies of the Decree (according to which within the protection zones of UNESCO sites only the installation of renewable energy plants authorizable in free construction pursuant to Annex A of the TU Renewables is allowed).

In order to facilitate the identification of suitable areas (as well as acceleration zones), with a Decree of the MASE to be adopted within 60 days from the entry into force of the Decree, the operating procedures of a digital platform aimed at qualifying the territory and classifying areas and zones will be regulated.

As regards the 2030 targets for renewable energy capacity to be installed in each territory, the previous regional distribution referred to in the DM Suitable Areas remains confirmed.

Suitable areas at sea

The Decree introduces the concept of "suitable areas at sea" (cf. art. 11-ter of the TU Renewables) providing that such areas are those identified by maritime spatial management plans as well as disused oil platforms and ports (the latter, for wind plants with power up to 100 MW and subject to a variant of the port master plan to be approved within six months from the submission of the single authorization application).

Regime semplificato

Similar to what was provided by the previous art. 22 of Legislative Decree 199/2021, art. 11-quater of the Decree provides that for interventions falling (entirely and not partially) on suitable areas a simplified authorization regime applies.

Specifically, for such interventions it is not necessary to acquire landscape authorization (the opinion of the competent authority, where expressed, is not binding) and, in the case of projects subject to single authorization, the procedure terms are reduced by one third.

Preliminary considerations and market impacts

After approximately four years spent waiting for a concrete paradigm shift together with clear, precise and unambiguous indications on how and where to direct their investment strategies, it is highly probable that the Decree in question will lend itself to multiple criticisms from market operators, some of which can be easily anticipated from a plain reading of the discipline under examination.

The absence of transitional provisions and the disappearance of former c-quater areas

As is known, the TAR Lazio with sentence 9155/2025 partially annulled the DM Suitable Areas for the absence of a transitional discipline aimed at safeguarding proceedings in progress at the date of entry into force of the decree and pending the promulgation of Regional Laws.

The Decree appears to repeat exactly the same error, not providing any safeguard regime for consolidated legal positions and determining a potential retroactive effect of the new limitations on the multiple projects in the pipeline not in line with the renewed locational criteria (think, by way of example only, of the significant number of projects to be installed in former c-quater areas or former c-ter, 2) whose plants are not authorized under the IEA regime).

Furthermore, the rule does not appear to provide for an express repeal of the previous provisions while providing, in fact, their evident replacement with the new regime.

It is hoped that – in order to prevent the proliferation of litigation, likely to be accepted given also the precedent of the TAR Lazio – during the conversion into Law (i.e., by January 22 next) the course will be corrected, introducing the aforementioned safeguard clause; however, even in such an (optimistic) hypothesis, the result would consist of 60 days of total freezing of development initiatives, with inevitable negative effects on investments currently under evaluation or implementation by market players.

The same applies to buffer zones for protected assets.

The TAR Lazio, with the above-mentioned sentence, branded the DM Suitable Areas as illegal for an evident lack of proportionality in the part where it gave Regions the possibility to provide for buffer zones for protected assets up to 7 kilometers from the relative perimeter.

The Decree seems to resolve this issue at the root, striking out the previous c)-quater and providing, even, the impossibility for Regions to qualify as suitable the areas included in the perimeter of assets subject to protection regardless of the buffer zones that no longer have any relevance.

In other words, the realization of projects in proximity to protected assets is prevented once and for all regardless of any buffer zone.

The above would seem, barring changes during conversion, to considerably compromise the multiple initiatives previously suitable under art. 20, co. 8 lett. c)-quater currently under evaluation and, even, in the absence of transitional provisions, under authorization.

The IEA filter

Pursuant to the previous art. 20, co. 8, lett. c-ter) it was possible to install photovoltaic plants or for biomethane production on areas internal to industrial plants and establishments as well as in areas classified as agricultural enclosed in a perimeter whose points are no more than 500 meters from the same plant or establishment.

In compliance with the principle of maximum diffusion of renewable energies, the provision in question has been the subject of multiple extensive interpretations both by the executive and in judicial proceedings, going so far as to classify as "plant" even photovoltaic installations with power exceeding 20 kW as well as power plants and electrical substations (cf. MASE interpellation n. 130318 of August 8, 2023; TAR Lazio, Rome, Sentence n. 4994/2025; TAR Lecce, Sentence n. 1113/2025).

The above by virtue of a substantialist approach, aimed at considering as suitable areas with strong urban impact which, conversely, appears entirely neglected by the Decree.

The new art. 11-bis, co. 1, lett. l), num. 1) of the Decree, in fact, on one hand, circumscribes the radius of suitability of agricultural areas for photovoltaics to 350 meters (instead of 500) and, on the other hand, expressly requires (both for photovoltaics and for biomethane) that the relative plant or establishment be subject to IEA, significantly restricting the pool of usable sites compared to previous extensive readings.

This regulatory contradiction generates legal uncertainty and risks nullifying the interpretative efforts made to expand developable surfaces, creating an evident short circuit between the hermeneutic evolution favorable to renewables and the new restrictive discipline.

Consider, in fact, that many industrial plants, despite having a significant territorial impact, are not necessarily subject to IEA, which exclusively concerns facilities of considerable size and dedicated to activities with high and significant environmental impact, including, by way of example, the production and transformation of metals or the chemical industry.

Agricultural areas

Despite the DL Agriculture currently being pending constitutional judgment, the Decree appears, unfortunately, to essentially repropose the same generalized prohibition on the realization of ground-mounted photovoltaic plants in agricultural areas.

The only positive difference is represented by the introduction of the long-awaited definition of standard agrivoltaic plants which should be able to be realized in agricultural areas in derogation of the aforementioned prohibition.

Nevertheless, even in relation to this profile, significant margins of uncertainty appear to remain; in fact, the derogation finds application only where the modules are "placed in an adequately elevated position from the ground", which leaves immense spaces of discretion to the relative local administrations on what should be understood as "adequately elevated position".

During conversion it is appropriate, if not necessary, that clear and concrete technical criteria and parameters be provided aimed at limiting the randomness of administrative procedures and, at the same time, facilitating operators in planning their investment strategies.

Particularly perplexing are the constraints imposed on Regions in terms of agricultural areas qualifiable as suitable in their territory which, as seen, must not be less than 0.8% nor more than 3% of the UAS (i.e., the sum of company surfaces destined for agricultural production), also providing the possibility for municipalities to define specific percentages of UAS exploitation.

This is a mechanism that risks triggering, for each Region, a real race to start authorization procedures on agricultural areas in order to prevent possible risks of denial deriving from the erosion of the aforementioned 3% threshold.

Conclusions

The new regulation appears to close the circle of suitable areas returning, essentially, to the starting point with conditions and criteria, unfortunately, further restrictive compared to the previous legislation, going to defuse the positive effects introduced with Legislative Decree 199/2021.

This is clearly a discipline that is worse than the previous one and which, quite unexpectedly, appears not to have grasped – unlike national jurisprudence – the urgent need to definitively adopt an approach consistent with European principles of maximum diffusion of renewable sources, proportionality and environmental integration, making the achievement of the objectives set by the PNIEC by 2030 almost impossible.

Such a scenario consisting of yet another change in peius of sector legislation – in the absence of a substantial reforming intervention during conversion into Law – risks further fueling the current climate of regulatory uncertainty with inevitable negative effects on the entire sector as well as, in general terms, on the common objective of progressively building a solid and independent energy system.

A leap forward was needed and, unfortunately, for now, it seems that the executive, ignoring the signals coming from the market and administrative judges, has taken an unexpected step backward.

Article by Giovanni Battista De Luca, Piero Viganò and Lorenzo Piscitelli. 

This structure was incorporated into Decree No. 204 of 29 July 2025, published on the MASE website on 28 October ("Corrective Decree"), following registration by the Court of Auditors.

Finally, the MASE Directorial Decree published on 19 November 2025 approved the expected operating rules and contract templates prepared and submitted by the GSE ("Operating Rules"). 

These sources confirm that energy-intensive end customers - registered on the CSEA list as of 18 January 2025 - will be able to receive, for a period of thirty-six months ("Advance Period") starting from 1 January 2025, volumes of energy from Gestore dei Servizi Energetici S.p.A. (“GSE”) for a period of thirty-six months starting on 1 January 2025, through a two-way contract for difference with a reference price of €65/MWh based on monthly quotas of the total volume awarded to energy-intensive customers at the end of the allocation procedure, but introducing some significant provisions.

These include the Competitive Procedure, as defined below, for the allocation of volumes to be returned to the GSE and the regulation of the so-called Claw Back: the GSE's right to have the residual advantage corresponding to the lower of the present value of cash flows during the advance period and the difference, if positive, between the present value of cash flows during the advance period and the present value of cash flows during the return period, returned by the counterparty. 

The repayment period still lasts twenty years, but this is supplemented by a further period of up to 20 years during which the aforementioned repayment may take place.

The Contract and the related Addendum governing the advance period and the repayment period

The energy consumer (or aggregator) is required to sign a contract (corresponding to the previous Advance Contract) aimed at regulating its relationship with the GSE by the deadline of 31 January 2026 ("Contract").

This contract covers:

i. the regulation of the differential for the advance payment to the operator of electricity volumes and the related guarantees of origin;

ii. the obligation to build new generation capacity from renewable sources within forty months of signing the single contract;

iii. the obligation to return the advance electricity and related Guarantees of Origin;

iv. the obligation to return the residual benefit.

Except as provided for in certain cases of award following the Competitive Procedure, the new generation capacity must be operational no earlier than 30 April 2025 and in any case no later than forty months after the date of signing the Contract, without prejudice to any extension due to force majeure or in cases of delay in the conclusion of administrative procedures. In any case, the final deadline already set for 31 December 2030 remains unchanged.

The contractual obligations relating to the entry into operation of the new capacity and the return obligations may be transferred by the energy consumer (or aggregator), with the relative release, to the delegated third party by signing the so-called Addendum, even after the Competitive Procedure has been carried out and in any case within forty months of the signing of the Contract.

With regard to the adjustment of the differential during the return period, it should be noted that for each month of the return period, the GSE calculates the difference between the Transfer Price and the higher than zero Day-Ahead Market price, determined in the relevant transaction period and in the market area where the plant is located, in relation to the monthly energy to be returned. A floor of zero has been included for the calculation of the differential. In the event of negative prices, the producer will receive the transfer price from the GSE and therefore the previous provision stating that 'the adjustment is suspended in the relevant periods when zero or negative prices are recorded on the MGP' no longer applies.

Advance settlement of accounts relating to the advance period 

With regard to the payment of amounts relating to 2025, the GSE will make a single payment after the first invoice has been issued.

Guarantees of Origin cancelled by 31 March of year 'n' may be used to certify consumption for year 'n-1', but Guarantees of Origin recognised under the Contract that are cancelled by 30 April 2026 may be used to certify consumption for the year 2025.

The first guarantee relating to 2025 and 2026 must be provided by the energy-intensive consumer (or aggregator) for an amount calculated by the GSE on the basis of the amounts advanced with reference to the year 2025 and the estimate for 2026, and submitted by 28 February of the same year. 

Competitive Procedure

Within ninety days of the date of publication of the new Operating Rules and following the signing of the Contract by energy-intensive end customers or aggregators, the GSE will publish the notice for the competitive procedure referred to in Article 6-bis of the Energy Release 2.0 Decree, as amended by the Corrective Decree, in order to select the third parties who will assume the obligation to build new generation capacity from renewable sources that will enable the already known requirement of producing at least double the volumes advanced to energy-intensive end customers during the advance period to be met ("Competitive Procedure").

The GSE will launch the Competitive Procedure no less than fifteen days after the date of publication of the notice. The procedure will remain open for the following thirty days and the outcome will be published within forty-five days of its closure. 

The following entities may participate: (i) energy-intensive customers (or aggregators) who have signed the Contract (within the limits of the energy quota subject to advance payment); (ii) delegated third parties (within the limits of the energy quota covered by the Contract for which they have been delegated); (iii) third-party producers, energy-intensive customers (or aggregators) and delegates for an energy quota in addition to that covered by the Contract, who, in order to participate, meet the following requirements: a) availability of the licence to build and operate the plant and concessionaires; b) availability of a definitively accepted estimate for connection to the electricity grid and registration of the plant on Terna's GAUDI system validated by the grid operator; c) compliance of the plant with the performance requirements and environmental protection standards necessary to comply with the 'Do No Significant Harm' (DNSH) principle. 

Participants will submit bids for the premium they are willing to receive or pay for the creation of the new generation capacity required for access to the mechanism, it being understood that participants may therefore also offer negative premiums. It is also envisaged that energy-intensive users (or aggregators) and delegates, with reference to the volumes covered by the advance contract signed, may, while participating, avoid submitting a bid. In this case, for the purposes of ranking, the GSE will also consider these volumes, assuming that, with reference to them, a bid equal to the minimum bid allowed has been submitted.

Participation, in turn, may be treated in two different ways depending on the participant and the volume for which they submit a bid.

The so-called 'Cluster A' will include requests for participation submitted without making an offer by (i) energy-intensive users, for all or only a portion of the energy covered by the Contract; (ii) energy-intensive customers in aggregate form, for all or only a portion of the energy covered by the contract; (iii) delegates, for all or only a portion of the energy covered by the Contract. 

The so-called "Cluster B" will include requests for participation submitted with the intention of making an offer by: (i) energy-intensive customers, for all or only a portion of the energy covered by the Contract; (ii) energy-intensive customers, for the portion of energy exceeding the Contract; (iii) aggregators, for all or only a portion of the energy covered by the Contract; (iv) aggregators, for the portion of energy exceeding the Contract; (v) delegates for only the portion of energy exceeding the Contract, (vi) third-party producers without any quota limit. 

Ranking and conclusion of the Award Contract

The ranking list shall be published within forty-five days of the closing date of the Competitive Procedure. The following shall be awarded: (i) all requests for participation in Cluster A; (ii) all bids in Cluster B that are lower than or equal to the value of the last accepted bid. 

After the publication of the ranking, only the successful third-party producers, in addition to energy-intensive users (or aggregators) and delegates, will be required to sign the so called Award Contract, but only for the portion of energy exceeding the Contract. 

Commissioning of plants following the competitive procedure

For energy-intensive users (or aggregators) who remain obliged to produce and return the quantity of energy covered by the Contract, the capacity must become operational within forty months of the signing of the Contract.

The plants relating to the 'Cluster B' bids and owned by energy-intensive users (or aggregators) or delegates, both for the portion of energy exceeding the Contract, or for third parties, must enter into operation within 36 months of the publication of the Competitive Procedure ranking and in any case no later than 31 December 2030. 

Residual Advantage adjustment method 

No later than the nineteenth year from the start of the repayment period, the GSE calculates the value of the Residual Advantage. If positive, one of the following solutions may be adopted: 

i. immediate settlement of the amount;

ii. free transfer to the GSE of ownership of the plants and the areas on which they are located, subject to the presentation of a sworn appraisal; 

iii. extension of the contractual obligations until the Residual Advantage has been fully settled for a period not exceeding a further twenty years under a further two-way CfD.

The scenario and the possible competitive context between Energy Release and Fer X

Even in the scenario outlined by the new regulatory framework, the so-called Claw Back continues to be an element of uncertainty for producers, but it cannot be ruled out that this may prejudice the interest of all producers in concluding agreements with energy-intensive customers and aggregators.

Taking into account the rules relating to the Competitive Procedure and the possibility of transferring all responsibilities relating to the entry into operation of the new capacity directly to the delegate, the conditions could be created for a frenetic phase of negotiations aimed at concluding agreements between energy-intensive customers and aggregators on the one hand and producers on the other, to allow the former to exclude any risk and the latter to secure the volume to be returned, against the release of guarantees to the GSE instead of to energy-intensive users.

It remains to be seen whether producers will also be willing to give up a useful position in the transitional FER X ranking in order to access the benefits of the new version of Energy Release assessing the conditions under which it will be possible to obtain the return of the security deposit. 

Article written by Piero Viganò and Valentina Castelli. 

[1] For further information, please refer to our article Discounted energy price will be offered to Energy Intensive Companies under the MASE Energy Release Decree

In the context of a simplified judgment, the Court took the opportunity to clarify that, for the purposes of lodging an appeal before the administrative courts,  the publication of a decision in the Regional Official Bulletin does not deprive the previous individual notification of the same decision, guaranteed by digital communication pursuant to Article 47 of the Digital Administration Code and Article 14 bis of Law No. 241/1990, which is decisive for achieving “full knowledge” of the decision and, consequently, for the start of the time limit for challenging it. 

In the case in question, following the opposition to the hearing of the extraordinary appeal filed by the other party, the Court, thus moving on to the decision on the appeal in court, declared inadmissible the extraordinary appeal to the President of the Republic filed by the Municipality of Corropoli (TE), notified on 18 July 2025, for the annulment of the single authorisation issued by the Abruzzo Region for the construction and operation of a plant for the production of electricity from renewable sources and the related connection works. 

However, the decision containing the aforementioned single authorisation had been notified via certified email to the proponent and the Municipality of Corropoli (TE) on 3 March 2025, the date from which, according to the panel of judges, the appellant had full knowledge of the decision in question and, therefore, the starting date for the 120-day period provided for the appeal to the President of the Republic, pursuant to Article 9, paragraph 1, of Presidential Decree No. 1199 of 24 November 1971, according to which “the appeal must be lodged within 120 days of the date of notification or communication of the contested act or from when the interested party became fully aware of it”.

For the appellant body, therefore, the subsequent publication of the decision in the BURAT is irrelevant, not least in terms of postponing the starting date for the submission of the appeal to the President of the Republic for the annulment of the single authorisation: the Court therefore specifies that this publication does not supersede the previous certified email communication through which the Municipality of Corropoli (TE) had already been made aware of the harmful nature of the contested measure, as well as the reasons underlying its adoption.

The time limit for appealing, starting from the date of publication of the measure in the BUR, therefore applies only to entities or interested parties who have not already received notification of the measure itself. However, the principle set out in Article 41 of the Code of Administrative Procedure remains valid for all parties (public and private) who have received notification, according to which “the appeal must be notified, under penalty of forfeiture, to the public administration that issued the contested act [...] within the time limit provided for by law, starting from the notification, communication or full knowledge, or, for acts that do not require individual notification, from the day on which the publication deadline expired, if this is provided for by law or based on the law”.

Written by Giovanni Battista De Luca, Lorenzo Piscitelli and Elisa Tunno. 

With decision No. 7414 of 19 September 2025, the Council of State established important and innovative principles concerning plants accessing incentives through registration in the GSE electronic register (in this case, Ministerial Decree of 6 July 2012). 

In particular, the two main novelties introduced by the aforementioned decision are: 

1. the irrelevance of the material error related to the indication of the plant’s capacity as a priority criterion where such an error does not result in any undue advantage for the operator and, indeed, may prove disadvantages for its ranking position for having indicated a capacity higher than that authorised; 

2. the applicability of tariff reduction instead of revocation for plants included in the ranking even in the absence of the execution of the GSE Agreement.

In this case, the applicant Municipality, in its application for registration under the incentive scheme provided by the Ministerial Decree of 6 July 2012, due to a mere typing error, indicated a higher capacity than that resulting from the concession title (namely, 226 kW instead of 152 kW). 

For this reason, following the checks carried out after the inclusion of the plant in an eligible position in the ranking, the GSE, having found a discrepancy between the capacity declared during registration (226 kW) and the authorised nominal capacity (152 kW), declared the revocation of the incentives for having provided untruthful information concerning the priority criterion laid down in Article 10 paragraph 3 letter g) of the Ministerial Decree of 6 July 2012, relating to the ‘lower capacity of plants’. 

According to the judges of the Council of State, the error made by the operator in indicating the actual capacity of the plant (226 kW instead of 152 kW) did not entail any violation of the priority criterion set out in Article 10 paragraph 3 letter g) of the Ministerial Decree of 6 July 2012, nor any undue advantage for the Municipality in the ranking, since the indication of a higher capacity than that actually authorised disadvantaged the entity in its ranking position (as lower capacity is one of the hierarchical criteria to be followed in drawing up the ranking), to the point that it moved from position No. 111 (which it would have obtained by indicating the correct capacity) to No. 135. 

In essence, the administrative judges, adopting a substantive approach, held that there was no relevant violation by the Municipality, which had not gained any competitive advantage as a result of a material error in typing the capacity, since ‘the error committed was not decisive in obtaining any concrete advantage over other competitors and must reasonably be regarded as the result of an involuntary occurrence’. 

In the same decision, the Court also addressed the issue of the interpretation of Article 42 paragraph 3 of Legislative Decree No. 28/2011, which provides that ‘in order to safeguard the production of energy from renewable sources, thermal energy and the energy savings resulting from efficiency measures, for plants which at the time of verification of the violation receive incentives, the GSE shall apply a reduction of the incentive between 10 and 50 per cent depending on the seriousness of the violation’. 

In this case, the Municipality, following its admission to the ranking list, set the investment in order to activate the plant, whereas it was then subject to the measure by which the GSE imposed the forfeiture of incentives. 

For the Council of State, there is no doubt that the plant falls within the scope of Article 42 paragraph 3 of Legislative Decree No. 28/2011, which governs ‘the fate of plants receiving incentives at the time of verification of the violation, without requiring that for the application of the reduction the agreement must already have been executed’, and therefore ‘a different interpretation intended to add a factual element not provided by the legislator, besides being praeter legem, would arbitrarily and unreasonably prejudice the purposes of safeguarding the production of energy from renewable sources, expressly referred to by Article 42 paragraph 3’. 

Indeed, based on the literal wording of the provision, the administrative judges held that the GSE should have applied a reduction of the incentive instead of revocation, since excluding the reduction in favour of revocation would prejudice the purposes of safeguarding the production of energy from renewable sources referred to in Article 42 paragraph 3 of Legislative Decree No. 28/2011, considering irrelevant the actual receipt of the incentives but focusing instead on conduct that induced the operator to believe the plant was eligible to receive them. 

These are highly relevant principles that protect the operator’s good faith, who possesses all the necessary requirements to access the incentives and who, due to a mere material error, has not gained any competitive advantage, excluding the applicability of the more severe sanction of revocation in favour of a reduction of the incentive, even for those who have been admitted to an eligible position in the ranking but have not yet executed the related agreement with the GSE.

The ruling was handed down in the proceedings brought by following the dismissal by the Province of Mantua of the application for the issue of the single regional authorization (PAUR), pursuant to Article 27 bis of Legislative Decree No. 152/2006, for the construction in the Municipality of San Giorgio Bigarello (MN) of an agrivoltaic plant with a power equal to 13.56 MWp and the related connection works.

In the aforementioned ruling, the Court deemed the provision in Annex A, paragraph 6, letter D) of the Resolution to be unlawful, as it introduced “restrictions not provided for by national legislation, limiting its scope of application in the absence of any legitimizing conditions contemplated by the relevant regulations and therefore in conflict with them”. 

It should be noted, in fact, that the contested provision of the Resolution stipulated that, first of all, “the agricultural land (all cadastral parcels) on which the agrivoltaic plant will be installed must be managed by an agricultural enterprise with a valid title (ownership, lease, loan for use) for the entire period of operation of the agrivoltaic plant itself”, as well as stipulating that “the following subjects may apply for obtaining the permit:

1. individual or associated agricultural enterprises with a chamber of commerce certificate, which carry out the project in order to contain their production costs. The requirement is verified through the turnover of the energy produced (which is considered a related activity, i.e., complementary and ancillary to the main agricultural production) which must not exceed the value of agricultural production, in order to maintain the status of agricultural entrepreneur, in compliance with current legislation on the definition of agricultural entrepreneurs and agricultural activities (Legislative Decree No. 228 of 18 May 2001 - Guidance and modernization of the agricultural sector);

2. corporate joint ventures with electricity producers to which the farm or branch of the farm is transferred by the same agricultural entrepreneurs who are responsible for the management of the business, except for the technical aspects of the operation of the plant and the sale of energy”.

None of this, as correctly pointed out by the Court (referring to a recent ruling by the Lombardy Regional Administrative Court, Milan, of 20 February 2025, No. 1825) , is required by national legislation, which does not introduce any subjective requirements for the applicant with regard to the legal form or purpose of the enterprise, nor does it impose particular models of aggregation/joint ventures between economic operators. Nor is the introduction of specific subjective requirements introduced by Ministerial Decree no. 436 of 22 December 2023 (the so-called “Agrivoltaic Decree”) relevant, as these are provided for “solely for the purposes of accessing incentives for the construction of agrivoltaic systems” and are, in any case, less burdensome than the subjective requirements set out in the Resolution. The same considerations, as highlighted by the Court, also apply to the subjective requirements set out in the Guidelines published by MASE on 27 June 2022, which are also relevant “solely as bonus factors or priority selection criteria”, concluding that no additional subjective requirements are prescribed for the purposes of applying for authorizations for the construction of the plant.

In conclusion, the ruling of the Lombardy Regional Administrative Court is part of a case law which, on a case-by-case basis, identifies — and hopefully annuls — the limitations, obstacles, and constraints that the Regions unreasonably intend to introduce with regard to the installation of RES plants and, as in the case at stake, with regard to the construction of agrivoltaic plants in agricultural areas.

Written by Giovanni Battista De Luca, Ernesto Rossi Scarpa Gregorj and Elisa Tunno.  

The main reference is to Edge DCs (ranging from 400 to 1,800 sqm with energy consumption under 5MW), which differ from Medium DCs (2,000 to 9,000 sqm with consumption over 5MW) and Hyperscale DCs (over 9,000 sqm with consumption exceeding 100MW).

In this context, recent weeks have seen significant developments that may impact the future deployment of DCs across the country. In particular:

• the introduction of a “new” single authorization procedure for the construction of DCs, as laid out in the draft of the so-called "Energy Decree", circulated on 24 July and expected to enter into force by the end of August;

• the release of a strategic plan for attracting foreign industrial investments in DCs by the Ministry of Enterprises and Made in Italy (MIMIT) on 16 July, currently under public consultation until 16 August (the “Strategy”).

The Single Authorization Procedure for DCs

To expedite the administrative processes required to obtain authorizations for operating DCs, Article 3 of the Energy Decree introduces a single permitting procedure.

Following the example of recent simplification measures for renewable energy plants, a similar “single authorization” or PAUR is now envisaged for DCs, aimed at streamlining and accelerating the acquisition of all permits and approvals necessary for construction and operation.

Specifically, Article 3 provides that:

• authorization for the construction or expansion of DCs (corporate, co-located, co-hosted, or campus-based) and their connected user networks (regardless of voltage) will be granted through a single permitting process by the authority responsible for issuing the Integrated Environmental Authorization. For projects up to 300 MW, this authority is the relevant Region or delegated Province; for projects exceeding that threshold, it is the Ministry of the Environment and Energy Security (MASE);

• in accordance with the principle of subsidiarity, the role of competent authority at the regional or provincial level cannot be delegated to sub-provincial bodies;

• the application for the single authorization must include all documentation and technical project materials required under applicable sector legislation, including – where necessary – authorizations for environmental impact assessments, landscape or cultural heritage clearance, water use permits, and air emissions;

• the authorization must be granted following a formal conference of services, and the process must be completed within 10 months from verification of complete documentation. Extensions are allowed only under exceptional circumstances and for no more than three months;

• if the project is subject to EIA screening and a full EIA is required, the related application must be submitted within 90 days, after which the request is deemed withdrawn;

• for DCs deemed of national strategic interest by the Council of Ministers, a special government commissioner will issue the authorization in accordance with the provisions of Decree Law 104/2023;

• for DCs that, as of the decree’s entry into force, have already obtained the necessary permits (including environmental approvals) but not the authorization for grid connection works, such authorization must be issued by the competent Region. This applies only to grid works above 220 kV, excluding lower-voltage infrastructure.

Mechanisms for Attracting New Investments

With its Strategy, MIMIT has launched a sectoral analysis to identify Italy’s strengths and weaknesses and implement all necessary measures to attract foreign investment, accelerate installation procedures, and create an attractive ecosystem for potential stakeholders.

The main areas of action include:

• defining the industrial classification of DCs, beginning with the introduction of a specific ATECO code (63.10.10) from 1 January 2025, under the broader category for “IT infrastructure, data processing, hosting and related activities”, with a dedicated ATECO code expected in 2027;

• introducing a specific land-use designation for DCs;

• simplifying the authorization processes (presumably through the Energy Decree);

• identifying the most suitable development areas, leveraging the National Federated Infrastructure Information System (SINFI) through multi-layer georeferencing of submarine landings, power grids, industrial brownfields, cabling, and renewable sources.

The Strategy is currently under public consultation, and all interested parties may submit proposals or comments by 16 August.

In parallel, it is essential to promote and incentivize the development of energy networks and renewable energy sources, in line with the expected growth in energy demand. Consideration should be given to a formal classification of DCs as energy-intensive consumers, subject to green conditionalities but also eligible for system charge reductions and lower energy costs.

This article is written by Piero Viganò, Giovanni Battista De Luca, Lorenzo Piscitelli, Ernesto Rossi Scarpa Gregorj and Paola Putignano. 

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Based on currently available information, the Decree is expected to be presented to the Council of Ministers at the end of August, following the summer break.

The Current Draft of the Decree

For the purposes relevant, the Decree propose the introduction of Article 10-bis into Legislative Decree No. 190/2024 (the so-called TU FER), which aims to regulate grid connection solutions for: (i) renewable energy plants (excluding offshore wind farms); and (ii) storage systems (BESS and pumped hydro storage).

According to the current draft:

• ARERA is required to issue, within 180 days from the Decree’s entry into force, the technical and economic terms and conditions for the connection of the aforementioned types of plants. Specifically, Terna on one hand, and local distribution system operators on the other, must allocate both available and surplus grid capacity through transparent and non-discriminatory procedures;

• As of the date ARERA issues the above regulations, connection solutions for unauthorized renewable energy and storage projects (again, excluding offshore wind) will lose their validity, unless the final design of the grid works has already been approved by Terna or the relevant DSO;

• The loss of effectiveness of a connection solution cannot be used as grounds to suspend ongoing environmental or permitting procedures related to the project;

• By way of derogation, connection solutions remain valid for projects that have already obtained an EIA screening determination (so-called “VIA Screening”) or a full Environmental Impact Assessment (EIA) approval, provided such approvals also cover the associated grid works;

• Even if a connection solution remains valid under the above derogation, definitive grid capacity allocation still requires the project to obtain full authorization for construction and operation.

Preliminary Observations

The draft Decree—excluding offshore installations—appears to introduce a fundamentally revised regulatory framework for grid connection to the National Transmission Network (RTN), likely to have significant short-term impacts on both ongoing and soon-to-be-launched initiatives.

Should the current provisions remain unchanged, it is reasonable to expect a rush in the coming months among more advanced projects to obtain VIA Screening, full EIA approval, or final grid work validations, in order to avoid the expiration of their STMG.

Notably, the Decree’s derogation provision may prove discriminatory, as it allows certain projects - subject to environmental procedures due to their characteristics - to “preserve” their STMG despite lacking validation of their final grid design.

Additional uncertainties pertain to the nature and implementation of the aforementioned “transparent and non-discriminatory” procedures. In principle, and in line with the obligation to grant third-party access to the RTN, such procedures should not be “competitive” in the traditional sense. Doubts also arise regarding how permitting authorities will handle projects whose STMGs have expired, given that both the simplified procedure (PAS) and the single authorization process typically cover both generation plants and associated grid infrastructure.

It is also clear that it will become even more crucial to speed up and streamline the authorisation procedures related to the development of renewables, given that the projects that obtain the authorisation more quickly will be the ones that will be the first to obtain definitive network capacity, to the detriment of unauthorised projects.

Even projects nearing the end of their permitting process face increased risks of losing allocated capacity due to potential saturation of the relevant micro-zone. This could result in higher connection costs—for example, if the previously identified substation becomes fully saturated and a more distant, costlier alternative must be considered.

This scenario will likely lead to numerous legal litigations from affected operators, who may contest the sudden loss of their previously secured grid capacity rights.

In any case, a complete and conclusive understanding of the new regulatory framework - and market reactions - will only be possible once the Decree enters into force and ARERA issues its implementing measures (expected by February 2026, assuming the Decree is enacted by the end of this month).

This article, written by Piero Viganò, Giovanni Battista De Luca, Lorenzo Piscitelli and Ernesto Rossi Scarpa Gregorj, is the third in a series of articles published on the topic of virtual grid saturation. The previous ones are:

Virtual grid saturation: micro-zones and transparent procedures. Potential impacts on current and future development initiatives

Italy, electricity grid under pressure: the challenge of saturation between input and output

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The Court, after preliminarily distinguishing biomass plants from other renewable energy installations[1] – which generally entail a lower environmental impact – found that although the Calabrian law does not impose a general ban on the construction of renewable energy plants throughout the region[2], it nevertheless violates Article 117, paragraph 3, of the Constitution. This article pertains to the matter of “production, transportation, and national distribution of energy” an area of concurrent legislative competence between the State (which sets the fundamental principles) and the Regions (which legislate in compliance with those principles)[3].

Indeed, while the new national regulatory framework assigns Regions a key role in identifying suitable and unsuitable areas for the installation of RES plants[4], the Court held that such declarations of unsuitability may not amount to a blanket, a priori prohibition. Rather, they merely indicate areas where installation may still be authorized, provided that an adequate assessment and strengthened justification are provided.

According to the Constitutional Court, any broader interpretation of the Regions’ power would directly conflict with the imperative to develop renewable energy sources, an objective that is crucial to environmental protection and to safeguarding the interests of future generations.

This is the first time the Court has ruled based on the principles set out in the Ministerial Decree on Suitable Areas (DM of 21 June 2024), issued pursuant to Article 20, paragraph 1, of Legislative Decree no. 199 of 2021. The decree established uniform principles and criteria for regional identification of areas suitable and unsuitable for RES plants, with the important clarification that unsuitability can never equate to an absolute and a priori prohibition.

In essence, while the new legislation enhances regional autonomy, it also aims to prevent unjustified restrictions - especially where there are no compelling reasons related to territorial or ecosystem preservation - which would run counter to the urgent need to develop renewable energy sources. This objective is of “crucial importance” precisely with regard to the “vital aim of environmental protection, also in the interest of future generations” (see decision no. 216 of 2022).

All this, while awaiting the Court’s decision on the Sardinian Regional Law (L.R. no. 20/2024), which, it is worth recalling, has effectively prohibited the installation of renewable energy plants on 99% of Sardinia's territory.

Written by Giovanni Battista De Luca, Paola Putignano and Ernesto Rossi Scarpa Gregorj.

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[1] The environmental issues associated with the installation of biomass plants, as highlighted in the National Integrated Energy and Climate Plan (PNIEC), which, on page 58, provides that their installation should be “guided in such a way as to favour high environmental quality and high efficiency plants, also considering the possibility of introducing restrictions on new installations in areas characterised by critical air quality situations”.

[2] The law only applies to biomass-fuelled plants in contexts where the need to protect the natural habitat is particularly strong – i.e. national and regional parks – and sets a power limit of 10 MW thermal.

[3] For the sake of completeness, it should be noted that the Constitutional Court also declared Article 14(2) of the regional law unconstitutional for violation of Articles 3 and 41 of the Constitution. According to the Court, this provision has the character of a legislative measure, since it refers solely to the Mercure power plant (the only biomass plant currently located in a national or regional park in Calabria) and is therefore intended to affect a single legal position, with the regional legislator intervening in matters normally entrusted to the administrative authority.

[4] The previous legislation allowed the identification of unsuitable areas exclusively “through a specific investigation” and, therefore, not by law but following an administrative procedure (paragraph 17 of the Guidelines referred to in the Ministerial Decree of 10 September 2010).

• provided specific guidance to the Gestore dei Mercati Energetici S.p.A. (“GME”) for the establishment and launch of an organized market dedicated to the negotiation of PPAs (“MPPA”);

• defined the criteria and conditions under which the Gestore dei Servizi Energetici S.p.A. (“GSE”) shall act as provider of last resort for PPAs negotiated on the MPPA.

The European and National Regulatory Context

The Decree is part of an evolving European regulatory framework aimed at fostering investment in renewable energy and ensuring price stability. Starting with Regulation (EU) 2024/1747, the European Union has encouraged Member States to remove existing constraints to the negotiation and execution of PPAs, promoting, among other measures, the use of security in support of market participants, with specific reference to the small and medium-sized enterprises and entities with limited access to energy markets.

At the national level, the Decree aligns with the objectives set out in the National Integrated Energy and Climate Plan (PNIEC) and Mission 7 of the REPowerEU initiative under Italy’s National Recovery and Resilience Plan (PNRR). These policies seek to reduce dependency on fossil fuels, accelerate the development of renewable energy sources and support the promotion of long-term agreements (5–10 year) between renewable energy producers and buyers.

More specifically, the primary objective of the MPPA and of GSE’s role as provider of last resort is to lower key barriers to the access and development of PPAs, and, more in details, the high financial cost of the security required to manage the risk associated with the relevant PPA’s position of each Party.

In recent weeks, GME and GSE have launched two public consultations concerning, respectively: (i) the proposed operational model for the MPPA; and (ii) the proposed operational rules governing the qualification of participants in the MPPA and the implementation of GSE’s last resort guarantee mechanism (the “Operational Rules”), as set forth in Article 8 of the Decree. The GME consultation closed on 24 July 2025, while the deadline for the GSE consultation is set for 4 August 2025.

The MPPA structure pursuant to the Decree and the GME consultation document

The MPPA will be a new trading platform forming part of the broader electricity market managed by GME (the “Electricity Market”), and will be functionally integrated with the forward market (the “MTE”)[1].

Accordingly, the Decree provides that the products eligible for trading on the MPPA must have “standardized characteristics that are similar to, or otherwise compatible with, those of the contracts traded on the MTE.”

Indeed, pursuant to the Decree and the consultation documents of GME and GSE, only agreements related to baseload and peakload profile will be eligible for trading on the MPPA, as actually provided on the MTE.

Furthermore, contracts eligible for trading on the MPPA must:

• relate to volumes of energy that have not already been subject to previously executed contracts and that are not covered by other incentive schemes and/or services provided by GSE (including with reference to the corresponding share of the facility’s capacity);

• have a duration of no less than 5 and no more than 10 years.

It is also envisaged that PPAs may be negotiated directly on the MPPA through an auction-based mechanism with a mutual acceptance process, or outside the market (“OTC Clearing”), provided that such OTC PPAs are compatible with the products tradable on the MPPA.

Participation in the MPPA will be on a voluntary basis; however, access and participation will be subject to both subjective and objective eligibility requirements.

In addition to the objective requirements related to the plants, subjective requirements are imposed both by GME, with reference to participation in the Electricity Market, and by GSE, concerning its role assumed within the MPPA.

Indeed, all participants in the MPPA, in addition to being companies registered with the competent Chamber of Commerce and having a credit rating not lower than the so-called investment grade, must:

1. qualify as market operators pursuant to the Electricity Market regulations (GME);

2. if sellers, be dispatching users of one or more renewable energy production plants that are in operation or authorized (GSE);

3. if buyers, be dispatching users of one or more withdrawal points as defined in the Integrated Text on Dispatching (GSE).

GME will act as the central counterparty for participants on the MPPA, while GSE will intervene in the event of default by one of the parties of the PPA to ensure the continuity of the relevant agreement, upon decision of the non-defaulting party, as further detailed below.

The role of GSE as provider of last resort pursuant to the Decree and the GSE consultation document

Any entity meeting the requirements set forth in the GSE Operational Rules shall enter into an adhesion contract with GSE in order to obtain the guarantee of last resort by the GSE.

In the event that a party is in breach of its obligations towards GME pursuant to the Electricity Market regulations or towards GSE pursuant to the adhesion contract[2], the non-defaulting party may decide either to continue with the PPA and benefit from GSE’s last resort service or to terminate the the PPA negotiated on the MPPA and withdraw from the adhesion contract signed with GSE.

Should the non-defaulting party decide to activate GSE’s guarantee, GSE shall step into the position of the defaulting party for the remaining duration of the PPA and in relation to the volumes are not already subject to delivery on the MCT.

Furthermore, in the event of seller default, GSE, by virtue of a mandate granted by the seller, shall assume the role of dispatching user for injection of the plant(s) subject to the PPA.

Upon GSE’s takeover, the contractual positions of the parties shall be settled by applying the so-called “reserve price” (Prezzo di riserva), as determined pursuant to the Operational Rules, rather than the contractual price previously agreed upon by the Parties in the PPA.

A strategic change?

The requirements and burdens (including professional and organizational obligations) associated with participation in the Electricity Market, and, consequently, in the MPPA, may represent a constraint for special purpose vehicles that typically own the production plants, as well as for energy-intensive companies that participate directly into the Market.

However, according to the GSE consultation document, it appears that both generators and the energy intensive companies may participate in the MPPA through their designated trader, to whom they have granted the mandate for dispatching.

This would allow such limitations to be overcome by enabling participation through qualified users to whom multiple producers or customers may confer dispatching mandates, similarly to what currently occurs in the dispatching services market managed by Terna and with reference to the Capacity Market. Nonetheless, in such a context, the potential risks arising from aggregation will need to be carefully assessed.

Similar considerations may apply with respect to the participation of energy intensive companies in the MPPA.

The Reserve Price has also raised a number of concerns, as it may not allow the parties to maintain the same cash flow originally envisaged at the time of PPA execution.

It will therefore be necessary to await the publication of the results of the GSE and GME consultations to determine whether the concerns and suggestions raised by market participants will be taken into account in the design of the MPPA and in the structuring of GSE’s role as provider of last resort.

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[1] In particular, the MTE is expected to be divided into two segments: the Forward Contracts Market (the “MCT”), where the contracts currently traded on the MTE will continue to be negotiated, and the MPPA.

[2] For example, in case of breach of the obligations under the adhesion contract.

Particularly, with this ruling, the Regional Administrative Court clarified that the primary legislation – represented, in this case, by Article 20 of Legislative Decree 199/2021 on suitable areas – as it comes from a legislative source, makes any landscape restrictions regulated by territorial plans and NTA requirements “yielding”.

As a result, it was established that, where the relevant project falls within an area suitable ex lege, the PAS cannot be denied on the basis of pre-existing territorial constraints without taking into account the national legislation.

In the case at stake, the Municipality of Larino had disregarded the national legislative context (in particular, Article 20, paragraph 8, c-ter, nos. 1 and 2) by considering a photovoltaic project with a capacity of approximately 5 MW incompatible with the Territorial Landscape Plan (denying the relevant PAS) despite the fact that it fell within a suitable area.

In this regard, the Molise Regional Administrative Court pointed out that the regional and municipal regulations referred to in the contested measures must be considered superseded by both the state regulations on suitable areas and the regional regulations (i.e., Regional Council Decree No. 158/2023, which adapted the location criteria to national provisions).

It was therefore reiterated that regional or local provisions imposing restrictions or requirements on the installation of RES plants may remain valid, pending the issuance of implementing decrees pursuant to Article 20 of Legislative Decree 199/2021, exclusively for those parts that do not conflict with national legislation (on this point, see also the note from the Ministry of the Environment and Energy Security, ref. no. 124474 of July 28, 2023, provided in response to a request for clarification on a similar case).

The administrative judges also focused on two further aspects of non-negligible importance in the context of the development of renewable projects, emphasizing that:

• in the context of authorization processes, local authorities cannot simply accept the negative opinions of the Superintendency uncritically, especially if the projects fall within a suitable area and, therefore, pursuant to Article 22 of Legislative Decree 199/2021, the latter are ‘non-binding’;

• a reasonable assessment of the ‘cumulative effect’ on the landscape can only take into account, for the purposes of assessing the real perceived impact of a photovoltaic project, neighboring plants that are already existing and/or approved, and not those still in the authorization phase.

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Looking in detail at the evolution of the market in the past year and in the first quarter of 2025, it was certainly possible to see that the ongoing transition process is now no longer only about generating energy from renewable sources and reducing emissions, but more generically about diversifying generation sources and prospectively modernizing grid infrastructure, given the growing need for flexibility, resulting from the diversification of non-programmable generation sources-along with the integration of digital infrastructure into the grids, which is also likely to play a significant role in improving the grids management.

New directions for growth: storage and biomethane.

In this general framework, alongside major operations in the electricity and methane and LNG sectors, the attention of investors has therefore gradually turned to the electrochemical storage market (storage, BESS) and the development and/or conversion of projects dedicated to the production of biomethane from organic waste and agricultural wastes/by-products, the latter supported of the MASE Decree September 15, 2022, which has been able to benefit from the European resources made available by the National Recovery and Resilience Plan, while the approaching of the related terms of entry into operation is reducing the prospects of return on investment and therefore the valorizations.

In the first case, an element supporting investment was the favorable regulatory framework that introduced the new mechanism "MACSE" (Mechanism for the Supply of Electric Storage Capacity) to regulate the supply of storage capacity by Terna whose first auction will be held on September 30, 2025, but sources of cash flow could also be constituted by off take contracts, tolling agreements as well as Capacity Market also combined with each other as well as with a merchant approach thanks to the expected spread of optimization agrements. 

At the same time, in 2024 biomethane emerged as a strategic carrier thanks to the economic support offered by National Recovery and Resilience Plan, which provided about 1.7 billion euros to support renewable gas production, triggering investments on numerous industrial-scale projects, supported by incentive tariffs-the first two of which expire at the very end of 2024 in the first quarter priority access to the grid. 

Last June 7, the amount of resources was, moreover, increased thanks to the Commission's approval of the Italian request to proceed with the reallocation of 640 million euros from the measure originally dedicated to hydrogen in hard-to-abate industrial sectors toward the development of the biomethane market, with an expiration date of June 2026. This is a significant measure which may not, however, achieve its goals in view of the challenging deadline for the commissioning of the plants. 

When determining the cash flows of investments in biomethane production facilities, it should also be taken into account that Article 5-bis of DL Agricoltura introduced extension of the definition of self-consumed biomethane also to biomethane consumed, at a site other than the production site, by an end customer active in the so-called "hard to abate" sectors who has signed with the producer a special contract of purchase and sale of biomethane, i.e., a so-called  corporate BPA or CBPA, and that on May 16, 2025, the GSE published the new DM Biomethane application rules, which better detail the main terms and conditions of CBPAs, the main objective requirements to be met by the relevant biomethane plant from time to time, and the subjective requirements of the parties involved in signing a CBPA. These regulations have created the preconditions for a growing market that could result in a different valuation of assets in M&A transactions involving such assets.

The regulatory framework and additional tools to support renewable  energy 

The current regulatory framework, although complex, offers significant opportunities for industry players. Among the most relevant instruments are the FER X Transitional mechanism for incentivizing mature RES solar (wind, hydro and residual gas plants) and the expected definitive FER X, thus fostering the bankability of more projects hitherto based substantially only on poor access to FER 1 in addition to Long Term Trader PPAs and physical and virtual Long Term Corporate PPAs meeting specific requirements.

Regarding RES 2 - which aims to support the realization of 4.6 GW in total between 2024 and 2028 - just at the beginning of 2025 the operating rules were published disciplining the competitive procedures that will determine its allocation to vary between €100/MWh and €300/MWh depending on the technology and power and an obvious favorable regime for offshore wind with 3.8 GW. However, the great anticipation for the launch of tenders dedicated to off-shore wind is likely to persist pending an adequate number of projects that can participate in truly competitive auctions.

On the other hand, the Transitional FER X - whose approval decree dates back to last February - allocated 9.7 billion euros to a temporary mechanism designed to promote the construction of new plants whose notice will be published on July 14, 2025, as stated by GSE's head of regulatory affairs Davide Valenzano at a conference held at ADVANT Nctm's Milan office. This pending the definitive FER-X mechanism that is expected to be approved by the fall of 2025 and encourage the construction of additional plants for the period 2026 - 2029.

Equally focused on the mechanism of Contracts for Difference (CfDs) is the so-called Energy Release 2.0 mechanism, introduced by Decree Law No. 11 of December 9, 2023, as subsequently amended, for which we remain awaiting the definition of the rules at the outcome of the pending discussions between MASE and the European Commission 

Moreover, the aforementioned measures are part of a general regulatory framework reorganized by the Consolidated Text on Renewables, also adopted last year-which, on the input of European legislation, finally brought procedural simplifications and rationalization in the field of authorizations, simplifying processes and clarifying interpretative uncertainties, and for which further developments are awaited that will be included in the corrective decree expected by the end of the year.

Compared to forecasts, Italy will continue to be an attractive market for traditional and infrastructure fund investments due in part to the bankability of projects supported by incentive schemes and the significant number of route-to-markers made available by the MASE.

This attractiveness will also affect sectors serving new installations such as EPC Contractors and O&M Operators in addition to ESCOs and operators generically active in energy efficiency, but market fragmentation appears to be an obstacle.

Risks related to virtual grid saturation 

Given the early stage status of many RES plant development initiatives for which the capacity of grid has been booked (and the related project not yet validated), it is likely that many of these projects will never be implemented. 

In this context, in recent months the MASE and Terna have initiated the preparation of strategies to avert potential risks of virtual grid congestion related to the considerable amount of connection requests related to these embryonic projects. 

By the end of the year, therefore, an almost revolutionized grid connection regulatory framework compared to the current one is expected to be approved, which could have a major impact on current and future investments in the renewables sector.

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Among these, data centres represent the focus of the new pressure on the grid. According to industry estimates, by 2030, Lombardyalone – and in particular the Milan metropolitan area – could absorb several gigawatts of additional power to power cloud computing, artificial intelligence and advanced digital services. Such concentrated increases in demand risk exceeding the available withdrawal capacity in primary substations and high-voltage backbones.

Data centres, which are central to cloud computing, artificial intelligence, financial services and telecommunications, are multiplying in the Milan metropolitan area, attracted by the quality of the infrastructure, connectivity and proximity to major ICT operators. But this development comes at a significant energy cost.

The phenomenon is already emerging in assessments by Terna and local distribution companies, which are detecting bottlenecks and connection requests that exceed installed technical capacity. Unlike traditional power plants or industrial facilities of the past, data centres require constant, stable and high-intensity power, often with demands in the order of hundreds of megawatts per site.

At the same time, electricity demand will be amplified by the decarbonisation of consumption, with the electrification of sectors such as transport, heating and industrial processes. The result is a scenario in which the grid will not only have to accommodate more and more distributed renewable sources, but also distribute energy in a widespread and reliable manner to new demand centres, often located in areas already densely populated with loads.

This scenario makes urgent infrastructure investment, the upgrading of transmission and distribution networks, the adoption of digital solutions for the intelligent management of energy flows and planning consistent with urban and industrial development plans. The balance between electricity supply and demand is no longer just a question of production, but increasingly of the absorption capacity and resilience of the grid.

According to current information, in this context, Terna has considered a mechanism similar to the so-called “Open Season” mechanism, intended for feed-in requests, also for withdrawal requests from new data centres. In particular, during the Open Season period, potential withdrawal users will have to express their interest and commitment to use future capacity. This would not, therefore, be a real auction, but priority would be given to those who first obtain authorisation.

* This article is the second in a series of articles published on virtual network saturation. The first can be found at this address.

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We discussed this mechanism and its implications for the national electricity system at a conference organized by ADVANT Nctm's Energy & Infrastructure Department at its Milan headquarters on June 18, 2025 - attended by Mr .Federico Boschi head of the Energy Department of MASE and Mr. Davide Valenzano, head of regulatory affairs at GSE, as well as Tommaso Barbetti of Elemens - dedicated to the new Market Design and Route To Market alternatives available to producers from RES.

1. Nature and legal structure of the ERF Z

FER Z differs from previous models (such as FER X) in its decentralized architecture. Whereas in the FER X system there is a "pay-as-produced" approach between the state and the producer, FER Z introduces a contractual disintermediation between production asset and incentive, enhancing the role of aggregators, such as traders and utilities.

These entities will enter into a Contract for Difference (CfD) with the Gestore dei Servizi Energetici (GSE) based on predefined energy delivery profiles (e.g., baseload or peakload), and at the same time will have to procure energy from a heterogeneous portfolio of facilities, at least 70/80% of which will be from newly developed RES (solar, wind, hydro, and storage) to meet these obligations.

In turn, aggregators will have to stipulate: 

1. Virtual PPAs (CfDs) with the various producers that make up the aforementioned portfolio and who are now entities that would participate directly in FER X;

2. Storage availability purchase contracts or MACSE time-shifting contracts,

in order to compose and fulfill the profile promised in favor of the GSE.

Ultimately, it is a virtual baseload or peakload corporate PPA where the GSE has the role of the offtaking corporate.

2. Legal profiles and critical regulatory issues

FER Z involves greater contractual complexities and operational risk, as it requires the aggregator not only to ensure continuity of supply according to hourly profiles, but also to actively manage the production portfolio and the economic balance between CfD and market purchases.

From a legal point of view, this is a hybrid incentive system that incorporates elements typical of Corporate PPAs and Terna's capacity market. The incentive is no longer linked to mere production, but to compliance with a theoretical production profile, which will have to be guaranteed over a defined time horizon (likely annual).

As stated by Dr. Boschi, the European Commission has, for the time being, expressed reservations about the technological efficiency and compatibility of FER Z with the EU State Aid Guidelines, as well as the effectiveness of the mechanism in relation to the planned maintenance aspects of the facilities, an issue that is also relevant to FER X.

3. Market implications and regulatory perspectives

From an energy law perspective, FER Z represents a step toward greater competitive integration of renewables in energy markets. It is expected that this scheme can contribute about 5 GW of baseload, with an estimated required installed capacity of up to 20 GW.

In operational terms, a public consultation (which has not yet started) is planned and the first auctions will start no earlier than 2026, with a potential duration until 2029. The system will be modulated on the basis of complementarity with other instruments (FER X and PPAs) to avoid overlap or distortions, with the understanding that the various mechanisms/instruments will have to coexist

The term "BPA" (biomethane purchase agreement) refers to the category of long-term contracts having as their object the supply of a certain volume of biomethane produced by a generation plant - under development and, therefore, to be realized, or already realized - to a purchasing party. The purchaser may be, alternatively, a "trader" or a final customer, as of the effective date of Law No. 101/2024, which converted Decree-Law No. 64/2024 ("DL Agricoltura"). In particular, Article 5-bis of DL Agricoltura provides for the extension of the definition of self-consumed biomethane also to biomethane consumed, at a site other than that of production, by an end customer active in the so-called "hard to abate" sectors who has signed with the producer a special contract for the purchase and sale of biomethane, i.e., a so-called corporate BPA or CBPA. 

On May 16, 2025, the GSE published the new application rules ("Application Rules") under Article 12 of the MASE Decree of September 15, 2022 ("Biomethane DM"), which better details the main terms and conditions of CBPAs, the main objective requirements to be met by the relevant biomethane plant from time to time and the subjective requirements of the parties involved in signing a CBPA.

2. Characteristics of the Plant

With reference to the requirements for the facilities underlying a CBPA:

• the plant must produce biomethane from the anaerobic digestion of biomass from the performance of agricultural, forestry, livestock, food and agro-industrial activities, i.e., it must be a so-called agricultural plant;

• the plant shall be eligible for the incentive tariff under the Biomethane DM.

3. End-customer characteristics

With reference, on the other hand, to the subjective requirements relating to the parties to a CBPA, in the case where the plant underlying the CBPA is connected to a public network, the Application Rules have specified that the end customer must be primarily active in a sector identified as "Hard to Abate," which includes (by way of example) cement factories, steel mills, paper mills, glass mills, steel and chemical companies. In contrast, this subjective requirement is not required with reference to the case where the facility covered by the CBPA is connected to a closed network.

4. Features of the Biomethane Purchase and Sale Agreement

The biomethane purchase and sale agreement referred to in Article 5-bis of the DL Agricoltura may be signed either before or after the commissioning of the biomethane plant relevant from time to time and must be transmitted to the GSE. Moreover, said type of agreement will necessarily have to comply with minimum requirements and contents detailed in the Application Rules and listed below.

First, the CBPA should cover the entire volume of biomethane produced by the relevant plant from time to time and its guarantees of origin.

Second, the duration should be at least one year.

Finally, the CBPA will need to include additional of provisions to ensure that the producer is subject to the instructions of the final self-consumer customer.

5. Concluding remarks

In light of the above, the Application Rules make it possible to complete the panorama of regulatory and normative sources necessary for the negotiability of corporate biomethane purchase agreements, which could take on a fundamental and growing importance within the contractual landscape of the Italian energy market given both the spread of an increasing number of plants generating biomethane from the purification of biogas from anaerobic fermentation of agricultural biomass and the relevance that agreements of this type can have for end customers with particular reference to internal sustainability and decarbonization objectives as well as the fulfillment of obligations under the European ETS (Emission Trading Scheme).

The regions with the highest number of applications are those in central and southern Italy, particularly Puglia, Sicily, Sardinia, Basilicata, and Lazio.

We are well beyond the decarbonization targets set by the PNIEC, according to which Italy is required to install “just” 65 GW of new renewable capacity by 2030, which is only one-fifth of the capacity currently reserved on the grid.

However, a significant percentage of connection applications are still in an embryonic or almost embryonic stage. In fact:

• for 59.47 GW, the relevant STMGs are still to be accepted;

• for 153.07 GW, the STMGs have been accepted (but the network works project is not yet under evaluation);

• for 72.63 GW, the network works projects are still being evaluated by the operator;

• for 57.96 GW, the relevant projects have received clearance (i.e., they have been “validated” or “approved”);

• for 8.11 GW, the STMD has been issued.

If the addends are changed and only projects that have been approved and for which the STMD has been issued are taken into account, the above figure falls to 66.07 GW, in line with the PNIEC targets but well below the capacity currently reserved.

Given their early stage, it is likely that many of the initiatives for which network capacity has been reserved (and the related project has not yet been validated) will not be successful; as a result, there is a potential oversizing of network infrastructure.

In this context, in recent months, MASE and Terna have been working to develop strategies to avert potential risks of virtual grid congestion linked to the considerable number of connection requests related to these embryonic projects.

In order:

• on March 14, Terna published its 2025 network development plan, dedicating a specific chapter to efficient territorial planning and connection measures;

• as part of the conversion into law of the so-called Bollette Decree, which took place on April 24, MASE presented an amendment (later withdrawn) aimed at making significant changes to the rules governing connection procedures through the introduction of new methods for reserving network capacity and specific priority criteria;

• on April 28, a rapid consultation process was launched for trade associations on the new rules proposed by MASE;

• at the beginning of this month, the Minister stated that the regulations in question – which should have the same features as those (almost) introduced by the DL Bollette – will soon be regulated by an amendment or an ad hoc decree (based on recent statements by the Director General for Energy Markets and Infrastructure of the MASE, this measure should enter into force by the end of 2025).

Well, from a joint analysis of the above documentation and the information available to date, it would appear – except for offshore plants, which should be excluded from the objective scope of application of the regulation – that the regulatory framework governing connection to the RTN has been almost completely revolutionized compared to the current one. 

The main features of this new framework that are relevant for current and future investments in the renewable energy sector are summarized here below.

• Microzones

For defining connection solutions, there will be a transition from the current “individual case” management system to a system based on the design of “comprehensive” solutions.

In this context, the concept of “micro-zone” is being introduced, i.e., a sub-regional (and therefore sub-zonal) portion of the RTN, which, according to an initial mapping carried out by Terna, sees the emergence of 76 different micro-zones.

The new connection process therefore involves an analysis: (i) inter-microzone, assessing the capacity that can be accommodated in each microzone, taking into account the exchange constraints between micro.zones and the degree of congestion in that particular micro-zone; and (ii) intra-microzone, designing an overall connection solution for each microzone that can accommodate the capacity estimated on the basis of the inter-microzone analysis.

The data relating to each micro-zone will be available to operators via the TE.R.R.A. telematic portal managed by Terna and subject to quarterly updates depending on the progress of the projects that have been allocated network capacity.

The portal will therefore provide a snapshot of the maximum additional capacity from renewable sources and storage – apart from offshore plants – that can be allocated in each microzone.

• Capacity allocation procedures

Based on the previous amendment, which was subsequently withdrawn:

• the allocation of available network capacity and the related connection solutions should be issued through transparent and non-discriminatory procedures to be established by ARERA within 180 days of the entry into force of the new regulations;

• for operators who, following competitive procedures, have been allocated network capacity and have already obtained the relevant permitting titles (PAS or Single Authorization), the relevant network capacity should be allocated on a definitive basis.

The current method of analyzing connection requests involves a sequential criterion for allocating connection solutions with one-to-one assessments conducted with operators for each request.

On the contrary, with the new provisions being introduced, it would appear that the operator will carry out an upstream assessment, defining an overall solution applicable to the relevant microzone, and will proceed with the allocation of network capacity not through individual procedures initiated at the request of the operators concerned, but through actual public procedures (which, in line with the obligation to connect third parties to the RTN, at least in theory, should not be “competitive”).

A significant advantage will be reserved for projects that have obtained authorization, for which the relevant capacity will be allocated definitively.

• Projects in progress and STMGs already issued

As mentioned above, the principles, functional criteria, and operating procedures for allocating network capacity through the above-mentioned transparent procedures should be detailed by ARERA in an ad hoc measure to be issued within 180 days from the entry into force of the new legislative framework.

In this regard, one of the most significant changes, especially for initiatives that have already been launched or are in the start-up phase, is the provision whereby, as of the date of publication of the measure adopted by ARERA, connection solutions relating to renewable projects or storage facilities that are not authorized and are already issued but not validated by the network operator, will cease to be effective.

In a nutshell, looking at the current situation, if this rule were already in force and the ARERA measure already adopted, the procedures relating to approximately 202 GW of power would be null and void, forcing operators to take part in the above-mentioned transparent procedures to reserve the capacity necessary to carry out their development initiatives. 

The innovations that MASE is about to introduce are clearly of considerable importance for current and future renewable project development initiatives.

In fact, if the provisions previously included and then withdrawn from the Bollette Decree were to be confirmed in their entirety:

• it will become even more crucial to speed up and streamline the authorization procedures related to the development of renewables, given that, in essence, the projects that obtain the authorization title more quickly will be those that will be the first to obtain definitive network capacity, to the detriment of projects that are slow to get off the ground, which will see an increased risk of losing the capacity allocated in the context of the procedure launched by Terna in the event of definitive saturation of the relevant micro-zone;

• it is likely that, in the coming months, there will be a real rush for approval for initiatives at a more advanced stage in order to try to prevent the risk of forfeiture of the STMG obtained;

• it is equally likely that, if the absence of any safeguard clause for projects for which the STMG has already been accepted or the related network works project is currently being evaluated by the operator is confirmed, there will be multiple disputes by the operators concerned due to the sudden loss of their acquired right to the previously reserved network capacity. In this regard, it should be noted that the possible termination of the STMG should not be immediately consequent upon the entry into force of the regulation. It will be necessary to wait for the subsequent ARERA regulation (assuming that the regulation enters into force by the end of June, the subsequent ARERA regulation should be available by December 2025 – i.e., within 180 days).

It should be noted that these are merely preliminary considerations. In fact, to have a clear, complete, and comprehensive picture of the future new regulations, it will be necessary to wait for the entry into force of the legislation and the subsequent implementing measures of ARERA.

The practical implications of the new legislation will also need to be observed to assess whether it is actually suitable for ensuring efficient planning of the RTN infrastructure while protecting market players by preventing and not creating new bottlenecks.

[1] Data taken from Terna's econnextion platform.

In the proceedings concluded with judgments no. 324 and 325/2025, the situations were symmetrical. An application had been submitted for the issuance of the Single Regional Authorization Measure under Article 27-bis of Legislative Decree no. 152/2006 for the construction of a photovoltaic plant and related works to connect it to the national electricity grid. The Administration responded only three years later, requesting supplementary documentation. Although the applicant complied with the request, the Administration remained inactive, thereby failing to meet the 230-day deadline for concluding the procedure.

In the case decided by judgment no. 326/2025, an application had been filed for the issuance of a Single Authorization for the construction and operation of a photovoltaic plant, to which the Region responded only two years later with a request for supplementary documentation. Here too, the Administration remained inactive, violating the 90-day deadline for concluding the procedure.

Article 31, paragraph 2 of the Administrative Procedure Code (Codice del Processo Amministrativo – c.p.a.) states that an action against administrative silence “may be brought as long as the failure to act persists and, in any case, no later than one year from the deadline for concluding the procedure.”

In all three cases, this forfeiture period had long expired, but the TAR of Basilicata nonetheless upheld all the appeals. This was because it considered that the Administration’s request for supplementary documentation constitutes an event that interrupts the time limit, whereas the request for suspension under Article 27-bis, paragraph 5, second sentence, of Legislative Decree no. 152/2006 — made by the private party and granted by the Administration — is irrelevant.

Therefore, since the remaining procedural deadline for convening the Conference of Services began to run from the date on which the applicant responded to the request for supplementary documentation, the TAR, in all three judgments, ordered the Region of Basilicata to convene the Conference of Services and conclude the procedure.

Specifically, various stakeholders involved in such configurations may benefit from:

• Incentives in the form of a feed-in tariff on the shared portion of energy, up to a maximum capacity of 5 GW;

• under certain conditions (especially for CERs developed in municipalities with populations under 5,000), non-repayable grants under the National Recovery and Resilience Plan (“PNRR”), covering up to 40% of investment costs, with €2.2 billion allocated and a target of 1.73 GW of installed capacity.

As of today, applications under the PNRR only total 420 MW of capacity (averaging 90 kW per CER), of which less than half (43%) approved.

With about five months remaining before the final application deadline (November 30^th, 2025), the goal of 1.73 GW set at the end of 2023 still seems distant, approximately 1.3 GW is still missing.

Unfortunately, the situation is no brighter regarding feed-in tariffs. Applications submitted for this mechanism total around 130 MW (averaging 120 kW per CER). Although the deadline for this incentive is extended until December 31^st, 2027, the estimated quota still appears far from being reached, with a shortfall of roughly 4.9 GW.

This scenario seems to stem, on one hand, from overly ambitious political targets and, on the other, from well-known bureaucratic and operational hurdles that complicate the establishment and management of CERs, significantly hindering their spread.

In this context, following recent public statements by Minister Pichetto Fratin, the legislator and the Ministry of Environment and Energy Security (MASE) have recently sought to give a fresh push to energy communities by making significant changes to the regulatory framework.

These changes concern two key areas:

• Expanded eligibility for CER participation, introduced via Decree-Law No. 19 of March 29, 2025, converted into Law No. 60 of April 24, 2025 (also known as the “DL Bollette”).

• Updated access rules for PNRR non-repayable grants, under a new ministerial decree currently awaiting approval from the Court of Auditors.

DL Bollette: Key Changes

To broaden access to CERs, DL Bollette significantly expanded the types of entities allowed to establish or join a CER. In addition to individuals, SMEs, local authorities, religious and third-sector organizations, the following are now also eligible:

• Public service agencies (ASP);

• Land reclamation consortia;

• Public housing authorities;

• Recognized environmental associations.

The law also appears to reflect GSE’s clarifications regarding “national CERs.” Specifically, the phrase “located in the same municipalities as the plants” has been removed from Article 31(1)(b) of Legislative Decree 199/2021. This suggests that CER members may now reside in different municipalities from those hosting the energy installations.

However, entities holding “control powers” (i.e., powers that guide the CER and ensure its statutory purpose) must still be located where the plants are situated.

The amendment seems aimed at accommodating a shift toward multi-configuration models, enabling greater flexibility in member selection (no longer restricted to municipal boundaries) and governance structures (e.g., control committees representing local interests).

Nonetheless, it’s too early to draw final conclusions. Further clarification from ARERA, MASE, and GSE is needed, along with analysis of the regulation’s practical implications.

The MASE Decree: New PNRR Grant Rules

To help meet 2023 targets, on May 16th, MASE issued a decree that revises how incentives and grants for CERs are accessed.

Key updates include:

• Expanded eligibility to CERs in municipalities up to 50,000 residents (previously limited to under 5,000), vastly broadening potential applicants. Approximately 7,750 Italian municipalities fall under the new threshold versus about 5,500 under the old one.

• Advance payments: Up to 30% of the PNRR grant may now be requested in advance (previously capped at 10%).

• Incentive compatibility: When combining capital grants with feed-in tariffs, individuals in CERs no longer face reduced tariff rates (previously halved if the grant covered 40% of investment costs).

• Extended timelines: While the installation must begin by June 30, 2026, projects may become operational as late as December 31, 2027. This aims to accommodate delays related to grid works and connection processes.

These changes have significant implications for business plans and project financing (if any) especially for third-party producers. Beneficiaries can now receive more upfront funding, retain higher tariff revenues, and manage timelines with more confidence.

Final implementation depends on publication in the Official Gazette following review by the Court of Auditors.

Remaining Challenges

Despite new opportunities, several concerns remain. Applications for PNRR funding must be submitted by November 30, 2025, and projects must already have accepted grid connection quotes and all necessary permits.

Even after recent streamlining under the Consolidated Renewable Energy Act, these steps remain time-consuming and clash with the tight PNRR deadlines.

Assuming the decree takes effect in early June, market players will have just six months to conduct feasibility studies, assess financial viability, and complete bureaucratic procedures with grid operators and public administrations, not to mention forming CERs or negotiating contracts with third-party producers.

For existing CERs, the inclusion of new eligible participants, especially public entities, raises legal and operational questions, such as whether existing statutes must be amended to reflect changes in objectives, participation criteria, or decision-making processes. All this while preserving the local dimension emphasized by both EU and national regulations.

This scenario highlights the urgent need for a fundamental shift in how CER regulations are designed, no longer as barriers to investment, but as enablers, allowing small producers and consumers to actively contribute to decarbonization.

While recent developments are promising and point in the right direction, a comprehensive review of the current legislative and regulatory framework shows that the expansion and consolidation of collective self-consumption in Italy’s energy landscape is still progressing far too slowly.

In the case at hand, the Municipality of Nardò merely stated that the project was incompatible with the General Urban Development Plan (PRG) and the Regional Landscape Territorial Plan (PPTR), and thus the relevant areas could not be classified as suitable under Article 20, paragraph 8, letter a) of Legislative Decree 199/2021 (i.e., sites where plants of the same energy source are already installed and where modifications are carried out— including substantial ones—for refurbishment, enhancement, or complete reconstruction, without increasing the occupied area by more than 20 percent).

The Court found that the administration had based its conclusions on a partial (and incorrect) interpretation of the regulatory framework concerning suitable areas.

Specifically, while the Municipality focused on the suitable area referred to in Article 20, paragraph 8, letter a), it failed to acknowledge that the project also involved areas covered by Article 20, paragraph 8, letter c-ter), no. 2—areas also deemed suitable for the installation of renewable energy plants and explicitly mentioned by the applicant during the authorization process.

These areas, in particular, include those within industrial facilities and plants, as well as agricultural areas located within a perimeter whose points are no more than 500 meters from the same facility or plant.

As the Court emphasized, this led to a lack of proper investigation and reasoning in the Municipality’s decision-making process, since Article 20, paragraph 8, letter a) of Legislative Decree 199/2021 is not the only rule identifying ex lege suitable areas, and the administration failed to assess whether the project area could fall under other categories governed by the same legislative framework.

Additionally, the Court criticized the challenged decision insofar as it deemed the project incompatible with the PPTR provisions. It stressed that, in terms of justification, the administration must conduct a case-by-case assessment, taking into account the specific features of the location and the public interest, while keeping in mind the European regulations promoting renewable energy sources.

This ruling aligns with a growing body of case law according to which any reasons for denying authorization for renewable energy projects must be particularly stringent (see, among others, Council of State, Section VI, June 9, 2020, no. 3696, and Section II, May 2, 2025, no. 3701).

The ruling regards a request to annul a note from the Energy Department of the Sicilian Region which required the operator to submit, before the issuance of the authorization title, copies of duly registered and recorded (registrati e trascritti) definitive agreements to prove the legal availability of the lands involved by the relevant project.

The Court clarified that, in line with Art. 2, Par. 2 of the Regional Law no. 29/2015, it is sufficient to submit the relevant preliminary agreements (duly registered and recorded) to demonstrate the fulfillment of the land availability requirement.

The submission of the definitive agreements, on the contrary, may be postponed to the phase following the issuance of the authorization title.

As emphasized by the administrative judges, preliminary agreements — also considering Article 2932 of the Italian Civil Code, concerning specific performance of the obligation to conclude a contract — are, then, suitable for proving the availability of the relevant projects’ land.

This is clearly a highly significant ruling, particularly in light of its practical and financial implications for market operators which, in the last few months, had to endure with significant investment costs in the framework of the development of renewable projects, given the significant expenses associated with the execution of definitive agreements prior to the successful completion of the authorization process.

The next hearing for discussing the merits of the case has been scheduled on next September 24^th, 2025, even though, as underlined above, the Court position on the matter at the stake already appears quite clear.

In this regard, the following is a concise and schematic summary of the main regulatory changes that have taken place along with some preliminary comment about their potential practical implications.

*** 

1. Thermomechanical electric storage systems 

Pursuant to Art. 3-quinquies of the Bollette Decree, in addition to electrochemical storage systems, thermomechanical electric storage systems are also expressly included among the interventions subject to the PAS regime set forth in All. B, Sec. I, lett. aa) and the Single Authorization regime set forth in All. C of the Renewables Consolidated Decree. To that effect:

• interventions related to thermomechanical electric accumulators located within specific areas (e.g., within the perimeter of existing industrial plants or power generation facilities; within quarry areas, etc.) and upon the fulfillment of certain conditions (e.g., the intervention does not require variations to adopted urban planning instruments, etc.) are subject to PAS;

• shall be subject to AU of regional competence the interventions related to thermo-mechanical electric accumulators: (a) connected or subservient to electric power generation plants with a capacity of 300 MW or less authorized but not yet built; (b) located in areas other than those described above and related to the PAS regime and capable of autonomously providing services for the benefit of the national electricity grid, with a capacity of 200 MW or less;

• shall be subject to AU of state jurisdiction the interventions related to thermomechanical electric accumulators: (a) connected or subservient to electric power generation plants of more than 300 MW authorized but not yet built; (b) located in areas other than those described above and related to the PAS regime of more than 200 MW. 

Furthermore, as to storage systems Art. 3-sexies of the Bollette Decree provides that the MASE, subject to the stipulation of a special agreement, can make use of the GSE in relation to authorization procedures concerning so-called storage systems.

The above with the aim of streamlining the related administrative processes.

Therefore, on the one hand, the categories of storage systems subject to the regulations of the Renewables Consolidates Decree are expressly supplemented and, on the other hand, the assistance of the GSE is provided to expedite the administrative proceedings functional and related to the implementation of such projects. 

2. Hydropower storage through pure pumping

Art. 4-bis, co. 1, lett. a, num. 2, of the Bollette Decree amends art. 9, co. 13 of the Renewables Consolidated Decree, the provision of which now stipulates that, also for hydroelectric storage plants through pure pumping, within the scope of the relevant AU proceedings (of state competence) both the Ministry of Infrastructure and Transport and the region concerned shall express their opinion in the services conference.

In this case, too, therefore, the range of public administrations to be involved is extended by expressly stipulating that the region affected by the relevant project must also be heard for the purposes of the permitting process.

3. Offshore power plants

Similar amendments are introduced with regard to offshore projects.

Specifically, it is provided that in AU proceedings related to off-shore facilities (under state jurisdiction) not only the Ministry of Infrastructure and Transport and the Ministry of Agriculture and Food Sovereignty (for aspects related to marine fisheries) but also the relevant coastal region concerned must be heard at the service conference. 

The same applies to upgrades, repowering, refurbishment, reactivation and reconstruction, replacement or reconversion of existing or authorized plants involving a total capacity of more than 300 MW (see Art. 9, para. 13, TU Renewables as amended by Art. 4-bis, para. 1, letter a), num. 1 of the Bollette Decree).

4. Hydroelectric  

It extends the regime of free activity to hydroelectric plants with a generating capacity of less than 500 kW of concession power and that comply with specific technical-urban requirements (e.g., built on existing pipelines without increase nor of the existing flow rate; do not involve changes to the intended use, etc.) (see Art. 4-bis, co. 1, letter b) of the Bollette Decree). 

The objective is to attempt to facilitate the development of certain hydropower projects that, due to their technical/design characteristics, are suitable to undergo a particularly simplified process.

In general terms, it should be noted that the PAS regime is provided for hydropower plants of <100 kW capacity and the AU in the case of plants above this threshold.

5. Agri-voltaic power plants 

Art. 4-bis, para. 1, lett. c) of the Bollette Decree removed the reference to agri-voltaic plants from Annex B, Sec. I of the Renewables Consolidated Decree.

The previous version established that solar photovoltaic or agrivoltaic systems with a capacity of up to 1 MW were subject to PAS.

This change would seem to have been made essentially to address the discordance of this provision with All. A of the Renewables Consolidated Decree, according to which the “free activity regime” applies to agri-voltaic plants of less than 5 MW, and which allows for the continuity of agricultural and pastoral activity.

6. Wind power plants 

As anticipated, the amendments introduced through the Bollette Decree produce reflections not only on permitting processes but also on environmental ones.

Specifically, Art. 4-bis, para. 2, supplemented Annex IV of the Environmental Code by providing that projects for the refurbishment or repowering of existing, licensed or authorized wind power plants to be built on the same site and involving an increase in capacity of more than 30 MW are subject to regional EIA screening. 

It should be noted that this capacity threshold, in line with what was clarified by the MASE (Protest Prot. 65335 of April 24^th, 2023) shall be calculated on the basis of the project under evaluation only and excluding any plants or projects located in contiguous areas or that have the same center of interest or the same connection point and for which an environmental impact assessment is already underway or an environmental compatibility measure has already been issued.

It should also be noted that under recent administrative jurisprudence (Lecce Administrative Court, Judgments Nos. 11/2025 and 935/2024), for the purposes of cumulation, only projects undergoing authorization should be considered, and not also plants insisting in contiguous areas already built and in operation.

7. EIA priority projects

Pursuant to Art. 4-quater of the Bollette Decree, the list provided under Art. 8 of the Environmental Code is supplemented by establishing that power generation plants from renewable sources subject to single authorization under state jurisdiction as per All. C, Sec. II of the Renewables Consolidated Decree (e.g., plants with a capacity >300MW; offshore, etc.) are also to be considered as priority projects. 

Thus, the list of project categories to be prioritized in the context of the order of processing EIA proceedings under the responsibility of the PNRR-PNIEC Technical Commission is expanded.

***

The innovations introduced by the Bollette Decree would seem to be largely directed at broadening the range of institutional actors to be involved in the context of relevant authorization procedures for the development of renewable projects.

The reference is to the projects of thermomechanical electric storage, hydroelectric storage through pure pumping, and off-shore plants for which the involvement of the GSE and/or interested regions is envisaged.

Purely theoretically, the increase in institutional stakeholders at the authorization tables could make the completion of administrative processes less expeditious.

On this point, however, it seems premature to take a definitive position; in fact, the application implications of the regulatory innovation will have to be observed in order to assess whether it will benefit market operators in terms of greater efficiency and speed of the procedures of their interest.

Of a different tenor and of no marginal importance appear to be the changes concerning environmental proceedings.

In fact, the introduction of the 30 MW threshold for EIA screening of wind farm modifications would seem to sharpen the application perimeter of the rule, previously made opaque by, among other things, unspecified references to the production of significant and negative environmental impacts (see Art. 6, para. 6 of the Environmental Code).

One can also look favorably on the inclusion among the priority projects, for the purposes of EIA proceedings, of those subject to state AU under the Renewables Consolidated Decree.

In relation to this last profile, however, it seems appropriate to emphasize that this amendment is in the wake of recent administrative jurisprudence, which has clarified on several occasions that this priority criterion is not in itself capable of derogating from the obligation to conclude all EIA proceedings instituted before the Technical Commission (i.e., not only those "priority" proceedings) within the peremptory deadlines established by law (on this point, see our commentary on the recent Council of State ruling, April 22, 2025, no. 3465). 

Particularly, the Judges once again clearly reiterated that the priority criterion governed by Article 8 of Legislative Decree 152/2006 is not suitable to derogate from the obligation to conclude EIA proceedings within the peremptory terms established by law (cf. Article 25, par. 7, Legislative Decree 152/2006 - the "Environmental Code").

The conclusions reached by the court of first instance (TAR Basilicata, Sec. I, Judgment n. 598/2024), according to which, on the contrary, the rule of peremptory deadlines should have been recessive with respect to the need to give priority to the procedures of plants with greater power, are thus fully reformed.

This ruling is in line with recent administrative case laws, which has repeatedly clarified that all EIA deadlines are peremptory (see, among others, Council of State, Sec. IV, Dec. 4, 2024, No. 9737 and Council of State, Sec. IV, Dec. 6, 2024, No. 9791). 

In fact, consistent with Art. 3-bis, para. 3 of Legislative Decree 152/2006, the rules of the Environmental Code can be derogated only by express declaration by subsequent laws.

Otherwise, as noted by the Council of State, in the case at hand, the criterion of priority in the processing of applications (connected ratione temporis to the greater power to be installed) is not only not supported by any express derogation from the peremptory nature of the deadlines for the conclusion of the relevant procedures but is not even incompatible with such discipline.

As a result of the foregoing, the Council of State ordered the Ministry of Environment and Energy Security to act on the EIA petition within a period of thirty days from the communication of the judgment with the warning that in case of further inaction it will proceed with the appointment of a commissioner ad acta.

This is another important point of clarification in the context of the multifaceted environmental procedures that characterize the renewables sector and draws attention to the current delicate balance between the internal organizational complications of the competent authorities and compliance with procedural safeguards as well as the weight of litigation within these procedures.

On these aspects and on the latest pronouncements of administrative jurisprudence, on the other hand, the PNRR-PNIEC Technical Commission itself has just recently dwelt on the matter, emphasizing the need to remedy as soon as possible the now well-known organizational-administrative issues of the Ministry and pointing out that a percentage of 41.4% of the applications received to date is conditioned by the incidence of litigation in determining the order of processing (see on this point the recent report first quarter 2025 of the PNRR-PNIEC Technical Commission transmitted to MASE on April 17^th, 2025).

In summary, these Instructions are merely clarifications and adjustments to regulatory updates that have occurred since the last revision of the Instructions, dated October 2023. 

Firstly, two formal modifications have been introduced. Where the previous version referred explicitly to “photovoltaic panels”, the new Instructions use the term “photovoltaic modules”, while retaining the same meaning previously assigned to “panel,” referring to “the photovoltaic panel installed in systems with a nominal power lower than (i.e., in the case of a ‘domestic photovoltaic module’, ed. note) or equal to/greater than (i.e., in the case of a ‘professional photovoltaic module’, ed. note) 10 kW.” Also, where the waste identification code was previously referred to as the “CER code” (European Waste Catalogue), it is now correctly referred to as the “EER code” (European List of Waste).

Beyond these formal amendments, the Instructions implement the updated amount withheld by GSE pursuant to Legislative Decree No. 49/2014. This amount is intended to fully cover the environmentally compliant end-of-life management and disposal costs of photovoltaic modules. Previously, the withheld amount was EUR 10/module for any type of photovoltaic WEEE, whether domestic or professional. Under the new Instructions, this amount is now equal to twice the contribution cost paid to Collective Systems, which is identified as EUR 10/module. Therefore, the new withheld amount is EUR 20/module.

For professional-type plants commissioned between 2006 and 2012, where the withholding process had already begun based on the former EUR 10/module rule, “the increased amount shall apply starting from the remaining installments of the withholding period”, and GSE will proceed with “the rescheduling of the remaining installments of the payment plan.”

Regarding provisions introduced by Legislative Decree No. 118/2020 and subsequent amendments, the Instructions also reflect the clarification introduced by Law Decree No. 13 of 24 February 2023, which states that the contribution payable to the Collective System may be paid in installments over a maximum of five years (and, in any case, not exceeding the remaining incentive period for the specific plant).

The new Instructions also incorporate provisions from Law Decree No. 84/2024, titled “Urgent Provisions on Strategic Critical Raw Materials,” introducing two additional time windows for submitting the application to join a Collective System:

• from 1 April 2025 to 31 May 2025 (currently ongoing);

• from 1 July 2025 to 30 September 2025.

These override the previous application deadline, which was set for 31 December 2024.

As for the timing of refunding previously withheld guarantee amounts by GSE, the Instructions stipulate:

• for domestic-type plants, the refund will be made in the year following the submission of the application to join a Collective System;

• for professional-type plants, the refund will be made within 180 days from the end date of the time window in which the application was submitted.

Lastly, in line with the provisions of Law Decree No. 84/2024, MASE may now rely on GSE to perform verification and control activities over the operations of the Collective Systems.

The annexes to the Instructions remain unchanged, as do the previous provisions, which remain valid following the adoption of Decree No. 45/2025 and the new Instructions for the end-of-life management of incentivized photovoltaic modules under the Energy Account scheme.

The term “tolling” derives from the word “toll”, originally meaning a fee, charge, or, in the industrial field, the compensation paid for the use of a processing facility. A tolling agreement, therefore, is a contract whereby one party, the owner of the raw material, entrusts another party, the owner of the facility, with the processing of such material while retaining ownership over it.

In the context of generation or cogeneration facilities, the tolling agreement is structured as a contract pursuant to which one party, known as the toller, supplies the raw material (typically, the fuel) to another party, known as the processor, who owns the facility. The processor, by using the raw material provided by the toller, produces electricity and thermal energy, which will subsequently be returned to the toller against payment of a fee.

More recently, market operators have extended the application of the tolling agreement to energy storage systems (“Tolling Agreement”). In this context, the Tolling Agreement is structured as a contract pursuant to which the owner of the storage facility, referred to as the asset owner (“Asset Owner”), makes the facility's storage capacity available to another party, the toller (“Toller”), enabling the latter to inject, store, and withdraw electricity from the storage facility at its own discretion, against payment of a fee to the Asset Owner for the availability of such capacity. The Toller retains exclusive ownership of all electricity injected, stored, and withdrawn from the facility throughout the term of the Tolling Agreement.

Under a Tolling Agreement relating to storage systems, therefore, there is no supply of raw materials nor any electricity generation activity. Instead, the storage facility is made available to the Toller to enable it to store electricity and subsequently sell it to the market according to its own strategies. 

The Rationale behind the Tolling Agreement

Through the Tolling Agreement, the parties aim to allocate the risks and responsibilities associated with the construction and subsequent operation of the storage system.

Going into detail: 

(i) the Asset Owner undertakes to construct and commission the facility within a certain term and to make its storage capacity available to the Toller. Upon commissioning, the Asset Owner remains responsible for the maintenance, availability, and management of the facility for the benefit of the Toller, receiving from the Toller a fee ensuring the Asset Owner's cash flow, which may be necessary to fulfil its obligations under any project financing agreement (if any); while

(ii) the Toller undertakes to use the facility in accordance with the operational cycles and procedures set forth in the Tolling Agreement, having the right to store electricity at its discretion. With respect to the storage facility, the Toller does not assume any construction or maintenance risk.

Tolling Fee Structure 

As outlined above, the Toller pays the Asset Owner a fee to compensate the availability of storage capacity. 

The fee may be determined according to different models:

(i) fixed fee – a set amount in Euro per MW of capacity made available under the Tolling Agreement. While the fee is fixed, the parties may however agree on adjustment mechanisms to account for actual availability and efficiency of the facility during the relevant period;

(ii) variable fee – an amount in Euro per MWh of energy injected and stored in the facility during a reference period. This variable fee may be the sole form of compensation or in addition of the fixed fee;

(iii) revenue sharing – a percentage of the profits generated by the Toller through optimization activities, including participation in electricity markets, allocated to the Asset Owner. This can be structured as the sole compensation or as a supplement to the fixed and/or variable fees. Revenue sharing may apply starting from the effective date of the obligation to make capacity available and pay the associated fee, or even earlier if the facility becomes operational before such obligations commence.

The Relationship between the Tolling Agreement and the Capacity Market

The obligations of the parties under the Tolling Agreement, as well as the remuneration mechanism addressed above, may become more complex in case the Asset Owner intends to participate in the capacity market with the same capacity made available to the Toller under the Tolling Agreement.

The capacity market, as set forth in Article 1 of Legislative Decree No. 379/2003, as subsequently amended, is a market organized and operated by Terna, based on the capacity made available in favour of the electricity system. Such market purposes to ensure adequacy of the available generation capacity within the electricity system, also guaranteeing the continuous satisfaction of national electricity demand with adequate reserve margins.

This market is structured as a system of auctions (so-called procedure concorsuali) aimed at determining the capacity commitments undertaken by each market participant. At the conclusion of such auctions, the successful bidders are required to enter into an agreement with Terna (“Capacity Market Contract”). Pursuant to this agreement, the awarded participant – that we assume to be the Asset Owner – undertakes to make the awarded capacity available to Terna, and to enhance the corresponding electricity volumes on the electricity market through the Toller, against a consideration paid by Terna to the Asset Owner. Such consideration consists of both a fixed and a variable component.

In light of the foregoing, and considering that the storage facility’s capacity is managed and enhanced by the Toller, the coexistence of the Capacity Market Contract and the Tolling Agreement requires that the latter also govern the additional commitments in this regard of the Asset Owner and the Toller. Furthermore, the Tolling Agreement shall address a flow structure and compensation framework that properly reflects the more complex legal and factual context related to the storage facility owned by the Asset Owner in this situation. 

Indeed, the Toller, also acting as the dispatching user of the facility, will be responsible for the injection and withdrawal of electricity from the storage facility, for managing the facility’s availability, as well as for submitting offers in the electricity market.

More specifically, with respect to participation in the capacity market, the Tolling Agreement shall govern: 

(i) the participation in the Auction Procedures, possibly restricting the Asset Owner’s ability to participate in certain auctions depending on the different delivery periods;

(ii) the Asset Owner’s undertaking not to participate in the Mechanism for the Procurement of Electric Storage Capacity (“MACSE”)[1], nor in any other mechanisms, including incentive schemes, and/or in any market that could be incompatible with the commitments undertaken under the Tolling Agreement and the Capacity Market Contract;

(iii) the specific obligations that the Toller must undertake in order to enable the Asset Owner to comply with the obligations assumed under the Capacity Market Contract;

(iv) the allocation of the risk associated with the variable fee to be paid to the Transmission System Operator in the event that bids are executed at a price higher than the strike price;

(v) the contractual remedies applicable in the event the Asset Owner fails to comply with its obligations under the Capacity Market Contract, where such failures are attributable to acts, omissions, or defaults of the Toller under the Tolling Agreement.

In general, the Toller shall have the right to dispatch the facility, at its own discretion, on all available markets, provided that participation in such markets remains compliant with the Capacity Market rules and does not adversely affect the Asset Owner’s participation therein.

The above and other aspects related to investments in Storage and the associated cash flows in the context of bankability will be discussed with our guests at the conference BESS: profili di bancabilità tra regole e mercato, to be held at our Milan office. Through the link you can register. Places are limited and we suggest you register as soon as possible.

[1] The MACSE was introduced by ARERA Resolution No. 247/2023, implementing Article 18 of Legislative Decree No. 210/2011. 

The widespread diffusion and incidence of energy production from renewable sources has made the introduction of a storage system for energy production and, therefore, centralised storage capacity essential to ensure flexibility and maximise the use of renewables.

The Mechanism, the rules of which Terna published on 22 October 2024, subject to the approval of the Ministry for the Environment and Energy Security with Ministerial Decree No. 346 of 10 October 2024, is based on the opportunity of entering into standard contracts for the procurement of electricity storage capacity with counterparties selected through competitive procedures, who receive a determined premium expressed in euro/MWh per year: in exchange for the premium, the awarded producer only has to make the contracted capacity available to third parties who have purchased, through Terna, the so-called time-shifting products, i.e., the right to store the energy produced at a specific time in one or more storage plants that were awarded the auctions in the previous phase, and then feed it into the grid at a later time.

These standard contracts prescribe specific obligations for the subscribers, i.e. (i) the actual realisation of the committed storage capacity within the terms provided for by the same contract; (ii) the obligation to make the committed storage capacity available to Terna, for the entire delivery period, in order to allow third-party market operators to exercise time-shifting contracts (iii) the obligation to make available to Terna on the Dispatching Services Market ("DSM"), for the entire delivery period, individually or through aggregates defined by Terna in the Grid Code, the committed storage capacity, complying with the minimum technical performance defined in the contract and the economic constraints.

As mentioned above, therefore, in order to enter into standard contracts, Terna organises special competitive procedures, periodically making available incremental capacity quotas to guarantee the availability of certain quantities of electricity storage in different and future periods, taking into account various variable components: such competitive procedures may only be attended by storage facility owners who meet appropriate subjective and objective requirements, but not limited to.

1.1 About the guarantee system

As part of the above-mentioned competitive procedures, in compliance with the provisions of the ARERA Resolution, Terna organises and manages a system of guarantees to which the participants are required to join, under penalty of being excluded from the same procedures or preventing the participant from proceeding with the stipulation of the standard contract for the procurement of electricity storage capacity. This guarantee system consists of (i) pre-auction guarantees; (ii) post-auction guarantees; and (iii) the guarantee fund. 

1.1.1. Pre-auction guarantees 

Pursuant to the provisions of Chapter II of the Terna Rules, for each auction the participant must, at least 40 (forty) days prior to the date of execution of the auction for which it intends to qualify the storage system, provide a pre-auction guarantee in an amount equal to the sum of 

(i) the qualified capacity[1] of each qualified storage system, expressed in MWh;

(ii) the reserve premium[2] of the open auction to the reference technology with the shortest planning period[3] among those admitted to the competitive procedure;

(iii) a percentage equal to 10 percent.

Said pre-auction guarantee, in the form of a non-interest deposit, will be returned by Terna to each successful participant within 15 (fifteen) days from when Terna sends a countersigned copy of the contract and/or implementation agreement, and to each unsuccessful participant within 15 (fifteen) days from notification of the auction results.

If the assignee participant fails to fulfil the obligations of the assignees identified by Terna, and/or if, following specific checks carried out prior to the signing of the contract and/or the implementation agreement, it emerges that the declarations made and/or the documentation provided are not truthful, Terna may enforce the pre-auction guarantee provided by the participant.

1.1.2. Post-auction guarantees

In the same manner as the pre-auction guarantee, for each contract, the successful participant shall, within 15 (fifteen) days from the communication of the auction results, set up or supplement one or more post-auction guarantees, for a total amount equal to the sum between:

(i) the committed capacity[4] of each contracted storage system, expressed in MWh;

(ii) the reserve premium of the open auction to the reference technology with the shortest planning period among those admitted to the competitive bidding process in which the storage system was contracted;

(iii) the number of years, rounded down, of the planning period of the reference technology with the shortest planning period among those admitted to the competitive bidding process in which the storage system was contracted;

(iv) a percentage equal to 15 percent. 

This post-auction guarantee, in the form of a non-interest deposit or a first-demand bank guarantee, will be returned by Terna, at the request of the assignee, following the complete settlement of the economic items arising under the contract and related implementation agreements.

Even in the case of post-auction guarantees provided by the assignee, if the latter fails to fulfil its payment obligations under the contract and related implementation agreements, Terna may enforce the post-auction guarantee provided by the assignee. 

1.1.3. The guarantee fund 

For each contract stipulated with Terna, the assignee is obliged to pay to Terna, within 15 (fifteen) days from the communication of the auction results, a contribution to the guarantee fund equal to the sum of the products between: 

(i) the committed capacity of each contracted storage system, expressed in MWh;

(ii) the reserve premium of the open auction to the reference technology with the shortest planning period among those admitted to the competitive procedure in which the storage system was contracted;

(iii) a percentage equal to 15 percent.

The contribution to the guarantee fund, like the pre and post-tender guarantees, in the form of an interest deposit, will also be returned, at the request of the assignee, following the complete settlement of the economic items arising from the contract and its implementing agreements. 

Terna's recourse to the guarantee fund is subject to the prior enforcement of all post-auction guarantees set up by the assignee under the contract to which the performance refers, resorting, in an orderly manner, first to contributions to the guarantee fund paid by the defaulting assignee, then to contributions to the guarantee fund paid by the other assignees.

1.2. The first auction

On 7 March 2025, through an appropriate notice for operators, Terna announced the timeline for the first MACSE auction: in fact, the auction for 2028 for the forward procurement of new storage capacity related to lithium-ion batteries and electric storage technologies other than lithium-ion batteries and hydro storage will take place on 30 September 2025.

Therefore, according to the schedule set by Terna itself, participants are required to apply for admission, in the manner defined by Terna, by June 3 and submit the necessary data and documentation on the MACSE portal by July 17, with payment of the deposit as a pre-auction guarantee by August 21 and uploading of the authorization documentation by the following August 26.

As an estimate, the current authorized capacity is expected to be about 9 GWh, thus below the demand of 10 GWh, but still having to consider that all finally authorized plants will be able to participate by the end of August 2025.

The above and other aspects related to investments in Storage and the associated cash flows in the context of bankability will be discussed with our guests at the conference BESS: profili di bancabilità tra regole e mercato, to be held at our Milan office. Through the link you can register. Places are limited and we suggest you register as soon as possible.

[1] Pursuant to Article 2, para. 1, letter i) of Terna's MACSE Regulation, for each storage system, this is the capacity, expressed in whole MWh values, that Terna qualifies for auction.

[2] Pursuant to art. 2, para. 1, letter aaa) of Terna's MACSE Regulation, this means the maximum value that can be taken by the adjusted premium (i.e., for each storage system, the amount equal to the product between the premium and precise coefficients referred to in the same regulation adopted by Terna), as defined by the Authority in relation to a competitive procedure.

[3] Pursuant to Article 2, para. 1, letter jj) of Terna's MACSE Regulation, this means the period, defined in the technical report, between the date of communication of the auction results and the start of the delivery period (i.e., the period during which the contracted storage system is subject to the availability obligation and the restitution obligation, beginning on January 1).

[4] Pursuant to Article 2, para. 1, letter g) of Terna's MACSE Regulation, for each storage system is the capacity, expressed in whole MWh values, that is contracted as a result of participation in the auction.

In the case at hand, the GSE had initially approved an energy efficiency project and three RCVs, but later rejected the fourth by annulling the approval decision concerning the PPPM and the previously accepted RCVs, on the grounds of non-compliance with the applicable legislation (Ministerial Decree of 28 December 2012).

The Court held that the annulment order did not fall within the category of forfeiture but rather constituted an exercise by the GSE of its self-defense powers, and as such was subject to the requirements laid down in Article 21-nonies of Law no. 241 of 1990. The decision was based on a reassessment of elements previously examined with a positive outcome, in the absence of any new facts or documentation having emerged in the meantime.

Forfeiture, by contrast, is characterized by the nature of the defect, which may consist of: (i) false or inaccurate declarations by the applicant; (ii) breach of administrative conditions deemed essential for the continued enjoyment of benefits; or (iii) loss of eligibility requirements necessary for the establishment or continuation of the relationship (Plenary Session, 11 September 2020, no. 18). In such instances, the GSE exercises a binding ascertainment power, issuing a decision that declares the absence of objective requirements which were a prerequisite ab initio for access to the incentive (Council of State, Section IV, 12 January 2017, no. 50; 24 January 2022, no. 462; 20 January 2021, no. 594; Section VI, 3 January 2022, no. 9; 28 September 2021, no. 6516; Constitutional Court, 13 November 2020, no. 237), following a new procedural path in which further evidence is gathered.

Conversely, where the absence of eligibility for the incentive mechanism is declared on the basis of a mere reconsideration of the same evidentiary material already in the possession of the GSE, the measure must be regarded as a self-defense annulment (annullamento d’ufficio in autotutela).

The conduct of assessments based on newly acquired evidentiary elements thus marks the dividing line between self-protection and forfeiture.

The judges of the Council of State emphasize that, once the administrative procedure has concluded with a positive evaluation of the information provided by the private party, any subsequent review—absent new circumstances, omissions, misrepresentations, or breaches of undertaken obligations—must necessarily comply with the conditions and limitations applicable to the exercise of self-protection powers, pursuant to Article 21-nonies of Law no. 241/1990.

Currently, the SSPC (Simple Production and Consumption System) is defined as the system in which a power line connects one or more production units managed, as producers, by the same natural or legal person or by different legal persons provided they all belong to the same corporate group, to one or more consumption units managed, as final customers, by the same legal person or by legal persons of the same group. This configuration thus imposes a subjective constraint among producers, effectively limiting, on the consumption or production side, access to the SSPC regime to parties linked by formal corporate relationships (Art. 16, para. 1, Legislative Decree No. 210/2021 and Art. 1.1, letter nn) of Annex A to ARERA Resolution of December 12, 2013, No. 578/2013/R/eel, the so-called TISSPC).

2. Amendment Proposal

The new formulation proposed during the conversion into law of Decree Law No. 19/2025 (the so-called Energy Bills Decree) provides for the removal of the requirement for producers to belong to the same corporate group, while leaving this requirement unchanged for consumers. The revised text would allow producers not belonging to the same corporate group to contribute to electricity generation within the same SSPC.

New proposed definition:

“The system in which a power line connects one or more production units managed, as producers, by the same natural or legal person or by different legal persons, to a consumption unit managed by a natural person as final customer or to one or more consumption units managed, as final customers, by the same legal person or by different legal persons provided they all belong to the same corporate group [...]”.

3. Proposal Rationale

The aim of the amendment is to:

• promote the integration of production plants by third parties, including independent ones, within an SSPC, while maintaining the unity of the consumption system;

• overcome the current corporate rigidities, which often do not reflect the operational reality of companies that share spaces, interests, or common energy goals, even if they do not formally belong to the same group;

• stimulate energy efficiency and self-production behind a single POD, avoiding the need to adopt configurations that use the public grid (Energy Communities, remote self-consumption via public line, collective self-consumption).

4. Conclusions

The proposed amendment is in line with recent regulatory developments on self-consumption and distributed energy systems, aiming to make the SSPC framework more inclusive and versatile while preserving the safeguards of managerial responsibility and administrative simplification inherent in the current configuration.

By no later than April 29, 2025, the proposed amendment must (or must not) be definitively approved by Parliament during the conversion of the Energy Bills Decree into law.

Should this proposal be effectively and definitively approved, pending further adoption by ARERA within the framework of the TISSPC, for those SSPC configurations that wish to add one or more production plants owned by parties other than the current plant owners, the procedure provided for communicating SSPC configuration changes in accordance with the relevant GSE Technical Rules is deemed applicable.

In force since 14 February 2025, the day of publication in the Official Bulletin of the Veneto Region, the regulatory provision unifies the three previous legislative proposals (i.e., nos. 221, 283, and 291) and introduces a key extension for the operation of small expired hydroelectric derivations: under the previous text, the expiration date was set at 31 July 2024, but, as a result of the amendment, this date has been replaced with "31 July 2029."

Indeed, Regional Law no. 1/2025 extends by five years the small concessions that expired in July 2024, aiming to provide the State with technically sufficient time to identify and implement a proper regulatory framework for the allocation of small hydroelectric derivations, as considered by the Regional Council.

In fact, the rationale of the amendment lies in the awareness of the current absence, at the national level, of a regulation aimed at managing the renewal of small concessions through competitive procedures: in this regard, reference is made to European directives, such as the "Bolkestein" Directive, for which the calling of tenders for awarding hydroelectric derivations to new concessionaires ensures fair competition but, consequently, requires extensive time during which, as stated by the president of the Second Council Committee, "we cannot leave uncovered an essential service such as electricity production, especially considering how problematic and economically costly other forms of energy supply are, primarily those from fossil fuels."

Furthermore, with the same Regional Law no. 1/2025, the Veneto Region also intervened on concessions for large plants, assigning – from the effective date of the amendment – to the Regional Government the possibility to allow, for concessions expired before 31 December 2024, the temporary continuation by the concessionaire of the operation of large hydroelectric derivation plants for the time deemed necessary to complete the procedures for the allocation of those same large hydroelectric derivations.

The aim of this provision is to ensure the continuity of electricity production, considering the time needed to carry out the inventory of the works, assets, and plants related to large hydroelectric derivations, as well as to guarantee the execution of the tender procedures.

Although, therefore, this is a “transitional” legal provision, whose introduction, moreover, allows for the possibility of knowing, in the meantime, the ruling of the European Court of Justice on the applicability of the aforementioned “Bolkestein” Directive also to small hydroelectric derivations, the Council of Ministers, in the session of 9 April, decided to challenge the same Regional Law no. 1/2025, considering some of the provisions contained therein illegitimate with respect to Articles 11 and 117, paragraphs 1 and 2, letter e), of the Italian Constitution.

In particular, the Council considered that “the regional provision under examination outlines a specific case of renewal that deviates from competitive principles, thereby crystallizing the implicit recognition of a renewal, in evident contrast with the principles of publicity, transparency and non-discrimination provided for by EU legislation and in particular by Article 12 of the Bolkestein Directive which, according to consistent jurisprudence, constitutes a self-executing rule of the EU legal order and, as such, is directly applicable, requiring the disapplication of any conflicting national legislation.”

The Court, while confirming that Regions may introduce proportionality and subsidiarity criteria to promote balanced RES development at the regional level, ultimately ruled that Resolution no. 171/2023 constitutes a true “a priori ban on initiating the necessary procedural assessment”, resulting in “an inevitable illegitimacy due to violation of fundamental principles governing the sector”.

By order issued by the President of the United States on April 2, the U.S. government adopted new tariffs which provide for additional ad valorem duties on imports of products from all foreign countries.

The new protectionist policies adopted by the U.S. government – which took effect at midnight on April 2 – also apply to imports from the European Union.

Below are the main provisions introduced by the new measures:

• in the automotive sector, a 25 percent tariff is introduced on imports of cars, trucks and related components from all foreign countries (for components, the measures will take effect by May 3);

• imports of all goods from foreign countries into the U.S. customs territory are subject to an additional ad valorem rate of duty of 10 percent, effective April 5;

• for many countries, the rate was set to increase starting from April 9. In particular, the order issued by the White House stated that the European Union (and, consequently, Italy) would be subject to a rate of duty of 20 percent; for China, the rate would go up to 34 percent;

• however, on April 9 the President of the United States announced a 90-day pause on the new tariffs, dropping reciprocal duties to 10% for all countries;

• the only exception is China, which has responded to the new U.S. measures by approving counter-tariffs at 84%: against it, the U.S. government has ordered an increase in duties to 125% for goods imported from China;

• certain products are currently excluded from the new tariffs. These include pharmaceuticals, lumber and semi-conductors, several precious metals (including gold, silver, platinum and copper), energy products (including oil) and critical minerals, as well as all goods subject to specific measures.

The new provisions complete an initial set of measures previously issued on February 10, whereby the U.S. government had imposed a rate of duty of 25 percent on steel and aluminum imports.

2. THE IMPACT OF CUSTOMS TARIFFS ON COMMERCIAL AGREEMENTS

Besides the clear economic and commercial impact, the introduction of additional duties may have a direct effect on all commercial agreements - whether existing or yet to be signed - involving the supply of goods to the United States.

In particular, for agreements already in place, fulfilling contractual obligations in light of the increase in tariffs may prove to be significantly more burdensome than expected – or reasonably foreseeable – at the time of signing.
First and foremost, it is advisable to conduct a preliminary review of the individual contractual clauses, checking for the presence of:

• provisions on governing law and jurisdiction, to determine whether the agreement is subject to Italian law (and, consequently, to the possible remedies provided by the Italian Civil Code);

• any delivery terms (so-called “Incoterms”) to verify the allocation between the parties for customs duties related to import/export;

• any clauses on renegotiation and/or early termination upon occurrence of certain circumstances (e.g. force majeure clauses or hardship clauses).

In addition, the recent 90-day pause on the new tariffs confirms the current instability and uncertainty in international trade relations. We believe this calls for even greater caution in negotiating new agreements and special attention in managing existing ones.

2.1 Remedies under the Italian Civil Code

For commercial agreements subject to Italian law – lacking specific contractual remedies agreed upon by the parties – the Italian Civil Code provides for certain legal instruments that may mitigate the impact of the new tariffs on the original contractual terms. In particular:

• supervening impossibility of performance due to causes not attributable to the debtor (pursuant to Articles 1218, 1256 and 1463 et seq. of the Italian Civil Code);

• supervening hardship (pursuant to Article 1467 et seq. of the Italian Civil Code);

• provisions on supplementary equity (pursuant to Article 1374 of the Italian Civil Code) and obligations to interpret and perform the contract in good faith (pursuant to Articles 1366, 1375 of the Italian Civil Code).

Supervening impossibility of performance refers to any situation preventing performance that cannot be foreseen and cannot be overcome with the effort that may be legitimately required of the debtor. According to the general principle laid down in Article 1218 of the Italian Civil Code, if the non-performing party proves that the default was a consequence of the impossibility of performance for “reasons not attributable to such party”, the latter may be held not liable.

In cases of definitive supervening impossibility, the contractual obligation is extinguished, resulting in the automatic termination of the agreement (either in full or partially, if the impossibility affects only part of the performance). If the impossibility is only temporary, the performance of the obligation may be legitimately suspended.

That said, while each commercial agreement should be assessed on a case-by-case basis, the new tariffs (at least in general terms) do not seem to constitute a genuine case of supervening impossibility. However, a temporary impossibility may be invoked in specific circumstances, resulting in a suspension of the contractual obligation.

It is arguably more feasible to rely on the instrument of supervening hardship. This remedy allows the termination of agreements whose balance is altered by supervening events – extraordinary and unpredictable when the agreement was entered into – which do not fall within the normal contractual risk and which make the performance of any of the obligations underlying the contract excessively burdensome or objectively debased in value and/or usefulness.

In such a case, the counterparty that is interested in maintaining the contractual commitment in place may offer to rebalance the relevant agreement within the limits of normal risk, thus avoiding termination.

In any event, it is worth noting that both remedies – aside from the option to take the contract back to fairness – often face a practical obstacle: in the context of commerce, contract termination may not be a suitable remedy, as it would completely erase the business relationship. In this regard, during the Covid-19 pandemic (an exceptional event par excellence), the Italian Supreme Court expressed support for the existence of an obligation to renegotiate the contract rather than seeking termination (see Corte di Cassazione, Ufficio del Massimario, relazione tematica no. 56/2020).

An alternative might be to invoke the application of general principles of supplementary equity and good faith in contractual performance, with respect to which scholars has already acknowledged the possibility of claiming a general duty to renegotiate the contract upon the occurrence of supervening circumstances.

2.2 Contract remedies

As discussed, the provisions of the Italian Civil Code mainly offer remedies that lead to contract termination, which often do not align with the commercial need to preserve existing business relationships.

To encourage the use of conservative remedies, one solution may lie in the prior arrangement of specific contractual renegotiation clauses.

In this regard, commercial contracts often include certain clauses that are commonly used in both domestic and international commercial practice, that contractually regulate the effects of supervening events that may impact the contractual balance.

The most common contractual provisions in business practice include:

• force majeure clauses;

• hardship clauses;

• material adverse change (MAC) clauses.

Force majeure clauses regulate cases in which the contractual obligation becomes impossible due to the occurrence of an event specified in the relevant agreement. The application of the force majeure clause results in the suspension of the affected party’s obligations and may, subsequently, lead to the termination of the contract or grant the parties the right to terminate it.

The applicability of such clauses in relation to the introduction of tariffs must be assessed in light of their precise wording, even though – as previously noted – the new customs duties generally do not result in an actual impossibility of performance. A detailed review of the specific events covered by the clause is therefore necessary.

On the other hand, hardship clauses place an obligation to renegotiate contractual terms upon the occurrence of certain circumstances that make it excessively onerous for either party to perform the contract.

This remedy seems to offer a more viable solution in the context of the newly introduced tariffs. First, hardship clauses do not strictly refer to impossibility of performance (similarly to the Italian remedy of supervening hardship). Second, the preservative nature of the remedy may represent a more suitable solution for commercial purposes.

Finally, MAC clauses entitle one party to terminate the contract upon the occurrence of a specified “material” event (unless a so-called “right to cure” is provided, allowing the other party to remedy the consequences of the supervening event. However, it is still appropriate to undertake a case-by-case assessment to determine the actual applicability of the clause.

3. CONCLUSIONS

The introduction of the new customs tariffs by the United States raises several questions regarding the future of trade relations between the United States and Italy.

Pending the developments of the policies undertaken by the U.S. government, it is advisable to consider the inclusion – in commercial agreements under negotiation – of adequate provisions aimed at mitigating the risks arising from the high degree of uncertainty in the international context, with an eye to any potential mitigants that may be adopted by the European Union – such as providing specific clauses that clearly allocate the burden of newly imposed customs duties and/or provide for price revision mechanisms.

As for commercial agreements already signed, the performance of which may be impacted by the tariffs, it will be necessary to assess on a case-by-case basis the potential triggering of legal and contractual remedies.

Accepting the objection raised by the counter interested party, the Regional Administrative Court ruled that pursuant to Article 119, paragraph 1(f) and paragraph 2 of the Code of Civil Procedure in judgments concerning disputes relating to measures concerning the procedures of occupation and expropriation of areas intended for the execution of public works or of public utility, all the ordinary procedural terms are halved (except, in first instance judgments, those relating to the notification of the appeal and the additional grounds), including the term for the transposition of the extraordinary appeal to the court by filing the notice of constitution pursuant to Article 48 of the Code of Civil Procedure, which constitutes a time limit of a procedural nature and must therefore be met under penalty of inadmissibility (see, ex multis, T.A.R. Veneto, Sec. II, 31 May 2024 no. 1251).

Pursuant to article 48, paragraph 1 of the Code of Civil Procedure, if the party against whom an extraordinary appeal has been filed lodges an opposition, the proceedings shall continue before the competent regional administrative court ‘if the appellant, within the peremptory term of sixty days from receipt of the notice of opposition, files with the relevant secretary's office the notice of appearance before the court, notifying the other parties thereof’.

It is, therefore, already with the opposition to the extraordinary appeal that the jurisdictional phase of the case opens, without the filing of the notice of appearance being considered as “service of the application initiating proceedings” - to which the shortened time limit would not apply -.

In fact, the notice of appearance is limited to re-submitting the appeal already lodged in the administrative proceedings, which cannot be supplemented or amended in its grounds and conclusions, and cannot, therefore, in any way be equated with the lodging of the appeal, which has already been lodged, with the result that, for matters subject to the special procedure under Article 119 of the Code of Administrative Procedure the filing of the writ of summons after the reduced term of thirty days from the date of opposition renders the appeal inadmissible due to the lateness of its filing for the purposes of transposition (see also Council of State, Section VII, 9 February 2023 no. 1443; Regional Administrative Court of Emilia-Romagna - Parma, 6 August 2024 no. 217).

While Article 15 provides, in fact, that the procedural provisions repealed by Annex D shall continue to apply to ongoing procedures, i.e. to those procedures for which the verification of the completeness of the documentation submitted in support of the project is in progress, “without prejudice to the right of the proponent to opt for the application of the provisions of this decree”, Article 1, paragraph 3, provides that, pending the implementation to the principles set forth in the new regulation by the Regions and local authorities (which must take place within 180 days of its entry into force), the rules previously in force shall continue to apply. 

In its reply of 26 March to Question No. 5-03777, the X^th Commission of the MASE clarified that, as of 30 December 2024, “any new initiative that is not among those for which the verification of the completeness of the documentation accompanying the project is complete at the date of entry into force, is subject to the new provisions as regards both the type of administrative regime and the competent administration”.

The MASE also clarified that, with reference to the provision in Article 1, paragraph 3, the aforementioned “implementation” refers to merely organisational aspects of the individual competent administrations, with regard to, inter alia, the complete digitalisation of administrative procedures.

In conclusion, the provisions of the TU FER shall be considered immediately applicable with respect to “new initiatives”, which include, in addition to applications for authorisation submitted after 30 December 2024, also those submitted prior to that date but for which the verification of the completeness of the documentation has not been completed by 30 December 2024.

The Court held that this circumstance alone cannot integrate the hypothesis of artful splitting, given that Article 29 of the Ministerial Decree of 23 June 2016, in its entirety, provides that this element may be considered, at most, as ‘circumstantial’ and not as a constitutive element of the abusive case.

In particular, in the view of the Council of State, from the analysis of Article 29 of the Ministerial Decree of 23 June 2016, which provides that the GSE ‘in applying the provisions of Art. 5, paragraph 2, verifies, moreover, the existence of elements indicative of an artificial fractioning of the power of the plants’, it becomes clear that ’the uniqueness of the node for the collection of the energy produced can at most be assessed as a possible element indicative of an artificial fractioning, but cannot in any way be considered - by virtue of an unforeseen absolute presumption - an element alone sufficient to configure an artificial fractioning’.

In this perspective, for the Court, the interpretation given by the GSE first, and by the TAR, then, being focused on the enhancement of Article 5, paragraph 2, letter b)[1], of the Ministerial Decree of 23 June 2016 according to which there would always and in any case be a ‘single plant’ in the case of ‘plants located in the same cadastral parcel or on contiguous cadastral parcels’, only because both PODs are located in the same cadastral parcel, would entail the inadmissible abrogation of the part in which the same art. 5, paragraph 2 makes art. 29 of the Ministerial Decree of 23 June 2016 save, generating ‘an inadmissible logical-legal short circuit’.

Another very interesting point of the ruling concerns the breach of the principle of legitimate expectations by the operator owner of the two wind plants which, at first, had been challenged by the GSE in its rejection notice, among other impeding reasons, on the possibility of an artful splitting, whereas the final rejection measures adopted by the GSE did not contain such complaint. 

This had led the company to believe that its plants were no longer considered by the GSE to be interconnected, with the result that, following the publication of the new calls for the incentives, it had decided to participate, subject to registration in the Register of the two plants (with a capacity of 3 MW and 2.4 MW, respectively) instead of the tender procedure (provided for plants with a capacity of over 5 MW).

It follows that the conduct of the GSE was censured by the Council of State as being contrary not only to the literal datum and ratio of the provisions on the subject of artful splitting but also to the principle of the legitimate expectation engendered in the operator, which is configured ‘by reason of the reasonable belief in the legitimate exercise of public power and the reasonable belief in the work of the administration in accordance with the principles of fairness and good faith, identifying in this the twofold parameter ’to which to anchor‘ the ’trust‘, ’belief‘ or ‘expectation’ of the private individual’ (ex multis, Council of State, Sec. IV, 27 December 2024, no. 10415).

[1] According to which ‘without prejudice to Article 29, the following shall be considered for the purposes of determining the power output of the plant, including the threshold value referred to in paragraph 1: ... b) several plants supplied by the same source, at the disposal of the same producer or traceable, on corporate level, to a single producer and located in the same cadastral parcel or on contiguous cadastral parcels shall be understood as a single plant, with a cumulative power equal to the sum of the individual plants’.

The increasing reliance on digital services is driving an unprecedented demand for data processing and storage infrastructure. Data centres, some of the most energy-intensive infrastructures globally, are central to the digital and artificial intelligence revolution. Their energy and water consumption can no longer be overlooked. 

Despite their high energy consumption, data centres remain ineligible for benefits designated for companies at high risk of relocation.

Furthermore, the ATECO code (63.11), assigned to data centres as of 1 January 2025, does not qualify for the benefits available to energy-intensive companies.

The European and National Regulatory Framework

With Regulation (EU) 2024/1774 of 13 March 2024, the European Commission has set up a new data centre sustainability rating system aimed at enabling comparisons between data centres and promoting new or appropriate efficiency measures in new or existing data centres, which may result not only in a considerable reduction of water and energy consumption, but also in a wider use of renewable energies, increased network efficiency or the re-use of waste heat in surrounding facilities and heating networks. 

Notably, the regulation specifies the information and key performance indicators (KPIs) that data centre operators with an installed IT power demand of at least 500 kW must report to the European database. These metrics are essential for establishing a classification system for data centre sustainability and a standardized EU-wide measurement and calculation methodology.

To date, there are no regulations specifically dedicated to data centres in Italy.

The first legislative proposal on this topic, known as “DDL Pastorella,” dates back to 24 June 2024. It grants the government authority over the organization, enhancement, and technological advancement of data processing centres, aiming to

a) provide for a general regulation of data processing centres, in compliance with constitutional principles, European Union law and international law, defining, in this context, simplified authorisation procedures for the construction of new infrastructures and a related ATECO code; 

b) ensure the strengthening of the national electricity grid to guarantee the concrete implementation of infrastructural development;

c) promote technological development and support the digital economy, by encouraging public and private investments in technological innovation for the data processing centre sector;

d) encourage the recognition and growth of the sector, optimising the use of resources and reducing the environmental impact, in compliance with the principles of bureaucratic simplification and the provisions on IT security and data protection; 

e) define the parameters and levels of security, resilience, recovery and energy efficiency of data processing centres, in compliance with the relevant international standards and provisions;

f) facilitating the digital transformation of public administrations and enterprises and the provision of high-performance services to citizens through the development of design, construction and maintenance skills for high-technology infrastructures;

g) adopting initiatives to ensure Italy's competitiveness in European infrastructural and digital strategies and technological sovereignty for data processing centre infrastructures; 

h) promoting training and the development of specific skills in the data processing centre sector, also by envisaging the establishment of specific educational programmes in cooperation with higher education institutions.

Bill no. 1259 of 2025 (“DDL Basso”) largely incorporates the provisions of DDL Pastorella while introducing additional objectives, specifically

a) to facilitate the reuse and redevelopment of sites with the presence of disused or decommissioned coal-fired power plants for the construction of new data processing centres and supporting energy infrastructures, also through financial incentives;

b) to create an inter-ministerial steering committee composed of the Ministry of Business and Made in Italy and the Ministry of the Environment and Energy Security, to coordinate the development of data processing centre infrastructures;

c) consider the acceleration of applications for new data centre projects involving the use of clean energy solutions, innovative experiments in district heating and cooling, and the reduction of water demands;

d) support environmentally friendly energy storage systems to make data centres more sustainable and efficient. 

Both bills do not indicate what type of incentive mechanism should be adopted, nor the types of authorisation procedures to be implemented in the abstract. Neither do they indicate on the basis of which principle the incentive would be compatible with EU state aid rules.

Existing Incentives and PPAs

Currently, no incentive mechanisms are specifically designed for data centres. However, from a regulatory point of view, data centres constitute “consumption units”. As such, they can constitute a configuration of self-consumption (individual or, if the relevant conditions are met, collective), with direct connection or via the public grid to plants producing electricity from RES.

Self-consumption via the public grid is incentivized by Ministerial Decree No. 414 of 7 December 2023 (“DM CACER”). This decree establishes the framework for granting incentives, promoting the development of renewable energy plants integrated into energy communities, self-consumer groups, and remote self-consumption setups. 

In particular, the CACER Ministerial Decree incentivises the share of energy “self-consumed” by the consumption unit and produced by the production unit. The same energy is also subject to a contribution for the valorisation of self-consumed electricity.

Individual self-consumption with direct connection to the production unit, on the other hand, may alternatively configure, at the choice of the parties and according to the greater convenience

• a Simple System of Production and Consumption pursuant to the Integrated Text of Simple Systems of Production and Consumption, which, in a nutshell, benefits from a discount on system charges;

• a remote self-consumption with a direct line pursuant to the Integrated Text of Diffuse Self-Consumption, which benefits only from the contribution for the valorisation of the self-consumed energy.

Obviously, the two latter configurations allow the end customer, in addition to the above-mentioned advantages, a direct saving in the bill equal to the lesser amount of energy not withdrawn from the grid and self-consumed.

Lastly, major tech companies frequently rely on virtual Power Purchase Agreements (PPAs) to secure fixed energy prices from new renewable energy plants. With the implementation of regulations designating GSE as the guarantor of last resort and the anticipated growth in electricity storage capacity, the role of PPAs could expand and diversify further, shifting from volume-based to profile-based contracts.

***

This contribution follows others in which environmental authorisations (https://www.advant-nctm.com/news-e-approfondimenti/energia-tra-innovazione-tecnologica-e-impatto-ambientale) and urban planning aspects in the Lombardy Region (https://www.advant-nctm.com/en/news/guidelines-for-the-implementation-of-data-centers) were analysed.

As is known, in EIA procedures under state jurisdiction, the Ministry of the Environment and Energy Security (MASE), as the competent authority, adopts the measure of environmental compatibility on the project after obtaining the agreement of the MiC, in accordance with the provisions of Article 25 of Legislative Decree No. 152/2006.

In particular, with reference to the PNRR projects, art. 25, paragraph 2 bis, of the Legislative Decree no. 152/2006, establishes that the PNRR-PNIEC Technical Commission expresses its opinion ‘within the term of thirty days from the conclusion of the consultation phase referred to in Article 24 and in any case within the term of one hundred and thirty days from the date of publication of the documentation referred to in Article 23, preparing the outline of the EIA measure. Within the following thirty days, the director general of the Ministry of Ecological Transition adopts the EIA measure, after obtaining the agreement of the competent director general of the Ministry of Culture within twenty days'.

In other words,the aforementioned provision outlines a procedure whereby, once the preliminary investigation phase has been completed, the PNRR-PNIEC Technical Commission renders its opinion on the environmental compatibility of the project, which is then brought to the attention of the MiC for the relative assessment. The Ministry is called upon to express its opinion within the peremptory term of twenty days from receipt of the draft measure rendered by the PNRR-PNIEC Technical Commission.

Until the recent pronouncements, it often happened that the MASE waited for several months for the expression of the MiC's consent, the lack of which led to a real deadlock in the procedure that could not be overcome except by bringing an action on the silence before the Administrative Judge.

The most recent administrative case law, starting from the interpretation of the Council of State (cf., Sec. IV, sentence no. 8610/2023) with reference to the silence of the Superintendence within the landscape compatibility procedure, has, instead, deemed applicable the institute of the silence consent between Administrations (so-called horizontal silence consent) pursuant to Article 17 bis of Law 241/1990, also in the case of a Statal EIA procedure.

Article 17 bis, in regulating the effects of inaction between public administrations, introduces the institution of horizontal silence of consent once the time limits granted by law for the issue of an opinion have elapsed. This institute, by express provision of paragraph 3, also applies in cases where sensitive interests are at stake and, therefore, in cases where the acquisition of consents, concerts or nulla osta of administrations in charge of the protection of the environment, the landscape or the cultural heritage’ is required. 

Substantially, the most recent administrative case law stigmatizes the illegitimacy of opinions and technical-instructional contributions adopted in violation of peremptory terms of the law, excluding their preclusive scope with respect to the conclusion of the procedure and, on the contrary, recognising that delay as silence consent between administrations once the terms for the issue of opinions have elapsed, since the delay cannot entail an indefinite suspension of the EIA procedure in damage of the applicant.

On 26 November 2024, at the GSE headquarters, the Ministry of the Environment and Energy Security presented the National Hydrogen Strategy (hereinafter, “Strategy”), a policy document outlining the objectives of the Country to enhance the role of hydrogen - and, in particular, green hydrogen[i] - in the Italian energy transition process, to achieve the decarbonization targets set out in the National Integrated Energy and Climate Plan (“PINIEC”) to 2030 and Net Zero to 2050.

As is well known, in fact, hydrogen is called upon to play a fundamental role in the so-called hard-to-abate (HTA) sectors of industry (steel, foundries, ceramics, glass cement) as well as in other more specific sectors such as mobility, heavy or long-haul land transport, the maritime sector and air transport.

Moreover, at present, its use is limited to that of a technical gas, i.e. a production factor used in some specific industrial processes (oil refining, fertilizer production, etc.) or to use as a fuel in sustainable mobility pilot projects but it has not yet found a significant use for heat production through combustion.

Contrarywise, this gas could take on an important role as an energy carrier, as it can potentially be produced from all primary energy sources - renewable (bio and non-bio), fossil and nuclear, and as it has a certain degree of universality for certain end uses.

The Strategy is therefore articulated along three fundamental lines, namely: (i) hydrogen demand; (ii) hydrogen production and supply; and (iii) hydrogen transport and infrastructure. In each of these areas, the Strategy has developed three scenarios, namely the “base” scenario, the “intermediate” scenario and a final “high employment” scenario, which are followed by a chapter on strategic actions, policies and supporting measures, setting different time horizons between now and 2050.

With regard to the short-term horizon (up to 2030), the Strategy envisages that hydrogen demand will be driven by the European obligations of RED III, in compliance with which Italy has already taken steps to support the emergence of an ad hoc market, thanks to the resources made available by the PNRR that will finance the first operational production projects by 2026. The Strategy aims to implement measures to facilitate the realization of such projects, working on incentive schemes to lower the cost of hydrogen, intervening to support the value chain up to the end user, as well as to simplify environmental and safety regulations and authorization paths. 

At this stage, production and consumption will be mainly concentrated in confined areas (so-called Hydrogen Valleys), capable of creating synergies between different sectors, from mobility to industry, and bringing supply and demand closer together. This embryonic development phase of the supply chain and market should make it possible to use renewable and low-carbon forms of hydrogen so that the first significant quantities of hydrogen with specific guarantees of origin will be available immediately. This development will also be accompanied by the development - at local level - of transport and logistics infrastructures.

The sector's potential growth in the medium term will instead be driven by emission reduction policies, favoured by the increasing availability of H2 technologies, as well as supported by measures designed to meet European obligations and by the National Recovery and Resilience Plan (“PNRR”) to allow the emergence of a true hydrogen market, including through the development of large-scale solutions capable of cutting operating costs. With respect to the short-term scenarios, in the medium term, demand is expected to increase in the maritime and air transport, HTA industry, heavy-duty and long-haul mobility sectors. 

In the long-term scenario, 2050 will represent the end point of Net Zero commitments, with hydrogen penetration reaching 18% of final consumption in the HTA industry and 30% of final consumption in the transport sector. The infrastructure will play a key role in the exchange of energy with other countries, consolidating Italy's role as a hydrogen import hub for Europe with gas network infrastructures connected to North Africa and a set of ports, enabled for the import of hydrogen (and other energy vectors, including ammonia, methanol, etc.).

The Strategy, considering the variability of production from non-programmable renewable sources, which makes it very useful to include different types of storage systems in the electricity grid, emphasizes the ability of hydrogen, by its very nature, unlike batteries and almost all technologies currently considered for storage, to allow the storage of large quantities of energy even over relatively long periods.

In the scenarios envisaged by the Strategy, importing hydrogen will be a necessary (as well as cost-effective) option to cover part of domestic demand.

In this regard, the construction of an Italian pipelines dedicated to hydrogen transport, part of the broader Southern Hydrogen Corridor, is particularly important in terms of infrastructure.

The demand for hydrogen could, in fact, be covered by a supply of hydrogen partly produced in Italy and partly imported; the subject of possible hydrogen imports has already found its way into the final version of the PNIEC sent to the European Commission on 1 July 2024. In fact, according to the PNIEC policy scenario, it is estimated that at least 70 per cent of demand will be met domestically, while the residual will be imported. Imports will therefore already play an important role in the short term for the spread of hydrogen, in the hope that an international market will develop.

In the long term (beyond 2030), it is also likely that both Italy and Europe will not be able to produce enough hydrogen, especially green hydrogen, locally to cover all future demand.

Thanks to its geographical location and the existing natural gas transport infrastructure network (to be adapted to hydrogen transport), Italy has the opportunity to become a hub for the import, production and export of renewable hydrogen, connecting North Africa with Europe. This role is further strengthened:

(i). by the number and distribution of natural gas storage sites available in the country, which could be converted to hydrogen storage, increasing the security and balancing of the system; 

(ii). by the availability of sea ports for imports from the Mediterranean and Middle East of energy carriers (e.g. ammonia) to be converted into hydrogen.

A major role in the supply of renewable hydrogen in the European Union could be played by the Southern Hydrogen Corridor (“SoutH2 Corridor”).

As part of the joint activities for the development of a SoutH2 Corridor (which, crossing Italy, Austria and Germany, will allow the import and supply of low-cost renewable hydrogen, produced in the countries of the southern Mediterranean probe, to the main demand clusters in Italy and Central Europe), the Ministry for the Environment and Energy Security has been working with the German and Austrian Ministries to evaluate hypotheses of collaboration on specific tools to support import. 

The latest act in this ambitious project dates back to 21 January 2025: Italy, Germany, Austria, Algeria and Tunisia have, in fact, signed a letter of intent committing to the construction of the South Hydrogen Corridor (about 4,000 km long), which will connect production centers in North Africa with the heart of Europe. 

Five sub-projects with a transport capacity of up to 163 TWh per year are planned for the realization of the South H2 Corridor. For Europe, 60-70% of the projects concern the conversion of existing pipelines. The various sections of the Corridor have been recognized by the EU as Projects of Common Interest (PCI) and have been granted “Global Gateway” status by Brussels.

In the declaration, the signatories pledged to strengthen cooperation for the development of the infrastructure through a joint working group of five members, which will meet every six months, in order to coordinate national policies, exchange experiences to ensure the effective implementation of the project, identify financing needs and risk-reducing mechanisms, and develop the necessary expertise.

Moreover, the supply of hydrogen from imported energy carriers would have a positive impact for Italy in terms of diversification of energy supplies, already in the short/medium term, and in terms of preparing for the widespread use of hydrogen, through dedicated infrastructures contributing to supplying renewable hydrogen at a more competitive price to Italian industries. Furthermore, the role of ports would be enhanced, converting them into new renewable energy hubs that would act as catalysts for the development of demand, similar to what is already happening in Northern Europe. This could also have positive spin-offs in terms of developing skills and a dedicated hydrogen logistics chain.

Related to the issues of the hydrogen supply and market is undoubtedly the issue of its traceability and certification of its origin. In May 2024, the Council of the European Union finally adopted a regulation and a directive (so-called hydrogen and gas market package), which aims, among other things, to create a regulatory framework for hydrogen infrastructure and markets and for integrated network planning. In particular, the package envisages the issuing of gas quality standards and its monitoring, also following blending; it also envisages the development of a low-carbon hydrogen certification scheme. The certification scheme (it also extends to derivative products) is to be developed in line with what is already envisaged for renewable hydrogen of non-organic origin, thus completing the regulatory framework for the traceability and certification of hydrogen and “low-carbon” fuels, whether produced in the EU or imported.

***

The Strategy envisages several scenarios, emphasising that the multiplicity and complexity of hydrogen development issues means that a number of factors must be taken into account that cannot be fully determined well in advance of the time when a broad deployment of technologies will be needed. Hence the choice of several scenarios to chart a medium- to long-term course on the use of hydrogen.

In the ‘high employment’ scenario, the hydrogen carrier is given a very important role, although differentiated sector by sector. In contrast, the ‘base’ scenario, while recognizing a significant contribution to hydrogen, assumes a longer delay in the maturation and achievement of competitiveness of this vector. 

The scenarios to 2050 estimate hydrogen consumption at between 6.4 and 11.9 million tonnes per year (6.39 million tonnes in the ‘base’ scenario, 9.08 million tonnes in the ‘intermediate’ scenario and 11.93 million tonnes in the ‘high employment’ scenario). The ‘high employment’ scenario envisages consumption covering 30% of transport, 18% of hard-to-abate industry and 0.7% in the civil sector in 2050. 

The projected investments vary according to the share of domestic production and import: a scenario with 70% domestic production and 30% import and a scenario with 80% import and 20% production. In the scenario with 70% domestic production, EUR 8-16 billion is estimated for 15-30 GW of electrolysis, while with 80% import the expenditure is reduced to EUR 2-5 billion for 4-9 GW.

[i] Hydrogen is often classified according to the production chain used. However, one may still come across terminology, which is not official, referring to colors: (i) grey hydrogen, produced from fossil sources without capturing the CO2 produced; (ii) blue hydrogen, produced from fossil sources but capturing the CO2 produced; (iii) green hydrogen, produced from renewable sources; (iv) pink hydrogen, produced from nuclear sources; (v) white hydrogen, of geological origin. The European Hydrogen Strategy (COM/2020/301), on the other hand, refers to different types of hydrogen, classifying them as follows 1) electrolytic hydrogen, produced through the electrolysis of water in an electrolyser powered by electricity, irrespective of the source of the latter; 2) renewable (or clean) hydrogen, produced through the electrolysis of water by electricity from renewable sources 3) hydrogen of fossil origin, produced through various processes whose raw materials are fossil fuels; 4) hydrogen of fossil origin with carbon capture, characterised by the capture of greenhouse gases emitted during the production process; 5) low carbon hydrogen, which includes hydrogen of fossil origin with carbon capture and electrolytic hydrogen.

The Regional Administrative Court, upholding the appeal brought against the denial measure issued at the end of the simplified authorization procedure for the construction of photovoltaic plant, with a nominal capacity of 4MW, rejected the Administration's argument that the project did not fall within a suitable area because it was more than 500 meters away from industrial plant, since the Terna station had to be consider as “technological infrastructure.”

Recalling some rulings of the Supreme Court that have recognized the “industrial” character of the activity related to the production of energy developed by wind farms and hydroelectric power plants (see Cass. civ, Sec. V, ruling Nos. 14042/2020 and 14007/2024), the Court considers that the notion “industrial plant” should be interpreted “not in a restrictive sense - that is, as an industrial activity functional to the transformation of materials into new products - but also as an activity aimed at the transformation of hydrostatic potential energy into kinetic energy and, therefore, into electrical energy”. 

The Regional Administrative Court points out how, the reason behind Art. 20 paragraph 8 letter c ter) Legislative Decree 199/2021 - which establishes, even if transitory, the criteria relating to the identification of areas suitable to host the installation of photovoltaic plants - is based on the need to “promote urban decorum and therefore to concentrate, where possible, renewable energy plants in areas already with a strong urban impact”.

The Lazio Regional Administrative Court, therefore, further extends the concept of “industrial plant”, in a sense not dissimilar to what the MASE had already done, with answer no. 130318 to the interpellation of the Municipality of Villalba, last 8 August 2023, recalling in the definition of “establishment” provided in art. 268, paragraph 1, letter h) of Legislative Decree, 3 April 2006, No. 152, recognizing the nature of “industrial establishment” also to ground-mounted photovoltaic plant with a nominal capacity exceeding 20 kW, considering that even a photovoltaic plant can be identified as a “unitary and stable complex or industrial establishment since it is made up of a set of, for example, modules, inverter, storage system, monitoring system that are interconnected as an overall production cycle, and that the qualification of establishment also refers to the place used in a stable manner for the exercise of one or more activities”.

For a more complete analysis of the document, it seems useful to also delve into the contents of the related Illustrative report (“Illustrative Report”) for which the DDL delegates the government to define a regulatory framework for the production of energy from sustainable nuclear sources suitable for attracting private and public investment and is part of the strategic policies aimed at ‘ensuring the supply, economic development, national sovereignty and the country's independence’ in the geopolitical context, within the framework of decarbonization goals and also aiming at ‘cost sustainability for end users (domestic and non-domestic) and the competitiveness of the industrial system’.

SMR, AMR, microreactors, and fusion: new technologies that remove constitutional barriers and respect the principle of technology neutrality

In this broad scenario, the government considers it necessary to equip itself with a supply of electricity produced on a continuous basis over time being convinced that the goals of decarbonization and energy independence could hardly be achieved with renewable sources alone, which are characterized by the non-programmability and non-complete predictability of production, thus recalling the second scenario outlined in the PNIEC, according to which, by 2050, nuclear energy can cover between 11% and 22% of demand, with 8-16 GW of installed nuclear capacity.

The Illustrative Report points out that the technologies - SMRs (Small Modular Reactor), AMRs (Advanced Modular Reactors), microreactors and nuclear fusion power - besides still being under development should ensure high standards of safety and efficiency. It follows that, the current regulatory intervention would not find any obstacle in the referendums by which Italy renounced, in 1987 and 2011, the production of energy from nuclear sources, also in light of constitutional jurisprudence, which sees a limit descending from previous referendum abrogations, only if, over time, there had been ‘no change in either the political framework or the factual circumstances’ (Constitutional Court, Sent. 199/2012). 

The Illustrative Report also recalls the principle of technological neutrality for which it should be the market that chooses among the various options the most effective and competitive ones.  To date, however, there is no information available regarding the cost of new technologies.

Next steps: related terms exceed the duration of the legislature

Specifically, Article 1 of the DDL, recalling the purposes already analyzed, provides that the Government shall exercise the delegation of authority within 12 months of the law's entry into force, adopting one or more legislative decrees to regulate the production of nuclear energy in Italy, including for the purpose of hydrogen production. Within 24 months of the entry into force of each decree, the government may adopt one or more legislative decrees with supplementary and corrective provisions, including for the purpose of drafting a single text. 

There is therefore a very real likelihood that a complete regulatory framework applicable to new investments in energy production from renewable sources will not be defined during the current legislative term.

The provisions of the DDL

Among others, the delegation is concerned with: 

(i) the preparation of an organic regulation of the entire life cycle of nuclear, from experimentation and design to the licensing of plants, their operation, and the management, storage and disposal of radioactive waste and the decommissioning of plants, in compliance with quality and safety standards guaranteed and validated by international and supranational bodies; 

(ii) the delivery by project promoters of adequate financial and legal guarantees to cover the costs of construction, operation and decommissioning of the plant and for the risks, including those not directly attributable to them, arising from nuclear activity; 

(iii) the regulation of ways to support the construction of plants and the production of energy from sustainable nuclear sources; 

(iv) the regulation of the testing, siting, construction and operation of new plants for the production of energy from sustainable nuclear sources, plant for temporary storage as well as, if not processable, recyclable or reusable, final disposal, radioactive waste and spent fuel;

(v) the regulation of decommissioning and dismantling of existing nuclear plants on the national territory;

(vi) ways of promoting research and development activities, including through forms of incentives for related investments; 

(vii) the discipline on safety, supervision and control, including through the establishment of an independent administrative authority and the reorganization or abolition of the bodies and entities with competencies in this area.

In Article 3, the DDL sets guiding principles and criteria for the drafting of legislative decrees, including:

(i) as to authorization aspects: (a) the provision of a single permit for the construction and operation of the plants that also constitutes a variant to the urban planning instruments in force; (b) the provision that the interventions are of public utility, nondeferrable and urgent and that the permit may include, where necessary, the declaration of immovability and the affixing of the constraint preordained to the expropriation of the property included therein; (c) the provision of integrated enabling procedures involving the Ministry of the Environment and Energy Security, respecting the powers of the independent authority to be established; 

(ii) as to economic, guarantee and incentive aspects: (a) the provision of adequate financial instruments, with charges to be borne by the licensed entity, to guarantee the management of the entire life cycle of the plant itself, up to final decommissioning, including the management of radioactive waste and spent fuel; (b) the identification of the instruments of guarantee as well as financial and insurance coverage, to be borne by the operator of nuclear activities, against risks related to the operation of such activities, including for reasons independent of the operator himself; (c) the determination of the criteria for the allocation of any forms of support for operators.

The location of the plants

Then there remains the issue of the location of new power plants and nuclear waste repositories in a country where communities often struggle to accept even the installation of photovoltaic modules and wind turbines. It is no coincidence that there a number of references to territorial contexts such as the ‘promotion and enhancement of the territories concerned’, ‘the provision of modalities for the participation of the qualified entity in the promotion, development and enhancement of the territory affected by the location of the plant, giving preference to modalities based on agreements between the entity itself and the administrations concerned’;  the ‘strict observance of the principle of loyal cooperation with the ‘circuit’ of territorial authorities for all cases in which their involvement is constitutionally necessary’, the ‘provision of forms of capillary information towards the specific populations affected by the location of the facilities, as well as consultation with them’.

The FER-X Transitional Decree has been signed but has not yet been published (and therefore has not yet come into force) by the Ministry of Environment and Energy Security in implementation of Articles 6 and 7 of Legislative Decree No. 199/2021. Its goal is to support the production of electricity from renewable energy sources with costs close to market competitiveness.

2. Scope of Application

The Decree applies to electricity generation plants powered by:

• Photovoltaic

• Wind

• Hydroelectric

• Residual gases from purification processes

Agrivoltaic systems are also eligible for incentives, as they fall under the photovoltaic category. However, they do not benefit from any additional incentives or priority criteria for admission to the incentive mechanism.

The scope of application also includes full and partial revamping, as well as upgrades of existing plants, but only for the newly added section attributable to the upgrade.

The validity of the Decree is transitional, expiring on 31 December 2025, unless the power quota for plants larger than 1 MW is exhausted earlier. For plants with a capacity below 1 MW, the Decree will cease to apply 60 days after reaching the 3 GW power quota, if this occurs before 31 December 2025.

3. Support Mechanism

The Decree provides two ways to access incentives:

• Direct access for plants with a capacity ≤ 1 MW (provided they began construction after the FER-X transitional decree came into force).

• Competitive procedures (reverse auctions) for plants with a capacity > 1 MW, with assignment based on economic bids.

For plants with a capacity > 1 MW, the incentive mechanism operates only for 95% of the energy produced by the eligible plants.

The power quotas for small-scale plants amount to 3 GW, while the quotas for competitive procedures are:

• Photovoltaic: 10 GW

• Wind: 4 GW

• Hydroelectric: 0.63 GW

• Residual gas from purification processes: 0.02 GW

• Total: 14.65 GW

4. Selection Criteria and Priorities

Access to incentives is subject to compliance with environmental, technical, and economic requirements.

For plants with a capacity greater than 1 MW, a key requirement is the mandatory participation in the Balancing and Redispatch Market.

Other key requirements for these plants include:

• A valid permit for the construction and operation of the plant (producers can apply for competitive procedures with an environmental impact assessment approval if required).

• A final connection agreement and registration of the plant in Terna’s GAUDI system, validated by the grid operator.

• Compliance with performance requirements and EU/national environmental protection standards, including the “Do No Significant Harm” (DNSH) principle and Annex 3 requirements.

• Proof of financial solidity, which can be demonstrated by: 

  • A bank statement confirming the financial and economic capacity of the applicant.

  • Capitalization requirements (fully paid-up share capital and/or capital increase deposits) based on the investment value: 

    • 10% for investments up to Euro 100 million.

    • 5% for investments between Euro 100 million and Euro 200 million.

    • 2% for investments above Euro 200 million.

Plants larger than 1 MW that started construction before submitting their competitive procedure application are not eligible for incentives.

In case of excess applications compared to available quotas, priority criteria include:

• Removal of asbestos/eternit for photovoltaic plants.

• Full refurbishments and upgrades in agricultural areas without increasing occupied land.

• Location in areas classified as suitable by national regulations.

• Inclusion of storage systems to improve production scheduling.

• Long-term supply contracts (minimum 10 years).

• Earlier application submission date.

Applicants for competitive procedures must provide a temporary guarantee as project quality assurance and commit to providing a final guarantee within 90 days of the final ranking's publication.

The final guarantee is set at 10% of the investment cost based on the following technology-specific investment costs:

The temporary guarantee equals 50% of the final guarantee.

If an applicant withdraws within six months, 30% of the final guarantee is forfeited. If withdrawal occurs between six and twelve months, 50% is forfeited. If the deadline is missed entirely, the full guarantee is forfeited.

5. Incentive Modalities and Pricing

For plants <200 kW, GSE directly purchases and sells the electricity, providing a flat-rate tariff based on the awarded price. However, applicants can opt for the scheme used for plants ≥200 kW.

For plants ≥200 kW, support is granted through a two-way Contract for Difference (CfD):

• If the market price is below the awarded price, GSE compensates the difference.

• If the market price is higher, the producer reimburses the difference.

The market price is the day-ahead market price (PZ) from GME.

The awarded price depends on competitive bidding, but current reference "ceiling prices" are:

• Photovoltaic & Wind: €95/MWh

• Hydroelectric: €105/MWh

• Residual gas: €100/MWh

Additional price corrections:

• +€27/MWh for photovoltaic plants replacing asbestos/eternit.

• +€5/MWh for installations on water surfaces.

Market-negative or zero-price situations:

• For plants participating in the Balancing Market, incentives apply only to the electricity that could have been produced.

• For plants not in the Balancing Market, incentives are suspended for the negative/zero-price period.

In case of curtailment (production cuts), incentives apply only to curtailed volumes.

6. Construction Deadlines and Penalties

Plants must be operational within 36 months of the ranking's publication (except in force majeure cases).

Delays result in progressive tariff penalties:

• 0.2% per month for the first 9 months of delay.

• 0.5% per month for the following 6 months.

• After 15 months, eligibility for incentives is revoked.

• If the plant later reapplies for support, the tariff is reduced by 5%.

Failure to meet deadlines results in the forfeiture of the final guarantee.

7. Publication and Next Steps

The decree has not yet been published and will come into force the day after its publication on the Ministry of Environment and Energy Security (MASE) website.

Within 90 days of its entry into force, further regulations will be issued by GSE and ARERA, covering:

• ARERA: Setting auction prices for plants ≤1 MW.

• ARERA: Publishing reference "ceiling prices."

• ARERA: Technical and procedural rules for: 

  • Managing negative/zero prices and curtailment.

  • Enabling plants to participate in the Balancing and Redispatch Market.

The judgment is in accordance with a well-established in case law (on this point, ex multis, Regional Administrative Court of Lazio Region nos. 10162/2024, 11508/2024, 1385/2023, 12196/2023, 12641/2023; Council of State, no. 6060/2018) according to which the GSE's right of claim is subject to the ten-year limitation period and the day from which such right may be asserted cannot be postponed to the outcome of the verification and control proceedings but runs from the date of disbursement of each single payment made in favour of the incentivized plant, the public nature of the function concerning the regulation of the internal energy market and its incentive system being of no relevance. The only exception (expressly provided by Article 2941 no. 8 of the Italian Civil Code) is represented by the fraudulent intent of the beneficiary, which entails the suspension of the limitation period term until the fraud is discovered.

The task of verification and control can, in fact, be exercised by the GSE immediately after admission to the incentives, so only the GSE itself must be held liable for the failure (or delay) in exercising such powers. It follows that the timing and date of the start of the proceedings cannot result in the forward shifting of the dies a quo of the limitation period, on penalty of an undue postponement of the limitation period left to the discretion of the GSE.

Therefore, as things now stand, there is no dispute about the principle, which has already been established several times by administrative case law, according to which, on the one hand, in the presence of a verified circumstance of undue payment of the incentive tariff, the GSE cannot recover the sums paid out in respect of which the ten-year limitation period has already expired pursuant to Article 2946 of the Italian Civil Code, on the other hand, that that limitation period does not run from the date on which the GSE adopted the tariff reduction measure, but from the date of each single payment.

Below there are some of the most important novelties concerning environmental authorizations.

One of the aims of the Environmental Decree is to speed up the process of environmental assessments and authorizations by introducing a fast track for certain projects. On this point, by amending Article 8 of Legislative Decree No. 152/2006, the Environmental Decree includes among the projects to be given priority in the order of treatment by the State Technical Commission for Environmental Impact Assessment - EIA and SEA as well as by the PNRR-PNIEC Technical Commission, those “of pre-eminent national strategic interest pursuant to art. 13 of Decree-Law no. 104 of 10 August 2023, converted, with amendments, by Law no. 136 of 9 October 2023” and “those having the characteristics referred to in Article 30 of Decree-Law no. 50 of 17 May 2022, converted, with amendments, by Law no. 91 of 15 July 2022” . Among these, priority shall be given to the project types to be identified by decree of the Minister of the Environment and Energy Safety, in agreement with the Minister of Culture and the Minister of Infrastructure and Transport, taking into account the following criteria:

(a) reliability and technical and economic sustainability of the project in relation to its implementation;

b) contribution to the achievement of the decarbonization objectives set out in the PINIEC;

c) relevance to the implementation of the investments of the National Recovery and Resilience Plan;

d) enhancement of existing works, plants or infrastructure.

Pending the adoption of the decree, priority is to be given to, in order to: 

1. the projects of new hydroelectric storage plants by pure pumping that provide, also through the restoration of the conditions of normal operation of the existing reservoirs, an increase in the volumes of water that can be stored (provision added at the time of conversion);

2. the works and plants for geological storage, capture and transport of CO2, as well as their functionally connected plants, and industrial plants subject to conversion into biorefineries (provision added on conversion);

3. projects concerning green or renewable hydrogen installations referred to in number 6-bis) of Annex II to Part Two and related installations from renewable sources; 

4. projects for new installations concerning hydroelectric derivations with a capacity of up to 10MW (provision added on conversion);

5. revamping and repowering of plants powered by wind or solar sources;

6. on-shore photovoltaic and on-shore agri-voltaic projects with a nominal capacity of at least 50 MW and on-shore wind projects with a nominal capacity of at least 70 MW.

A quota of no more than three-fifths of the Commissions' processing is reserved for such projects, without prejudice to the chronological order of priority of the date of communication to the proponent of the publication of the documentation on the competent authority's website, which is valid for all projects, whether priority or not. 

To accelerating the assessment of projects, the Decree also provides that, in the event of delay in the issuance of the EIA measure, the President of the EIA-SIA Commission and the President of the PNRR-PNIEC Technical Commission may order the assignment of the project to the EIA-SIA Technical Commission, without prejudice to the application of the procedural discipline relative to the environmental impact assessments of PNRR and PNIEC projects.

Stringent and innovative provisions are introduced with reference to the EIA screening procedure pursuant to Article 19 of Legislative Decree No. 152/2006: 

(i) within fifteen days from the expiration of the term of 30 days from the communication to the interested administrations of the publication of the documentation on the portal, the competent authority may request clarifications and integrations from the proponent in order to exclude the submission of the project to the EIA procedure, assigning a term not exceeding thirty days, after which, in the absence of the requested integrations, the request is considered rejected

(ii) the competent authority adopts the measure of verification of subjection to EIA within 60 days from the date of expiration of the term of 30 days from the communication to the interested administrations of the publication of the documentation on the portal or, in the case of requests for clarifications or documental integrations, within 45 days from the receipt of the clarifications or integrations requested. In exceptional cases, the competent authority may extend, for a period not exceeding 20 days, the deadline for the adoption of the EIA screening measure, promptly notifying the proponent, in writing, of the reasons justifying the extension.

The Decree also provides that the measure of verification of subjectivity to EIA cannot have an effectiveness of less than five years, indicated in the measure itself, taking into account the expected time for the realization of the project, the necessary authorization procedures, and any proposal formulated by the proponent. Once this term has elapsed without the project having been carried out, the procedure must be repeated, without prejudice to the granting of a specific extension by the competent authority, at the request of the proponent accompanied by the relevant findings concerning the environmental context of reference and any changes, including design changes, that have occurred. Also in this case, within 15 days from the request, the competent authority may request additional documentation, assigning a peremptory term of no more than twenty days for the relative submission. If the documentation is again incomplete, the application shall be deemed withdrawn. Except in the case of a change in the environmental context of reference or modifications, including design modifications, the measure with which the extension is ordered does not contain prescriptions that are different and additional to those already provided for in the original measure of EIA subjectivity verification. If the petition is filed at least 90 days before the expiration of the effective date of the measure, the latter continues to be effective until the competent authority adopts the determinations relating to the granting of the extension. 

The Environmental Decree then introduces, as a partial exception to the general principle under Law No 241/1990 - according to which silence-consent does not operate in environmental matters -,  the mechanism of silence-consent in relation to the acceptance of the request to suspend the procedure up to a maximum of 12 days in the event that, as a result of the consultation or the submission of counter-deductions by the proponent, it becomes necessary to amend or supplement the project documents or the documentation acquired. The aforementioned request is deemed to have been granted if the EIA-SIA Commission or the PNRR-PNIEC Technical Commission remains silent after seven days from the suspension request.

A further novelty concerns the verification by the Ministry of Culture of the adequacy of the landscape report attached to the EIA (art. 24, paragraph 5, Legislative Decree 152/2006). Also in this case, with the identical mechanism foreseen before the Technical Commissions, in the event of a request for integration, if the proponent does not respond within the time limit indicated by the authority (in any case not exceeding 30 days, extended by a further 30 days at the proponent's request), the EIA petition is automatically considered rejected and the Ministry of Culture notifies the proponent and the competent authority, which is obliged to proceed with the filing.

With the aim of affecting the recent jurisprudential orientations of the Council of State (ex multis, Council of State. nos. 7299/2024, 4098/2022), for which it can be considered that the landscape authorization is included in the scope of the EIA measure issued by Resolution of the Council of Ministers pursuant to Article 5, paragraph 2, lett. c-bis) of Law 400/1988, the Decree also introduces art. 25, paragraph 2-quinquies of Legislative Decree 152/2006, providing that the agreement of the competent director general of the Ministry of Culture includes the landscape authorization where the landscape report allows a positive assessment of the landscape compatibility of the project. The Ministry of Culture is also required to adequately justify any rejection and, in the event of a favourable opinion of the VIA-VAS Technical Commission or PNRR-PNIEC Technical Commission, Article 5, paragraph 2, letter c-bis) of Law 400/1988 may be applied, overriding the disagreement with a Resolution of the Council of Ministers that replaces to all effects the favourable EIA measure and includes the landscape authorisation where the landscape report is complete and allows a positive assessment of landscape compatibility.

Lastly, the conversion law amended the provision of the Environmental Decree that had most worried operators in the version published in the Official Gazette, last 18 October: in paragraph 2 of Article 1 it was, in fact, provided that ”for projects of energy production from renewable sources, the proponent shall attach to the EIA application pursuant to Article 23 of Legislative Decree No. 152 of 2006 also a declaration certifying the legitimate availability, for any reason, of the surface and, if necessary, of the resources necessary for the implementation of such projects”.

The provision seemed to make it necessary for all renewable energy production projects involving recourse to the EIA procedure, the immediate demonstration of the availability of the surface area affected by the plants.

This claim, however, appeared, from the outset, to be completely unreasonable, considering the expense commitment (the acquisition of the availability of the land) in an completely transitory project phase, also considering that during the EIA procedure itself there are frequent requests by the authorities to move the plant components and the relative connection works. At the same time, the regulation appeared to fail to take due account of the circumstance that the availability of areas is often necessarily obtained after the authorization phase through subsequent expropriation - as often happens in the case of wind power - or public concession on state land - in the case of hydroelectric power -.

The conversion law has fully replaced the aforementioned paragraph 2 of Article 1, providing that for energy production projects from photovoltaic, thermodynamic solar, biomass or biogas sources, as well as the production of biomethane (thus excluding wind and water sources), the proponent of the EIA measure must attach a self-declaration attesting to the legitimate availability, for any reason whatsoever, of the area on which the plant is to be constructed, without prejudice to the consequent procedures for the interconnection works.

This article details the role of the Gestore dei Servizi Energetici – G.S.E. S.p.A. (“GSE”) as the guarantor of last resort and analyzes the anticipated impacts of this measure.

The Regulatory Context

As mentioned, the legislative measure aims to enhance the security and attractiveness of PPAs by amending Article 28 of Legislative Decree No. 199/2021 and removing certain legal, administrative, and financial barriers to their dissemination, thereby facilitating the achievement of decarbonization objectives through the use of renewable energy. Specifically, the first two paragraphs of the current Article 28[1] provide for the following:

• the establishment of a digital notice board by the Gestore dei Mercati Energetici – G.M.E. S.p.A. (“GME”) aimed at: (i) collecting announcements from operators interested in negotiating PPAs as sellers/producers or buyers, facilitating their interaction through the “Announcements Section”; (ii) enabling the registration of PPAs already concluded by operators registered on the notice board through the “Contracts Registration Section”; and (iii) managing the allocation procedures of electricity related to the so-called “energy release” mechanism as per the Ministerial Decree of 16 September 2022[2], through the “Energy Release Section” (“PPA Notice Board”).

• the establishment of an organized trading platform, managed by GME, based on voluntary participation and aimed at facilitating the signing and dissemination of PPAs among interested operators (sellers or buyers), thereby contributing to the achievement of decarbonization goals as encouraged by paragraphs (27) and (28) of Regulation (EU) 2024/1747 (“GME Platform”).

It is important to note that the GME Platform, at present, is not yet operational and is distinct from the PPA Notice Board, which is currently fully operational and functional. Article 8 of the Emergency Decree introduces two new paragraphs to Article 28 of Legislative Decree No. 199/2021. Specifically, the new paragraph 2-bis stipulates that, through a dedicated decree, the Ministry of Environment and Energy Security (“MASE”) will establish criteria and conditions for the GSE to assume the role of guarantor of last resort in PPA contracts, in line with a broader system of guarantees to be defined by the same decree through the identification of requirements and obligations for the contracting parties.

This initiative is part of the broader efforts under the Repower EU chapter of the PNRR to adopt primary and secondary legislation by 2024, aimed at increasing market operators’ confidence in negotiating PPAs, reducing perceived risks associated with PPAs, encouraging broader participation in the market, and stabilizing the market and prices related to long-term energy purchase agreements.

The Functions of the GSE as Guarantor of Last Resort

The new legislation provides that the GSE will step in for the defaulting party (producer or buyer) in a PPA to guarantee the fulfillment of the obligations undertaken by that party towards the non-defaulting counterparty.

It is worth noting that the new system appears to be limited in its scope to only PPAs concluded through the GME Platform. Supporting this are: (i) the reference in the opening lines of paragraph 2-bis of Article 28 of Legislative Decree No. 199/2021, which mentions the goal of the new guarantee system, namely, “the development of long-term contracts through the GME Platform referred to in paragraph 2, first sentence,” and (ii) the mention of the ministerial decree that will regulate the functioning of the GME Platform as the main implementing regulation of this new guarantee system.

Additionally, it should be clarified that the guarantee provided by the GSE, through stepping into the relevant contract, will only operate as a last resort. This means it will come into play only when the additional guarantees provided for in the ministerial decree fail to offer adequate coverage to the non-defaulting party in the event of the other party’s breach. In this regard, the second paragraph of the new Article 28, paragraph 2-bis, of Legislative Decree No. 199/2021 provides for the support of a guarantee system integrated with the rules of the GME Platform and potentially similar in operation to the mechanisms provided for participation in the Electricity Market.

Finally, as of now, as previously mentioned, the GME Platform has not yet been activated. Therefore, at this stage, the new guarantee system is not applicable to any PPA.

Estimates of the Economic Impacts at the Macro Level and on Individual PPAs

According to the technical report attached to the Emergency Decree, the guarantee system is designed to cover the needs associated with a total capacity of 10 GW[3] of renewable energy by 2030, equivalent to 15.7 TWh/year, about one-twentieth of the national electricity consumption.

The estimated costs for GSE (the energy services operator) are approximately €45 million per year for a five-year period, for a total of €224 million. These costs will be primarily covered by revenues from ETS auctions[4] and, to a limited extent, by system charges. Furthermore, as suggested by the technical report, the future guarantee mechanism, the subject of this contribution, could be less financially burdensome for GSE if the legislator were to provide for the availability of the energy subject to the PPA (Power Purchase Agreement) once GSE assumes the role of buyer rather than seller, eliminating the risk related to market fluctuations.

However, it is believed that the Italian legislator must carefully evaluate the feasibility and methods through which GSE can eventually obtain availability of the energy covered by the PPAs.

In this regard, less problematic seems to be the hypothesis of taking over the buyer’s contractual position, where it is assumed that, to obtain availability of the energy covered by the PPA:
(i) GSE could be appointed as the dispatching user concerning the plant covered by the relevant PPA, directly withdrawing the energy delivered to the plant’s POD (Point of Delivery) and thus obtaining its availability; or, in a less protective scheme for GSE,
(ii) the buyer could be required to transfer the energy produced and fed into the grid by the plant through the PCE (Energy Trading Platform) to GSE’s account, thereby making it available to GSE.

On the other hand, concerning the hypothesis of taking over the seller’s contractual position, it is hypothesized that: (i) GSE could be appointed as the dispatching user concerning the plant covered by the relevant PPA, directly withdrawing the energy delivered to the plant’s POD, thereby obtaining its availability, and then committing to transferring these volumes via the PCE to the buyer; or, in a less impactful scheme on the contractual structure,
(ii) GSE could take over the seller’s position only concerning the latter’s creditor position, giving up, however, the availability of the energy. In any case, the risk to which GSE would be exposed in this context is that the producer neglects the maintenance and management of the plant.

In any event, the possible availability of energy, combined with operational efficiency criteria, would contribute to minimizing the overall economic impact on the system, reducing price risk. Finally, the technical report attached to the Emergency Decree emphasizes that the effectiveness of the mechanism depends on conditions such as market price stability and the application of contractual clauses that limit the risk for GSE, ensuring a potentially zero economic impact[5].

As for the negotiation of individual PPAs, it will be necessary to verify how the implementing ministerial decree will effectively implement the guarantee mechanism and under what conditions. For now, it can be anticipated that the guarantee mechanism in question will not eliminate the need to require the parties to provide guarantees to support the fulfillment of contractual obligations, as the GSE guarantee will operate “as a last resort,” and therefore, likely, only after all other contractually provided forms of guarantee have been exhausted. In this regard, it will also be interesting to understand what type of guarantees operators will need to provide to access the GME Platform.

Moreover, it is expected that the measure in question will in any event have an impact on the costs relating to the guarantees that the parties will have to provide in the context of a PPA and, therefore, indirectly, also on the price of the energy subject to the PPA itself, even though, in this calculation, it must be taken into account that the guarantee of last resort mechanism will be the subject of a specific consideration.

Finally, as a negative side effect of the purpose of such guarantee system aimed also at breaking down the barriers to entry into the PPA market, there is the possibility of the spread of practices characterized by a higher degree of “moral hazard” dictated by the existence of a guarantee system based, in the last resort, on the takeover of a third entity as contracting party.

[1] These first two paragraphs remained unchanged from the text of Legislative Decree 199/2021 as originally published in the Official Gazette.

[2] Please note that this is not the recent energy release mechanism introduced by Decree Law No. 181/2023.

[3]Including 7 GW of photovoltaic capacity and 3 GW of wind power capacity.

[4] See paragraph 2-ter of the new Article 28 of Legislative Decree No. 199/2021.

[5] It should be noted that the new regulation was adopted considering price scenarios between 65 and 115 Euro/MWh on spot markets and an average PPA contract price of 90 Euro/MWh.

The Operating Rules, issued by the GSE, provide the necessary information for the fulfilment of the provisions of FER 2 and, in general, of the relevant legal and regulatory framework.

The document illustrates the timeframes and processes for conducting the planned competitive procedures, the modalities for reallocating any unallocated production capacity, and the terms and fulfilments required for participation in the procedures and for inclusion in the rankings. The criteria for the formation of the rankings and the reasons for exclusion are also regulated, as well as the effects of renunciations and the reasons which, if ascertained after the start of operation, during the evaluation phase of the request for access to the incentives, lead to the forfeiture of the ranking list.

Each competitive procedure corresponds to 

• a public tender;

• a production capacity quota, expressed in MW, for each procedure envisaged, to be allocated to the plants participating in the procedure;

• a ranking list, drawn up by the GSE as a result of the selection of projects and which takes into account any percentage reduction offered with respect to the reference tariff used as a basis for the competitive procedure and any application of priority criteria.

FER 2 provides for nine types of procedures, depending on the type of plant and the category of intervention. The types of plants allowed are

• biogas plants with a nominal capacity of no more than 300 kW of electricity

• biomass plants with a nominal capacity of no more than 1,000 electric kW;

• thermodynamic solar plants of any power;

• offshore floating wind power plants and offshore wind power plants on fixed foundations with a minimum distance from the coast of 12 nautical miles, of any power;

• off-shore floating photovoltaic installations and off-shore floating photovoltaic installations on inland waters, of any power;

• tidal, wave and other marine energy installations of any power; 

• geothermal plants, conventional with innovations or with zero emissions, of any power.

FER 2 aims to support the realization of a total of 4.6 GW between 2024 and 2028.

Feed-in tariffs vary between 100 €/MWh and 300 €/MWh depending on technology and power. The technology on which the Decree focuses most is offshore wind power with 3.8 GW.

In order to participate in the auctions, one must be in possession of a permit (or favourable environmental impact assessment, where applicable) and a definitively accepted interconnection solution. Certain minimum environmental and performance criteria must then be met. 

Both new construction projects and, for traditional geothermal plants with innovations only, projects for the revamping of existing plants are admitted to the procedures.

Each competitive procedure remains open for a period of 60 days from the date of publication of the notice on the GSE website, and the relative rankings are published within 90 days of the closing date.

In the event of non-saturation of the power quota, the GSE, for each type of procedure, in order to reallocate the available resources, provides for mechanisms to reallocate the unallocated power: in each competitive procedure the unallocated residual power quota is allocated to the quota of the first subsequent procedure, until the quotas are exhausted.

In addition, the GSE will assess the possibility of reallocating the power quota related to plants that were admitted in a useful position in a previous ranking and for which the applicant has submitted a waiver.

A mechanism for checking and supplementing applications is envisaged. Nonetheless, no responsibility can be attributed to the GSE, for failure to report inaccuracies or documental deficiencies, in respect of alleged errors committed at the time of the application for registration to the competitive procedures or of incorrect transmission of the mandatory documentation by the applicant, as the principle of ‘preliminary relief’ cannot be applied.

Failure to prove possession of the requirements and/or priority criteria declared during the registration phase shall result in exclusion from the ranking list.

FER 2 provides for the possibility (for plants with a capacity of up to 300 kW) or obligation (for plants with a capacity of over 300 kW) for applicants to make an offer of a percentage reduction in the reference tariff. If the reduction offered is equal, and the quota is saturated, the other priority criteria provided for by the decree will be taken into account:

a. plants built in the areas identified as suitable in implementation of Articles 20 and 23 of Legislative Decree No. 199 of 2021;

b. earliest date of completion of the application for participation in the procedure.

The percentage reduction offer must be greater than or equal to 2%, for plants with a power exceeding 300 kW. For each type of procedure, the reference tariff is that set out in Annex 1 to FER 2, reduced by 3% per year from 2025. For plants with power up to 300 kW, this reduction applies from 2026.

For plants that have been placed in a good position in the rankings published after the respective competitive procedures, FER 2 envisages, based on the source, the category of intervention and the type of applicant, compliance with precise time limits for entry into operation for the purpose of accessing the incentives; subsequent to entry into operation, the applicant may apply for the incentive.

The document also regulates the phase of requesting recognition of the incentive, the relative procedure of evaluation and verification, the determination of the tariff, the activation of contracts, and the subsequent modalities for disbursement of the incentive, also providing for specific conditions of cumulability with other measures as well as the system of verifications and controls.

The FER 2 provides for two types of incentives: an all-inclusive tariff or an incentive, calculated as the difference between the due tariff and the hourly zonal energy price (referring to the market zone where the electricity produced by the plant is fed into the grid). In the event that the difference is positive, the GSE disburses the incentives in an amount equal to the aforementioned difference, on the incentivized energy, i.e. on the net production fed into the grid. In the event that the value of the incentive is negative, the GSE will request the restitution of this differential by means of an adjustment, offsetting against other items pertaining to the same entity or direct payment. Plants with a capacity of less than or equal to 300 kW may opt for one or the other type. For plants with an output of more than 300 kW, only the incentive will be recognized.

In the case of the all-inclusive tariff, the consideration paid includes the remuneration of the energy produced and fed into the grid, which is collected by the GSE; in the case of the incentive, the energy produced and fed into the grid instead remains at the producer's disposal.

The first tender for tenders opened on 16 December for biogas and biomass plants for a quota of 10 MW and will close at 12 noon on 14 February 2025.

The timetable for subsequent procedures will be approved by the Ministry, based on the proposal of the Manager, by 31 March 2025 and communicated by the GSE two months before the opening of each procedure.

The decree envisages at least one procedure per year for biogas and biomass and at least three procedures over the entire period, i.e. until the end of 2028, for other technologies.

The measure has been in force since 6 December, i.e. the day following its publication, and is applicable not only to plants whose authorization procedure was commenced after the date of entry into force of the law, but also to plants whose authorization procedure is underway and even to plants already authorized that have not implied an irreversible change to the state of the sites, whose authorization titles will be ineffective. 

The law provides for the abrogation of the previous regional law of 3 July 2024, no. 5, concerning ‘Urgent measures for the protection of the landscape and environmental assets’, introducing the so-called ‘Sardinian moratorium’, and, consequently, the withdrawal of the challenge to its legitimacy raised by the Council of Ministers before the Constitutional Court.

Sardinia is thus the first Italian region to have implemented the ‘Suitable Areas Decree’, with the ‘declared’ aim of identifying ‘suitable areas and suitable, unsuitable and ordinary areas, in order to favour the ecological, energy and climate transition’, guaranteeing the minimization of the environmental and landscape impact of renewable energy plants, as well as their spatial planning in compliance with both the EU's decarbonization and energy transition obligations and the regional overall power objectives, with the aim of maximizing the areas to be identified in order to facilitate the regional overall power objectives to be reached by 2030, as set out in the Decree on Suitable Areas.

In order to be able to identify the areas and surfaces suitable and unsuitable for the installation and promotion of renewable energy source plants, the measure firstly provides for the primary differentiation between plant sizes, identifying 

a. small size plants in photovoltaic, thermodynamic, and agri-voltaic plants with a nominal power less than or equal to 1 MW; wind power plants with a maximum overall height less than or equal to 20 meters; power generation plants from biomasses, landfill gas, residual gas from purification processes and biogas with a nominal power less than or equal to 200 kW; geothermal plants with a temperature of the fluid found less than or equal to 90 degrees centigrade; in storage plants with a nominal installed power less than or equal to 500 kW;

b. medium size plants in photovoltaic, thermodynamic, agri-voltaic plants with a nominal capacity greater than or equal to 1 MW and less than or equal to 10 MW; wind power plants with a total maximum height greater than 20 meters and less than or equal to 100 meters; biomass, landfill gas, sewage treatment plant gas and biogas power generation plants with a nominal capacity greater than 200 kW and less than or equal to 1 MW; geothermal power plants with a temperature of the fluid retrieved greater than 90 degrees centigrade and less than or equal to 150 degrees centigrade; storage plants with a nominal installed capacity greater than 500 kW and less than or equal to 1.2 MW;

c. large size plant in photovoltaic, thermodynamic, agri-voltaic plants with a nominal capacity exceeding 10 MW; wind power plants with a total maximum height exceeding 100 meters; power generation plants from biomass, landfill gas, sewage treatment plant gas and biogas with a nominal capacity exceeding 1 MW; geothermal power plants with a temperature of the fluid retrieved exceeding 150 degrees centigrade; storage with a nominal installed capacity exceeding 1.2 MW.

In consideration of the different plant sizes in Annexes A, B, C, D and E, as well as paragraphs 9 and 11, art. 1, L.R. 20/2024, unsuitable areas are therefore identified, in a far greater number than the suitable ones, identified, instead, in Annex F as follow

a) disused industrial areas, with the exception of large-scale wind farms

b) urban and special waste landfill areas, exclusively in the service areas outside the landfill body, limited to photovoltaic plants and small and medium sized wind farms

c) for the installation of photovoltaic plants, the sites and plants at the disposal of the Italian State Railways group companies and railway infrastructure managers

d) port areas, excluding marinas, limited to photovoltaic and wave energy production plants

e) airport areas, limited to photovoltaic plants

f) the areas pertaining to major roads already subject to transformation, limited to small-scale photovoltaic systems

g) limited to photovoltaic plants and small and medium sized wind power plants, first and second category quarrying areas

h) the areas of sites subject to reclamation proceedings, limited to photovoltaic plants and small and medium sized wind farms as well as biomass plants

i) the sections of water of the basins of the Regional Multi-sector Water System, as identified by the Water System's managing body, not used by fire-fighting aerial vehicles, and relevant appurtenances, limited to hydroelectric plants and floating photovoltaic plants up to 10 MW

j) for photovoltaic installations and small and medium-sized wind power plants, homogeneous urban planning zones D and zones G for commercial and logistical use

k) with the exclusion of large wind power plants, the industrial areas managed by the provincial industrial consortia, the industrial areas of regional interest, and the PIPs referred to in Article 27, Law No 865 of 22 October 1971

l) the homogeneous urban planning zones G referred to in Decree No 2266/U of 20 December 1983 of the Regional Councilor for Local Authorities, Finance and Town Planning for renewable energy, with the exception of large-scale wind farms

m) for the installation of photovoltaic systems, the infrastructure areas of the homogeneous urban planning zones G relating to the transport sector (roads, railways, ports and airports), excluding marinas, and to technological installations (waste cycle, water cycle, drinking water purifiers, sewage treatment plants, lifting plants, energy cycle)

n) limited to the installation of small and medium sized wind farms, the infrastructure areas of the homogeneous urban areas G, relative to technological plants (waste cycle, water cycle, drinking water purifiers, sewage treatment plants, lifting plants, energy cycle).

Each hypothesis contains specific technical conditions to which the construction of the plants is subject.

The construction of RES plants and storage facilities, regardless of whether they are located in eligible areas or in ordinary areas, is also subject to compliance with the requirements and prescriptions set forth in Annex G, as well as to compliance with the specific territorial, urban planning, construction, landscape, with particular reference to the Regional Landscape Plan, environmental and technical prescriptions pertaining to the area and the plant subject of the authorization application.

As provided for by Art. 1, paragraph 4, with regard to photovoltaic plants, without prejudice to compliance with the applicable territorial, town planning, building, environmental and landscape regulations, with particular reference to the provisions contained in the Regional Landscape Plan (PPR) and in the other town planning instruments, as well as the technical requirements per type of plant set forth in Annex G of the same regional law, suitable areas are identified as ‘the roofing surfaces of buildings, such as, by way of example and not limited to, buildings, canopies, pergolas, shelters, public and private, of any kind, legitimately built or to be built in compliance with the provisions of the town planning instruments, and the relevant cumulation systems’. Of particular relevance, moreover, is the subsequent clarification according to which, regardless of the recognition of suitable, unsuitable or ordinary areas (those for which the construction of RES plants is subject to case-by-case verification), ‘the construction of small-scale geothermal plants is always allowed, for which the authorisation discipline provided for by the regulations in force on suitable areas applies’.

The law also specifies, in the first part of paragraph 7, art. 1, that ‘if a plant project falls in an area included both in the areas defined as suitable, as per annex F, and in the areas defined as unsuitable, as per annexes A, B, C, D and E, the unsuitability criterion prevails’, while the restoration, complete reconstruction work on plants built before the law came into force and in operation in areas defined by the law as unsuitable, ‘are allowed only if they do not entail an increase in the gross occupied surface area and, in the case of wind farms, an increase in the total height of the plant’.

A further provision, Article 2 of the regional law, provides for the establishment, as from 2025, of a fund - fed by regional, national and European resources, with an initial endowment of Euro 678,000,000 for the years from 2025 to 2030 - for the granting of incentive measures, ‘both through the disbursement of non-repayable grants and through the use of financial instruments or through their combination’, in order to support the interventions aimed at the installation of photovoltaic and electricity storage systems for self-consumption and carried out by, in compliance with the requirements set forth in the same regulatory provision, (i) natural persons resident in Sardinia (ii) businesses and professionals with their operational headquarters in Sardinia; (iii) energy communities and other forms of self-consumption and sharing; (iv) municipalities, union of municipalities, provinces, metropolitan cities; (v) other regional, territorial public entities. These incentives are granted by means of an assessment procedure following a call for tenders, with special measures aimed at promoting energy communities.

The law also provides for simplification and acceleration measures for the promotion of RES plants, as well as measures to guarantee the implementation and reclamation of plant sites: firstly, in Article 3, municipalities are given the right to propose a preliminary application for the construction of a RES plant or storage within an area identified as unsuitable; this application, which is approved following a phase of ‘public debate’ by a qualified majority of the municipal council (or councils) whose territory is affected by the plant or storage, is finalized with the signing of an agreement with the Region; in the event that the aforementioned agreement is finalized, ‘the proponent has the option of submitting an application to the competent entities for the implementation of the intervention within the authorization regime envisaged for ordinary areas’, thus opting for the Simplified Authorization Procedure (PAS), or the Single Authorization (AU).

Secondly, for all RES plants and storage facilities and within one hundred and twenty days from the issuance of the authorization for their construction - and in any case before the submission of the notice of commencement of works -, Regional Law no. 20/2024 makes it incumbent on the authorized party to submit to the Regional Department of Industry a guarantee in an amount equal to the total value of the intervention in order to cover any failure to realize the plant or its realization in breach of the authorization issued, as well as to guarantee the decommissioning of the production plant, of the connected works and of the restoration works on the sites concerned. This provision also covers plants in the course of authorization and, with different mechanisms and timeframes, those already authorized for which work has not yet commenced, as well as plants for which work is in progress.

At the end of an overall analysis of the legislation (the destiny of which, in terms of a probable declaration of unconstitutionality, seems already sealed), the opportunities for building RES plants and accumulations appear, therefore, significantly reduced - as well as significantly conditioned by compliance with specific requirements - and it must be noted that the areas defined as ‘suitable’ represent only 1% of the entire regional territory: the law, whose application is foreseen, completely irrationally, even to plants that have already been authorized and whose works have already begun, manifests itself, therefore, as a further (illegitimate) restriction on the spread of renewables, constituting a new obstacle to the achievement of the imposed decarbonization objectives.

1. Plants on industrial areas, former quarries and landfills - Authorization with DILA without the need to obtain other opinions. 

In its decision no. 1922/2024, the Veneto Regional Administrative Court held that, according to Article 22 bis, Legislative Decree no. 199/2021, introduced by Article 47 paragraph 1 letter b) of Decree-Law no. 13/2023, being the installation of ground-mounted photovoltaic plant and the related connection works in areas for industrial, handicraft and commercial use or, again, in landfills or closed and restored landfill lots or lots or portions of quarries not susceptible to further exploitation, an ordinary maintenance activity, is not subject to the acquisition of any permit, authorization or act of consent. In such cases, any rejection measure adopted by the competent authority at the outcome of the PAS, (erroneously) activated by the operator, must be deemed unlawful. This also applies in the event that the aforesaid procedure was activated (in this case appropriately) prior to the entry into force of the aforementioned Article 22 bis, since, by virtue of the principle tempus regit actum, the new provision, in the absence of different transitional provisions, also applies to proceedings already pending at that date.

2. PAS in suitable areas - Related works may also be authorized in PAS where they are located in unsuitable areas.  

With order no. 605/2024, the Regional Administrative Court of Palermo, referring to the provision set forth in paragraph 1 ter, Article 22, Legislative Decree no. 199/2021, noted that the interconnection works of RES plants “may benefit from the simplified authorization rules provided for suitable areas, regardless of their location”. This implies that, even where such interconnection works are located in non-suitable areas, they can in any case - in abstract - be treated as insisting in suitable areas, with the procedural simplifications that comes therefrom, thus leaving it up to the Administration to justify the incompatibility of the works with the area in which they are to be located, having regard to the specific characteristics of the territory and the constraints that insist on it. The Regional Administrative Court comes to these considerations also by virtue of the well-established jurisprudence according to which areas not included in the list of suitable areas “cannot be declared unsuitable for the installation of renewable energy production plants, at the territorial planning stage or within the scope of individual proceedings, simply because they are not included in the list of suitable areas” (see ex multis, Palermo Regional Administrative Court, orders no. 3272 of 8 November 2023, no. 3814 of 20 December 2023, no. 95 of 11 January 2024 and, most recently, no. 87 of 22 February 2024).

In the same order, moreover, the Palermo Regional Administrative Court took the opportunity to give prominence to the periculum deriving from the delay that the competent Administration accumulates in the issuance of the authorization title, having to consider both the fact that the construction of the plant itself is connected to the grid capacity booked by the proponent through the acceptance of the interconnection solution, and the limited duration of the same reservation, equal to only 270 business days from the acceptance of the solution, failing which the reservation would lose its validity and the consequent exposure of the proponent to the risk of the possible exhaustion of the grid capacity.

3. Authorization in suitable areas - The opinion of the Superintendence is not binding. 

In its decision no. 867/2024, the Regional Administrative Court of Sardinia ruled that “if the EIA application concerns a project to be located in suitable areas according to the applicable law, as in the case now under examination, the opinion of the Superintendence is not binding, which is why the competent Ministries must adopt the final act of the procedure on the basis of an autonomous motivation, They cannot merely transpose the opinion expressed by the Superintendence itself, especially when, as in the case now under examination, its opinion is contradicted by the ones expressed by other offices that participated in the preliminary investigation”. In this case, the Court observes, the rejection measure adopted by the MASE is unlawful as it merely recall the negative opinion of the Special Superintendence for the PNRR, without adding anything and without even referring to the favourable opinions that had been expressed by other offices during the preliminary investigation, in particular the Technical VIA-VAS Commission of the same MASE.

4. Authorization in suitable areas - The Municipality cannot introduce new restrictions for the construction of RES plants. 

With ruling no. 3464/2024, the Lombardy Regional Administrative Court found that “the introduction, at a merely local level, of a system of rules aimed at restricting the scope of the areas concretely usable for the establishment of photovoltaic plants, without clear reasons justifying the introduction of such measures in function of the protection of potentially impaired competing interests that are equally worthy of protection as well as in breach of the principle of strict proportionality in relation to the protection requirements pursued, also runs counter to the favour expressed by European Union legislation, in particular Regulation (EU) 2022/2577 of 22. 12.2022, according to which ‘the planning, construction and operation of installations for the production of energy from renewable sources, their connection to the grid, the grid itself, and storage facilities shall be regarded as being in the overriding public interest and in the interest of public health and safety when balancing the legal interests in individual cases’”. Censuring the rules set forth in the municipal building regulations, the Regional Administrative Court specified that if the site chosen for the installation of the photovoltaic plant falls on an area declared suitable by law, the local authority has no chance for assessment as to the installation of the work. The only discretionary margin that remains to the municipal administration is the possibility of introducing a merely building regulation relating to construction aspects, which must, however, move within strict boundaries and be declined according to a principle of strict proportionality in order to remain so and not provide for criteria that prevent the installation of such energy sources.

5. Priority criterion in the EIA - The peremptory nature of the terms of the EIA procedure for non-priority projects does not disappear. 

In judgement no. 9793/2024, the Council of State reaffirmed the peremptory nature of all the terms of the EIA procedure (cf. art. 25, paragraph 7, Legislative Decree 152/2006). Questioning the interpretative scope of art. 8, paragraph 1, of Legislative Decree. 152/2006, as amended by Decree-Law 17/2022, in the part in which it establishes a criterion of priority in the assessment of projects with a significant economic and employment impact or with expiring authorizations, the Council of State, in fact, held that “in any case, even regardless of the methods used by the administration to give concrete expression to the legislative criterion of priority the Ministry should have adopted, under the legislation in force, organizational measures such as to allow the examination of priority projects, without prejudice to the observance of the deadlines for the conclusion of proceedings relating to non-priority projects inasmuch as they are not derogated from by any provision of law”. The criterion of priority thus assumes, therefore, mere internal relevance for the purposes of an orderly and effective management of the authorization procedures by the bodies deputed thereto, “but it is not such as to assume, at the same time, a derogatory scope to the legal regulation of the time limit for the conclusion of the proceedings”.

6. Tempus regit actum - Article 22 bis also applies to proceedings pending on the date of its entry into force. 

In its decision no. 790/2024, the Sardinian Regional Administrative Court upheld the appeal against the refusal of a single authorisation pursuant to Article 12 of Legislative Decree no. 387 of 2003 concerning the construction of a photovoltaic plant with a capacity of 104.076 MW in an industrial area, on the basis of the tempus regit actum principle, since, during the authorization procedure, Article 47 of L.D. no. 13 of 24.2.2023 (conv. L. no. 41 of 23.4.2023) entered into force, introducing art. 22 bis into the L.D. no. 199 of 2021, entitled ‘Simplified procedures for the installation of photovoltaic plants’.

In the opinion of the Court: “The regional refusal, in view of the new legislation, is not lawful”, since “the project in question is no longer subject to the single authorization regime” with the consequence that the procedure for its issue should have been closed since the activity can be qualified as ordinary maintenance not subject to authorization and, therefore, “free building activity” by virtue of the entry into force of Article 22 bis.

7. State EIAs - The priority criterion for the treatment of certain projects does not invalidate the peremptory nature of the deadlines for the conclusion of the proceedings for ‘non-priority’ projects.

With decision no. 830/2024, the Regional Administrative Court of Sardinia declared the illegitimacy of the MASE's silence with respect to the obligation to proceed in relation to the adoption of the Environmental Impact Assessment (EIA) measure within the terms provided for by Article 23 et seq. of Legislative Decree no. 152 of 2006 on the basis of the assumption that “the introduction of a priority criterion in the processing of applications based on the greater power of the plant (art. 8, para. 1, legislative decree no. 152/2006) cannot in itself legitimize the failure to comply with the deadline for the conclusion of the proceeding (art. 25, para. 7, legislative decree no. 152/2006) for other projects, also in view of the circumstance that they are aimed at satisfying interests attributable to the operation of the business”.

8. Cost-effectiveness of administrative action - Sardinian Moratorium - The operator may ask the municipal administration to correctly qualify its application in the light of the legislation that has come into force.

In its decision No. 844/2024, the Sardinian Regional Administrative Tribunal observes that, following the entry into force of Law No. 5/2024 (the so-called Sardinian Moratorium), the operator may ask the municipal administration to correctly classify its application in the light of the legislation that has come into force, providing the necessary documentation according to the clarifications provided by the regional law itself on the characteristics of the so-called ‘agri-voltaic’ projects exempt from the moratorium.

The different opinion, expressed by the administration, that the applicant could have made a new application in accordance with the new law, thus giving rise to a new procedure, is in contrary to concentration, economy and efficiency principle of administrative action requiring that when a procedural-communication channel is already open between the administration and private individuals, and a different and relevant piece of legislation comes into force, the same channel should be used to specify - in the light of the change that has taken place - the contents and characteristics for the recognition of the authorization / right that has already been requested.

9. In the case of areas to be acquired through an expropriation procedure, the non-availability of the areas is not an obstacle to the establishment of the tacit authorization.

In judgment No. 847/2024, the Sardinian Regional Administrative Court deemed the authorization to construct the repowering works for a wind farm consisting of 27 wind turbines with a total capacity of 121.5 MW to have been tacitly obtained following the expiry of the 60-day period provided for by Legislative Decree No. 50/2022 from the submission of the application.

On this point, the competent Authority objected to the failure to demonstrate the availability of the areas by the applicant, pointing out that the expropriation procedure could not be considered tacitly concluded.

This assertion, however, according to the Court, is not compliant with the applicable law, given that Article 12, paragraph 4 bis of Legislative Decree No. 387/2003 provides that for plants other than those indicated in the first paragraph (which does not include wind farms) the operator “[...] when submitting the application for authorisation referred to in paragraph 3, may request the declaration of public utility and the attachment of the pre-ordained expropriation of the areas affected by the construction of the plant and related interconnection works”.

It follows that the competent Authority could not have objected to the non-availability of the areas as an obstacle to the recognition of the tacit formation of the authorization, given that their actual availability will depend on the performance of the expropriation procedures following the conclusion of the authorization procedure. 

Nor can the tacit formation of the title be prevented by the Moratorium provided for by Regional Law No 5/2024, given that that law entered into force on 4 July 2024, therefore, long after the formation of the tacit authorization, on which it could not produce any preclusive effect.

10. The unsuitability of the areas due to the lack of the prerequisites for the application of one of the areas indicated in paragraph 8, Article 20, of Legislative Decree 199/2021, does not prevent the qualification of the areas as suitable due to the existence of the prerequisites relating to a different case under the same paragraph.

In this case, dealt with by the Regional Administrative Court of Tuscany with decision no. 1359/2024, the competent Authority had denied the authorization for the construction of a ground mounted photovoltaic plant, although it fell within a suitable area pursuant to letter c-ter, paragraph 8, of Article 20 of Legislative Decree 199/2021, as it did not fall within the suitable areas referred to in letter c-quater, since the area falls within the perimeter of a protected zone pursuant to Article 12, paragraph 1 of Legislative Decree 42/2004.

For the Regional Administrative Court of Tuscany: “The above provisions must be interpreted, as stated by recent jurisprudence (…), in the sense that they provide for two distinct hypotheses, cumulative among themselves, of ex lege suitability of territorial areas for the construction of photovoltaic plants. In other words, the ascertained existence of the prerequisites of one of the two provisions contained in letters c-ter and c-quater means that the area has to be deemed suitable. More specifically, with reference to the present case, the possible ineffectiveness of letter c-quater does not exclude that the plant is authorizable under letter c-ter, since the second of the two provisions (quater) adds a new hypothesis of legal eligibility, textually preserving the operability of the first provision (ter)’.

Objectives and Guidelines

The Unified Code addresses the regulatory fragmentation that has often hindered the development of renewable energy in Italy. Its main goals include:

• Reducing bureaucratic complexity;

• Ensuring greater operational certainty for investors and industry stakeholders;

• Supporting clearer and harmonized territorial planning;

• Promoting efficient land use through innovative tools such as “acceleration zones.”

Key Innovations of the Measure

1. Three Differentiated Administrative Regimes

To streamline authorization processes, the decree establishes three administrative regimes:

• Free Activity: Applies to minor interventions that do not interfere with protected properties or public works. Compliance with basic technical and environmental conditions is sufficient. For interventions on non-urbanized land, a financial guarantee for site restoration is required.

• Simplified Enabling Procedure (PAS): Designed for medium-complexity projects, this procedure involves submitting simplified technical documentation. It applies to interventions that do not require environmental assessments but still need specific monitoring. The proposer may request the publication of the PAS in the relevant Region's Official Bulletin.

• Unified Authorization: Required for complex and large-scale interventions. The regional authority is responsible for plants up to 300 MW, while the national Ministry of Environment oversees those exceeding this threshold. Regions may discretionarily activate the PAUR procedure under Article 27 bis of Legislative Decree No. 152/2006 for regional EIA (Environmental Impact Assessments), ensuring the final Unified Authorization also includes the EIA ruling. The Unified Authorization process now also encompasses any EIA Screening ruling, regardless of whether the PAUR process is initiated.

Publication of the Unified Authorization ruling on the relevant authority's website is mandatory.

New thresholds for EIA Screening procedures are introduced:

• The new thresholds of (>) 30 MW, above which national EIA (Environmental Impact Assessment) Screening applies, and (≥) 15 MW, above which regional EIA Screening applies, for ground-mounted plants located in areas designated for industrial, artisanal, and commercial use, as well as in landfills or closed and restored landfill lots or in quarries or quarry lots or portions of quarries that cannot be further exploited;

• The new threshold of (>) 25 MW, above which national EIA Screening applies for ground-mounted plants in suitable areas (the threshold remains at 10 MW for ground-mounted plants in areas not included among the suitable ones);

• The new threshold of (≥) 12 MW, above which regional EIA Screening applies for photovoltaic and agro-voltaic plants in agricultural areas that are compatible and allow integration with agricultural activity (to understand the meaning of such compatibility and integration);

• The new threshold of (≥) 15 MW, above which regional EIA Screening applies for rooftop plants.

2. Acceleration Zones

The decree introduces “acceleration zones,” geographical areas designated to expedite the plant of renewable energy systems. These zones will be mapped by the Energy Services Manager (GSE) by May 2025, with final regional plans expected by February 2026. Priority areas include:

• Artificial and built surfaces;

• Industrial areas and waste disposal sites;

• Artificial water basins and non-productive agricultural land.

This approach aims to avoid conflicts with other economic activities or landscape protection while promoting rational land use.

3. Land Availability

For free construction activities, the proposing entity must acquire the availability of the area before starting interventions, regardless of their type. Land availability for connection works is not required.

For PAS-regulated interventions, the proposing entity must also secure land availability at the time of the authorization request. Expropriation procedures are now allowed for network works.

Unified Authorization interventions can include expropriation for plant areas, except for new photovoltaic, solar thermal, biogas, and biomethane plants.

4. Start and Completion Deadlines

Free construction activities do not have specific start/completion deadlines.

PAS-regulated interventions must start within one year of PAS approval and conclude within three years of commencement.

Unified Authorization interventions have deadlines set by the authorization ruling, with a total minimum duration of four years. Authorization rulings must also specify the operational start date of the plant. Extensions are granted only for force majeure events, a narrower criterion compared to the current rules allowing extensions for events beyond the proponent’s control.

5. Codification of the Ban on Artificial Fragmentation

Regions are tasked with defining rules to combat artificial fragmentation of authorization requests, where formally different entities attempt to access less burdensome authorization procedures but share a common “center of interest.”

6. Strengthening the Sanctioning Framework

To ensure compliance, the decree introduces severe penalties for authorization-related violations, reaching up to Euro 150,000. Site restoration is always mandated.

Next Steps

According to the approved text, the decree will take effect on 30 December 2024. Its success will largely depend on the ability of regional and local authorities to swiftly adapt to the new provisions. Strong coordination between central and peripheral levels will be crucial to translating promised simplifications into tangible benefits for citizens and businesses.

Regions have 180 days to align with the provisions and principles of the decree. Until then, the previous regulations will continue to apply.

Roma, 8 Novembre 2024

1. Introduction

The taxation for registration tax purposes of deeds creating rights of superficies on agricultural land is an issue of great relevance and interest for the renewable energy sector, since it is a contractual arrangement widely used in the context of the construction of plants for production of electricity from wind and photovoltaic sources. Such contractual agreements indeed allow producers of energy from renewable (specifically wind or photovoltaic) sources to secure the availability of the agricultural areas and land on which such plants are generally installed (and at the same time the “bankability” of the projects themselves), without acquiring full ownership of such land.

For registration tax purposes, a deed creating a right of superficies falls within the “deeds subject to registration within a fixed deadline”, in relation to which Article 1, paragraph 1, of the Tariff, Part One, attached as Annex A to Presidential Decree No. 131/1986 (“T.U.R.”) provides as follows:

• in the first sentence: “deeds transferring title to real estate in general for valuable consideration and deeds transferring or creating in rem rights of use, including pure and simple waiver thereof, measures of expropriation in the public interest and compulsory transfers” are subject to proportional registration tax determined at the rate of 9%;
• in the third sentence: “if transfer relates to agricultural land and its appurtenances in favour of persons other than farmers and professional agricultural entrepreneurs, registered in the relevant social security and welfare management system", the relevant deeds are subject to proportional registration tax determined at the rate of 15%.

In respect of deeds creating rights of superficies on agricultural land in favour of persons other than farmers and professional agricultural entrepreneurs, Italian tax authorities have historically stated their subjection to proportional registration tax at the rate of 15%¹, deeming such case comparable to the concept of “transfer” referred to in the third sentence of Article 1, paragraph 1, cited above².

The approach expressed on this point by the tax administration had already been disregarded by the case law of the Italian Supreme Court, based on considerations aimed at highlighting the impossibility of endorsing, from a legal perspective, the assimilation proposed by the tax authorities.

More specifically, by decision No. 3461/2021, the Italian Supreme Court, ruling on the registration tax applying to a deed creating rights of superficies on agricultural land for the construction of a photovoltaic plant, stated that  “From a plain reading of the provision [third sentence of Article 1 of the Tariff, Drafter’s note] it emerges  that the same applies to the transfer and not to the “creation” of an in rem right of use”, outlining the impossibility of assimilating the two cases, since  “the creation of a right of superficies on land by an assignor/creator is not regulated by the provisions applying to transfer deeds”, precisely because “a right of superficies is ‘created’, and not ‘transferred’".

Based on the above considerations, the Italian Supreme Court decided to endorse the approach previously expressed by judgment No. 16495/ 2003³, issued in a case concerning the creation of easement rights, considering it “similar to the one under consideration for tax purposes” [creation of right of superficies, Drafter’s note]”, deeming also the case of creation of the right of superficies under consideration falling within the scope of the provision set out in the first sentence of paragraph 1 of Article 1 of the Tariff, Part One, with consequent application of proportional registration tax at the rate of 9%.

2. The Reply to application for a ruling No. 365/2023.

Notwithstanding the clear interpretative/operational criterion outlined by the Italian Supreme Court, with respect to the right of superficies the Tax Authorities - unlike in relation to the right of easement - maintained the “assimilation” thesis, reaffirming their position in their Reply to application for a ruling No. 365/2023.

In such document, with respect to the legal principle stated by the Italian Supreme Court by decision No. 3461/2021, cit.  – referred to by the  applying Notary in support of its interpretation – the Revenue Agency stated that the  grounds expressed in such decision were not deemed prejudicial to its view  since “although concerning a dispute regarding the taxation of a deed of creation of the right of superficies, the Italian Supreme Court expressly recalls previous rulings on the right of easement as well as the concept according to which “it does not entail the transfer of rights or faculties of the owner of the servient estate”, which, as pointed out, is peculiar to the right of easement as defined by Articles 1027 et seq. of the Italian Civil Code and not to other in rem rights of use”.

Based on the above considerations, the Agency therefore concluded that “the taxation principles set out in the aforementioned Circular No. 18/E of 2013, for registration tax purposes, are still deemed applicable. Therefore, the deed of creation of the right of superficies in respect of the agricultural land at issue is subject to registration tax at the rate of 15%, in addition to mortgage and cadastral taxes at the fixed rate of EUR 50 each”.

3. Decision of the Italian Supreme Court No. 27293/2024.

In its very recent decision No. 27293/2024, the Italian Supreme Court ruled again on the taxation for registration tax purposes of deeds creating rights of superficies on agricultural land⁴, confirming the application of the rate provided for by the first sentence of Article 1, paragraph 1, of the Tariff, Part One, attached as Annex A to Presidential Decree No. 131/1986 (namely, 8% pursuant to the text applicable ratione temporis to the case at issue and 9% according to the text currently in force).

Consistently with the position previously held, the Italian Supreme Court - recalling that “In both scenarios contemplated by Article 952 of the Italian Civil Code, there is a separation between the legal ownership of the land and that of the building (to be constructed or already existing) [which, Drafter’s note ) does not entail, however, a splitting of the legal ownership of the land, which [...] remains with the grantor” - reiterated that “by reason of the intrinsically temporary nature of the right, surface tenure must be considered a right ontologically different from fee simple interest” and the consequent need, for tax treatment purposes, to keep the transfer deeds distinct from those creating in rem rights of use, considering also that “when the legislator wanted to tax also the deeds creating said rights, it made express provisions in such regard⁵”.

In confirming its position, the Italian Supreme Court expressly stated that the guidelines provided by the tax authorities⁶, traditionally invoked by them in support of the payment notices issued in relation to such particular case, are not binding.

It appears significant that the Italian Supreme Court not only expressly referred to and confirmed the view already laid down in decision No. 3461/2021, but de facto considered it as well established.

Indeed, following the appeal lodged by the Attorney General's Office, the Deputy Counsellor proposed an accelerated settlement pursuant to Article 380-bis of the Italian Code of Civil Procedure, due to the manifest unfoundedness of the grounds of complaint, noting that "The word transfer contained in Article 1 of the Tariff attached to Presidential Decree No. 131 of 1986 was used by the lawmaker to indicate all those deeds providing for the transfer from one party to another of the ownership of real estate or the holding  of in rem rights of use in real estate and cannot be referred to deeds creating in rem rights of use such as an easement, which does not entail the transfer of rights or faculties of the owner of the servient estate but the limitation of the latter's right of ownership to the benefit of a given dominant estate)". 

The decision in question, therefore, further contradicts the position reiterated in the Reply to application for a ruling No. 365/2023 cited above, whereby the Tax Administration had reaffirmed the application of the 15% rate to deeds creating a right of superficies on agricultural land, notwithstanding the fact that the notary public drawing up the deed had made express reference to the principle established by decision No. 3461/2021 cited above.

Considering the full compliance of the decision with the proposal of the Deputy Counsellor, the losing Public Treasury was, inter alia, ordered not only to pay the “increased” litigation costs, but also to pay the further sums provided for by Article 96, paragraphs 3 and 4 of the Italian Code of Criminal Procedure, an element that may lead the Tax Administration to consider ceasing recourse to litigation, as occurred with respect to deeds of easement ⁷.
 

¹ Resolution No. 92/E/2000, Circulars Nos. 18/E/2013 and 36/E/2013. According to the Agency’s view, although  the third sentence of Article 1 cit., as is worded, limits the application of the  15% rate to deeds involving the “transfer” of agricultural land, lawmakers (allegedly) intended to assimilate the concept of “transfer” to the concept of “deed of transfer” or “deed transferring or creating in rem rights of use in real estate, so that the term “transfer” should be deemed to also cover the “deeds creating in rem rights of use in real estate”  expressly mentioned in the first sentence of paragraph 1.

² Conflicting with such view was the more recent Resolution No. 4/E of 15 January 2021, which, endorsing the view taken by the Italian Supreme Court of the point, stated that, for the purposes of the registration tax, a  deed creating easement rights on agricultural land for persons other than farmers and agricultural entrepreneurs should fall within the scope of the general provision referred to in the first sentence of Article 1, paragraph 1, of the Tariff, Part One, declaring the indications contained in the former circulars de facto  superseded. (Cass. judgment No. 16495/2003, conf. Cass. judgments Nos. 22198/2019, 22199/2019, 22200/2019 e 22201/2019, Cass. decisions 6671/2020, 6677/2020 and 22118/2020).

³ According to which "The term “transfer” contained in Presidential Decree No. 131 of 1986, Article 1, of the attached tariff was used by lawmakers to indicate all those deeds that involve the transfer of title to real estate or of in rem rights of use in real estate from one person to another and cannot be referred to deeds  creating in rem rights of use such as right of easement, which does not involve the transfer or rights or faculties of the owner of the servient estate but the limitation of its ownership right in favour of a certain estate (dominant estate)"

⁴ In particular, the case ruled by the Italian Supreme Court concerned a deed creating a right of superficies on agricultural land for the construction of a photovoltaic plant.

⁵ Making reference, by way of example, to Article 9, paragraph 5 of Presidential Decree 917/1986. 

⁶ In particular, by Circular No. 36/E/2013 invoked by the applicant Authority in support of its appeal, in respect of which the Italian Supreme Court recalled “that the circulars whereby the Revenue Agency provides an interpretation of a tax provision, even if containing instructions to hierarchically subordinate departments, express exclusively a non-binding opinion, not only for the departments to which they are addressed, but also for taxpayers, for the same authority that issued them and for the court; therefore, the so-called ministerial interpretation of tax provisions, whether contained in circulars or resolutions, does not represent a source of law, nor is it subject to the review of legitimacy exercised by the Supreme Court (pursuant to Articles 111 of the Italian Constitution and 360 of the Italian Code of Civil Procedure), since they are not the expression of regulatory activity, but rather an internal activity of the public administration itself, intended to exercise a directive function with respect to the dependent departments, but having no effect on the tax relationship (Cass. en banc No. 23031 of 2007; Cass. No. 35098/2022; Cass. No. 18618 /2019; Cass. No. 10195 of 2016)”.

⁷  See above, Resolution No. 4/E of 15 January 2021.

Pending the approval of the regional law identifying suitable areas pursuant to Article 20, paragraph 4, of Legislative Decree 8 November 2021, no. 199, as well as of the approval of the Regional Development Programme (PRS) and the Regional Landscape Plan (PPR), and, in any case, for a period not exceeding 18 months from its entry into force, the regulation subjects the entire regional territory to measures to safeguard the landscape, territory and environment, providing for the prohibition of the construction of new plants for the production and storage of electricity from renewable sources that directly affect the occupation of land.

In particular, the following areas are subject to safeguard measures involving the prohibition of the construction of new plants for the production and storage of electrical energy from renewable sources:

a) homogeneous urban areas pursuant to Article 3 of Decree No. 2266/U of 20 December 1983[1], without prejudice to the provisions of Paragraph 3 of the Act;

b) protected natural areas established pursuant to Law No 394 of 6 December 1991, with particular reference to integral and general oriented reserve areas as well as equivalent areas established by regional legislation;

c) wetlands of international importance recognized and included in the list of the Convention on Wetlands of International Importance, with particular reference to waterfowl habitats, signed in Ramsar on 2 February 1971, and implemented by Presidential Decree no. 448 of 13 March 1976;

d) wetlands within Sites of Community Interest (SCI) or Special Protection Areas (SPAs) and wetlands within nature reserves and protection oases established at national and regional level;

e) areas included in the Natura 2000 Network in accordance with Directive 92/43/EEC of 21 May 1992;

f) breeding, feeding and transit areas of protected fauna species or areas where the presence of animal and plant species subject to protection under international conventions and Directive No. 92/43/EEC of 1992 is ascertained;

g) agricultural areas affected by quality agricultural-food productions, such as organic productions, PDO, PGI, TSG, DOC, DOCG, traditional productions, or areas of particular value with respect to the landscape-cultural context;

h) areas characterized by situations of instability or hydrogeological risk that are delimited in the Hydrogeological Structure Plans (PAI);

i) areas that are less than 7 kilometers from cultural heritage, or 1,500 meters for minor islands;

j) the areas referred to in Article 142, paragraph 1, of Legislative Decree No. 42 of 2004, letters a, b, c, d (within the limits of the part exceeding 1,200 meters above sea level), f, g, h (limited to areas encumbered by civic uses) and m;

k) the areas identified pursuant to Article 143, paragraph 1, letter d), of Legislative Decree no. 42 of 2004[2];

(l) areas that are less than 7 kilometers away, as the crow flies, or 1,500 metres for minor islands, from plants for the production and storage of electricity from renewable sources that have been built or for which an application has been filed for the start of the relevant authorization procedure at the date of entry into force of the law.

The following are excluded from the application of the safeguard measures:

1. plants for the production and storage of electricity[3] from renewable sources that do not involve land consumption and, limited to homogeneous zones H, provided that they are intended for self-consumption or for the enhancement of the compendium in terms of environmental sustainability;

2. ordinary, extraordinary maintenance or revamping of plants for the production and storage of electricity from renewable sources;

3. plants for the production and storage of electricity from renewable sources aimed at self-consumption and plants located in energy communities;

4. plants located in the free areas of plots already urbanized and built on at the entry into force of the law on the basis of an implementation plan, falling within homogeneous urbanistic zones D and G;

5. plants for the production and storage of electrical energy from renewable sources envisaged within projects aimed at sustainable public transport;

6. plants for the production and storage of electricity from renewable sources integrated within projects for the realization of public works;

7. advanced agri-voltaic plants, with elevated construction solutions with a maximum size of 10 Mwp serving farms run by owners with the status of direct cultivator (CD) or professional agricultural entrepreneur (IAP) operating as of 31 December 2018 and with operational headquarters in the territory of the Sardinia Region. 

With paragraph 2 of Article 3, the law provides for the application of the safeguard measures also to the 'ongoing' authorization procedures of plants for the production and storage of electricity from renewable sources.

Although the approved and published text makes no reference to plants already authorized whose construction has not yet begun, the President of the Region, Alessandra Todde, point out that the law “is effective in blocking all initiatives for which work has not yet begun prior to its entry into force”. Therefore, despite the letter of the rule, the construction of plants that have already been authorized and whose work has not yet begun should also be considered blocked, with serious damage to the legitimate expectations of operators.

The law immediately showed clear profiles of unconstitutionality. 

It is yesterday's news that the Council of Ministers decided to challenge it before the Constitutional Court for exceeding the Region's own competences according to the Statute, for contrasting with State and European legislation and for violating Articles 3, 41 and 117 of the Constitution. The Council of Ministers has also asked the Constitutional Court to apply immediately and as a precautionary measure the suspension of Article 3, the core of the provision.

On this point, it should be recalled that the Regions were not permitted to proceed with the identification of suitable areas prior to the issuance of the Ministerial Decree referred to in Article 20, paragraph 1, of Legislative Decree No. 199/2021 ("Ministerial Decree on Suitable Areas", most recently published in the Official Gazette on July 2, 2024), nor are they permitted to provide for moratoria or suspensions of the terms of the authorization procedures, as provided for by paragraph 6 of the aforesaid Article 20. Moreover, the Regions do not have the power to subject the construction of production or storage plants to express limitations on specific areas, implying, in fact, their concrete unusability for significant expanses of territory, in violation of the reservation of administrative procedures and the relative preliminary investigation aimed at balancing the public interests involved and guaranteeing their proper development (see ex multis Constitutional Court, judgment no. 77 of 2022), nor can they autonomously provide for the identification of criteria for the proper inclusion in the landscape of plants fuelled by alternative energy sources (see Constitutional Court, judgment no. 168 of 2010) or impose absolute preclusions that prevent a priori any concrete assessment at the time of authorization (see Constitutional Court, judgment no. 106 of 2020).

The law, in other terms, violates Article 117 of the Constitution on the subject of concurrent legislation on 'production, transport and national distribution of energy', Article 3 of the Constitution, regulating situations that are substantially identical in an unjustifiably different manner from the national provisions, and Article 41 of the Constitution on freedom of initiative, in addition to being clearly in conflict with the principle of maximum dissemination of renewable energy sources, as it hinders the achievement of ambitious national and European decarbonization objectives.

Despite the fact that, therefore, in all likelihood the law will be censured by the Constitutional Court - as has already happened in the past with similar provisions (see the Lazio and Abruzzo Moratorium declared unconstitutional in judgments n. 221/2022 and 27/2023, respectively) - there is a real risk that any authorization process that may be initiated for the realization of a project in the Region will be affected by the Moratorium (except for the cases referred to in paragraph 3 of Article 3 above) pending the Constitutional Court's decision.

[1] Homogeneous zones includes: (a) the historic-artistic center or those of particular environmental value (zones A); (b) the totally or partially built-up parts of the territory other than zones A (zones B); (c) the parts of the territory destined for new residential complexes, which are undeveloped or in which the pre-existing construction does not reach the limits of utilized surface area required for zones B (zones C); (d) the parts of the territory destined for new settlements for industrial, craft, commercial, conservation, processing or marketing facilities for agricultural and/or fishing products (zones D); e) the parts of the territory destined for agricultural use and those with buildings, equipment and installations connected to the agro-pastoral and fishing sectors and to the valorization of their products (zones E); the parts of the territory of tourist interest (zones F); the parts of the territory destined for public and private buildings, equipment and installations, reserved for services of general interest (zones G); the parts of the territory that cannot be classified according to the criteria defined above and that have a particular speleological, archaeological or landscape value or are of particular interest to the community, such as the coastal strip, the strip around urban agglomerations, the cemetery buffer zone, the strip along provincial and municipal roads (zones H).

[2] In particular: the coastal strip, systems of bays and promontories, cliffs and small islands; dune fields and beach systems, rocky and ridge areas and areas higher than 900 meters above sea level; caves and caverns; natural monuments pursuant to Regional Law No. 31 of 7 June 1989; wetlands, natural lakes and artificial reservoirs and contiguous territories included in a strip 300 meters deep from the shoreline, also for elevated territories on lakes; rivers, streams and watercourses and their banks or embankment feet, for a strip of 150 meters each, and river systems, riparian, resurgences and waterfalls, even if temporary; areas of further naturalistic interest including priority species and habitats, pursuant to Directive no. 43/92/EEC of 1992; areas that are less than 2 kilometers as the crow flies from monumental trees; areas characterized by buildings and artefacts of historical and cultural value, including the protection strip; areas characterized by historical settlements.

[3] On this point, it should be noted that the Region has no competence in authorizing stand-alone Bess plants; this, in fact, belongs to the MASE. The rule therefore, insofar as it refers to 'storage plants from renewable sources', can at most refer to storage plants operating in combination with plants from renewable sources. Stand-alone plants must therefore be exempt from the effects of the Moratorium.

Written by Giovanni De Luca, Piero Viganò and Paola Putignano.

The Ministerial Decree completes the framework of rules for the revision of the guidelines on subsidies for energy users introduced by Decree-Law No. 131/2023 in line with the guidelines on State aid set out in the European Commission’s Communication 2022/C 80/01 of 18 February 2022 on “Guidelines on State aid for climate, environment and energy 2022”.

The reform of the subsidy scheme for energy-intensive companies

For the purposes of the article, the Decree-Law No. 131/2023 provides that in order to have access to favorable conditions in the application of the contributions to cover the general charges pertaining to the electricity system referred to in Article 3, paragraph 11 of Legislative Decree No. 79 of 16 March 1999 concerning the support of renewable energies (“Facilitation”) - in addition to the obligation to carry out an energy audit, energy intensive companies are required to adopt, alternatively, one of the following measures:

• implement the obligations set out in the energy audit if the amortization time of the investments required for this purpose does not exceed three years and the related cost does not exceed the amount of the Facilitation received;

  • demonstrate that they cover their needs from “non-carbon emitting sources” by at least 30%;

  • invest at least 50% of the amount of the Facilitation in projects that result in substantial reductions in greenhouse gas emissions.

The clarifications and provisions of the Ministerial Decree: 

(i) implementation of the actions foreseen in the energy audits

With specific reference to the measures envisaged in the energy diagnosis report (“Report”), Article 4 of the Ministerial Decree clarified that:

• the energy intensive company shall identify the interventions it intends to implement for each year of eligibility for the Facilitation, provided that these interventions have the following characteristics

  • a simple turnaround time of no more than three years;

  • a total cost of the investment (including any additional operating cost for carrying out the intervention) not exceeding the amount of the Facilitation received in the relevant year;

• in the year of reference of the Facilitation, the energy intensive company shall make investments corresponding to at least one third of the value of the above-mentioned interventions;

• the interventions shall in any case be completed within the second year following the year of the facilitation.

Article 4 of the Ministerial Decree clarified that to comply with these obligations, interventions provided for in a valid Report and implemented on or after 1 January 2024 are relevant.

The interpretation of the above provisions still appear ambiguous, and it therefore necessary to wait for the resolution with which ARERA will have to establish the methods and terms by which energy intensive companies will have to communicate their choice of interventions contained in the Report with which to fulfil their obligations.

(ii) Energy supply for at least 30 per cent of requirements from non-carbon emitting sources

With reference to the alternative of supplying energy from non-carbon emitting sources for at least 30 per cent of the energy-intensive enterprise’s needs, the DM clarifies that this obligation can be fulfilled in three ways (or a combination thereof):

• individual on-site or remote self-consumption with use of the public grid or with use of direct private cable;

• purchase of electricity through forward contracts concluded with producers of electricity from renewable sources;

• directly through the acquisition and cancellation of guarantees of origin for the corresponding value (one guarantee of origin corresponds to 1 MWh).

Some differences and coordination requirements with respect to the MASE Ministerial Decree of 23 July 2024 (“DM Energy Release”) should be taken into account when implementing the relevant provisions.

(iii) Investment of at least 50% of the amount of the Facilitation in projects leading to substantial reductions in greenhouse gas emissions 

Finally, in relation to the last of the alternatives available to energy-intensive companies, the Ministerial Decree clarified that “projects that result in substantial reductions in greenhouse gas emissions below the lowest of the following values” are eligible to meet the obligation to invest at least 50 per cent of the amount of the Facilitation:

• 90% of the applicable ETS free allocation benchmark;

• the 10% average emissions of the best installations listed in EU Regulation 2021/447 for the relevant product. 

Controls and sanctions

Finally, the Ministerial Decree assigned to ENEA, ISPRA and GSE the powers of control over the fulfilment of the above obligations according to procedures to be defined by the same entities.

In particular, ENEA will carry out controls each year on a sample of three per cent of the energy-intensive companies that have chosen to fulfil their obligations through the implementation of the measures envisaged in their energy diagnosis.

In the event of an ascertained breach, the entire facilities received during the period of the breach shall be returned to CSEA with penalties determined in accordance with Article 8 of the Ministerial Decree.

Written by Piero Viganò and Ernesto Rossi Scarpa Gregorj.

With this note, we intend to summarize and comment the main provisions of article 5 of the Law Decree no. 63 of 15 May 2024, published in Official Gazette no. 112 of 15 May 2024 (“Agricultural Law Decree”), which came into force on  16 May.  Article 5 introduced some restrictions on the installation of ground-mounted photovoltaic plants on agricultural areas, amending the Article 20 of Legislative Decree 199/2021 by introducing a new comma 1-bis which provides that the installation of ground-mounted PV plants in agricultural areas is limited to “suitable areas”.

On 12 July 2024, the Law Decree has been converted into Law no. 101 and published in Official Gazette no. 163 of 13 July 2024.

Exceptions to the ban

Firstly, the installation of photovoltaic plants with ground-mounted modules in areas classified as agricultural is still permitted:

a) if limited to repowering and revamping pre-existing PV plants that do not entail an increase of the area occupied (letter a of paragraph 8 Legislative Decree No. 199/2021);

b) on non-productive agricultural lands such as quarries and mines that have been closed, not recovered or abandoned or in an environmentally degraded condition, or the portions of quarries and mines that are not susceptible to further exploitation (letter c-bis of paragraph 8);

c) on areas under concession to Ferrovie dello Stato group, railway infrastructure operators, motorway concession companies or airport management companies on airport premises (letter c-bis1 of paragraph 8);

d) on areas inside factories and industrial plants, as well as in areas enclosed within a perimeter whose points are no more than 500 meters from the factory or plant itself (provided that such areas are not constrained pursuant to the second part of the Cultural Heritage and Landscape Code). In this regard, it should be noted that the Ministry of the Environment and Energy Security (MASE), in its opinion no. 130318 of 8 August 2023 - rendered following an environmental query by the Municipality of Villalba on the possibility of considering an existing photovoltaic plant as a unitary and stable complex or industrial plant - has clarified that are to be considered eligible, pursuant to Art. 20, lett. c-ter no. 2, Legislative Decree no. 199/2021, also the areas classified as agricultural enclosed within a perimeter whose points are no more than 500 meters away from a pre-existing ground-mounted photovoltaic plant with a power exceeding 20 kW (even if the latter is not built in an area zoned for industrial, artisan or commercial use) (letter c-ter no. 2 of paragraph 8);

e) on areas adjacent to the motorway network within a distance not exceeding 300 meters (letter c-ter no. 3 of paragraph 8).

The text converted into Law includes the possibility of installing ground-mounted photovoltaics also in quarries that have already been restored and those with a completed cultivation plan and not yet restored, as well as landfills or landfill lots that have been closed or can be restored.

The installation of photovoltaic plants with ground-mounted modules is not allowed:

i) on sites subject to remediation (letter b) of subsection 8);

ii) on areas classified as agricultural, enclosed within a perimeter whose points are no more than 500 meters away from areas of industrial, artisanal and commercial use, including sites of national interest, as well as from quarries and mines (letter c-ter) no. 1) of paragraph 8);

iii) on areas that are not restricted pursuant to the Cultural Heritage Code and are at least 500 meters away from cultural assets restricted pursuant to the second part of Article 136 of the Cultural Heritage Code (letter c-quater) of paragraph 8).

Such areas, although agricultural, were until now classified as suitable by article 20, paragraph 8 of Legislative Decree 199/2021 under letters b), c-ter no. 1 and c-quater.

Secondly, the prohibition of photovoltaic installations with ground-mounted modules does not extend to projects:

• aimed at the establishment of a Renewable Energy Community (REC);

• carried out in implementation of the investment measures of the PNRR or PNC or necessary for the achievement of the objectives of the PNRR.

Agrivoltaic plants

Therefore, the installation of agrivoltaic systems with modules elevated from the ground (so-called advanced agrivoltaic systems), as defined by Article 65, paragraphs 1-quater and 1-quinquies of Decree-Law No. 1/2012, i.e. which adopt innovative integrative solutions with the assembly of the modules elevated from the ground, exploit advanced technologies, also envisaging the rotation of the modules themselves, so as not to compromise the continuity of agricultural and pastoral cultivation activities of the farmland on which they insist, continues to be allowed in all agricultural areas, without the limitations provided for by the Agricultural Law Decree.

Till now, it’s not been clarified whether, in order to be exempted from the ban, additional subjective requirements must also be met by the developers of the advanced agrivoltaic project (e.g. agricultural entrepreneurs, temporary associations of enterprises - ATI), in line with the Ministerial Decree no. 436 of 22 December 2023 (“Agrivoltaic Ministerial Decree”) or whether these must be met only for the purposes of access to the incentives provided for therein, and therefore irrelevant for the purposes of the Agricultural Law Decree.

It is doubtful whether the prohibition should be extended to simple agrivoltaic systems, i.e. to systems that, while providing for the installation of modules on the ground, are constructed in such a way as to allow the integration of agricultural activity and electricity production and to enhance the production potential of both subsystems, without compromising the continuity of agricultural activity. In this hypothesis, the degree of integration between the two subsystems is less because the agricultural activity is carried out exclusively between the rows of panels.

On this point, however, it is necessary to recall a now consolidated jurisprudential orientation on the need not to assimilate agrivoltaic systems to ‘classic’ photovoltaic systems with modules located on the ground, since they are phenomena that are largely different from each other, despite their common starting point (the production of electricity from a clean source). And as a situation that does not overlap, they cannot be assimilated quoad effectum (see, inter alia, TAR Lecce Sez. II, Sentenza n. 1583/2022 and Consiglio di Stato Sez. IV, Sentenza n. 8029/2023). 

Moreover, if the government's objective is to protect agricultural activity and the land used for it, it would be illogical to ban ‘basic’ agrivoltaics; it would mean banning the combination of agricultural activity and renewable energy production.

PNRR related projects

The residual category of projects necessary to achieve the objectives of the PNRR could, at present, include, for example:

• collective self-consumption (because it is the subject of a specific PNRR measure and together with energy communities is the recipient of a specific incentive scheme, but not also remote self-consumption); 

• innovative photovoltaic systems or photovoltaic systems combined with hydrogen.

• photovoltaic plants for the production of biomethane and biogas.

Already commenced procedures

The new provision will not apply to projects currently undergoing the approval process more precisely with reference to the PV plants that have already filed the authorisation application or for which the authorisation or the environmental procedure has already started at the date of entry into force of such Agricultural Law Decree (i.e., 16 May 2024).

The provisions do not apply to projects for which, on the date of entry into force of the Agricultural Law Decree, at least one of the administrative procedures, including environmental assessment procedures, necessary to obtain the qualifications has been commenced for the construction and operation of the plants and related works or at least one of the same authorizations has been issued.

The provision does not explain what is meant by procedures already ‘commenced’.

A. For a less restrictive interpretation of the rule, the mere submission of an application for a PAS, AU, PAUR, EIA Screening, EIA by the date of 16 May 2024 could be deemed sufficient to consider that the procedure has been formally commenced.

B. If a more restrictive interpretation were to be adhered to, procedures already commenced could be understood as follows:

• PAS: if the documentation attached to the PAS is complete, the procedure may be deemed to have already commenced when the PAS is submitted to the Municipality, even if, as of 16 May 2024, the 30-day deadline for consolidating the PAS has not expired. On the other hand, in the hypothesis that, following the submission of the PAS application, it is necessary to acquire additional acts of consent required by law, the commencement of the procedure could coincide with the communication of the commencement of the procedure/convocation of the Services Conference by the Municipality;

• AU: the procedure is deemed to be initiated when the competent Administration sends to the proponent the notice of commencement of proceedings pursuant to Articles 7 and 9 of Law No. 241/1990;

• EIA Screening/ EIA /PAUR: the commencement of the procedure coincides with the publication of the environmental documentation on the website of the proceeding Authority and with the simultaneous communication of its publication to all potentially interested Authorities.

The interpretation to be given to the term ‘procedure already commenced’ appears to be another uncertain point of the text of the Agricultural Law Decree, which has not been clarified, neither during its conversion proceeding into law.

Duration of the surface right agreements

In addition to the above, Article 5, paragraph 2-bis of the Agricultural Law Decree provides that all surface right agreements, including those executed in the form of preliminary agreements, concerning land falling within the areas considered suitable for the installation of renewable energy plants, pursuant to Article 20, paragraph 1, lett. a, of Legislative Decree No. 199 of 8 November 2021, shall be entered into for a minimum term of 6 years. Should the parties agree on a shorter term or grant the surface right by omitting the indication of a specific term, the relevant agreement shall be deemed to be entered into for a term of 6 years.

It is further specified that at the end of the first 6-year term, the surface right agreement is automatically renewed for a further period of 6 years. At the end of this second period, the agreement is tacitly renewed under the same conditions, unless a party informs the other - by registered letter and at least six months before the relevant expiry date - of its intention to renew the agreement under new conditions or not to renew it at all. The party so notified has 60 days from receipt of such notice to reply. If no reply is received or if the parties fail to agree otherwise, the relevant surface right agreement shall be deemed terminated on the end of the second validity period.

The above-mentioned provisions also apply to the preliminary/final agreements already in place, unless one of the parties decides to withdraw from the relevant agreement within 60 days from the day of entry into force of Law no. 101/2024. Such right of withdrawal may be read as a way out granted to the landowners to avoid the new tax regime applied to surface right rents as of 1 January 2024. In fact, the landowners are now in the position to renegotiate these rents in order to offset the increase in their taxation.

Article 5, paragraph 2-bis of the Agricultural Law Decree appears to be quite unclear and open to different interpretations. In particular, it is not fully clear whether the 6-year term refers to the duration of the preliminary/final surface right agreements or to the duration of the surface right established by virtue of such agreements. Should this second interpretation prevail, the right of withdrawal from preliminary agreements having a duration of less than 6 years exercised by landowners in the time window of 60 days from the entry into force of Law no. 101/2024 would be deemed unlawful.

In light of the above, it is expected that, especially in a first phase after the entry into force of the Agricultural Law Decree, there will be uncertainty on how to manage the surface right agreements and this may delay or complicate the negotiations aimed at acquiring the availability of the land for the development of new renewable energy plants.

Conclusions

In conclusion, the impact of the Agricultural Law Decree on the solar energy market would be less dramatic than it seemed at first reading thanks to the above-mentioned exceptions to the ban, but it appears quite clear that uncertainties as to the interpretation of already commenced procedures could underpin an uncooperative approach by local authorities even with reference to projects started before May 16. 

It also evident that agrivoltaic plants are envisaged by the Government as a new cooperation model between the PV generation industry and the agricultural activity 

Investors will have to pay close attention their relationship with the farmer  and to the relevant seriousness and professionalism in carrying its agricultural activities. The farmer will have to be considered as as an EPC contractor, O&M operator or electricity purchaser under the PPA and as such the relevant contractual documents shall be structured taking into a rigorous risk allocation also through substitution mechanisms. Title on lands shall also take into account the performance of agricultural activities.

To get an overall view of the structure and content of the Decree Fer X, please refer to our article published on 10 April 2024.

Power Quotas Allocated for Tenders

The power quotas allocated for each tender are not fixed but are determined by the MASE (with the technical support of Terna and GSE) based on, among others:

• - the demand curve;

• - the technology;

• - specific coefficients identified for each market zone;

• - the expected evolution of electrical demand;

• - the number of authorization processes initiated and completed;

• - the expected evolution of the transmission grid, and

• - the realization times, useful life, and costs of the various renewable energy technologies.

The demand curve is determined by interpolating five pairs of electricity quantity/price according to what is detailed in Annex 2 to the new draft decree.

Compared to other incentive mechanisms, the integration of market regulation is quite pronounced, but the reasons are clear: to avoid excessive burden on electricity tariffs considering the significant power that needs to be incentivized and to avoid aggravating grid instability while optimizing secure system management, considering the non-programmable nature of the energy volumes to be produced.

Overall, the incentivized quotas have been reduced for photovoltaic plants with a power higher than 1 MW (from 45 to 40 GW) and increased for photovoltaic plants that access directly through registration, i.e., those with power equal to or lower than 1 MW (from 5 to 10 GW).

Finally, among the photovoltaic plants incentivized under the new draft, those installed on water surfaces are now included.

Tariffs

The percentage reduction offer is no longer necessarily at least 2% but will be determined from time to time with each publication of the call for tenders.

For plants with a power higher than 1 MW, the tender base price now varies depending on particularly high or low-cost conditions. Specifically, the following have been introduced:

• the higher operating price and

• the lower operating price,

respectively equal to 95 Euro and 70 Euro for both wind and photovoltaic.

Specifically, the “higher operating price” is defined as the base auction price in the case of particularly high-cost conditions.

The “lower operating price”, on the other hand, is the base auction price in the case of particularly low-cost conditions.

Thus, the “awarding price” should be the operating price (higher, lower, or otherwise fixed within this range) reduced by the percentage discount offered and accepted in the tender. However, the draft decree, in defining the “awarding price,” seems to have not considered the introduction of the higher and lower operating prices, referring only to the higher one.

This misalignment between the awarding price and the higher/lower operating price is also replicated in the provisions regarding the execution of offers (Article 4, paragraph 3) and in determining the demand curve.

Relations with Long-term PPAs and the Dispatching Service Market

In the previous version of the draft decree, it was envisaged that the non-incentivized power quota could be subject to a long-term electricity supply contract (so-called Long-Term PPA). This provision was unnecessary since, regardless of the incentive, all the energy produced by the plant remains the ownership of the producer.

In the new draft decree, therefore, the reference to the non-incentivized energy quota has been removed, and as of today, even if the entire power of the plant is incentivized, the producer can freely enter into a long-term PPA to monetize all the energy produced by the plant.

Entering in a Long-Term PPA is still among the priority criteria.

However, many aspects related to the interaction between the Fer X CFD mechanism and the Long-Term PPA remain to be understood, including the fixed or necessarily indexed and variable nature of the consideration.

As for the obligation to participate in the Dispatching Service Market operated by Terna, this has been extended to all plants with a power higher than 1 MW, i.e., all those plants that will participate in the tenders.

In this context, it is provided that the payment of the awarding price by the GSE occurs based on producibility (rather than actual input) in cases of plants subject to production cuts resulting from orders issued by grid operators or dispatching orders issued by Terna on the Balancing Market (typically production limitation orders, i.e., grid input limitation) and/or on European balancing platforms. This leads to greater market integration of renewable energy plants and, at the same time, reduces the volume risk borne by these plants.

Currently, the relationship between the determination of the incentive tariff under Fer X and the consideration that will be set by the GSE, following the issuance of the relevant Ministerial Decree, for the so-called “second Energy Release” under Law Decree No. 181/2023 remains unresolved.

Specifically, it is noted that this latter mechanism is structured as follows:

• on the one hand, energy-intensive companies, in return for meeting certain commitments related to implementation, can purchase renewable energy and the related guarantees of origin in advance for a period of 3 (three) years through a two-way contract for difference at a price set by the GSE itself (“First Contract”) and in return for certain commitments by the energy-intensive companies (see below);

• on the other hand, and upon the commissioning of the plants (as defined below), energy-intensive companies enter into a contract for difference with the GSE for the return, over a period of 20 (twenty) years of the amount of electricity advanced (and the related guarantees of origin) during the period mentioned above (“Second Contract”).

To access the mechanism, energy-intensive companies must commit, at the time of the conclusion of the First Contract, to realize additional plants and thus new renewable energy generation capacity. Alternatively, energy-intensive companies can commit to purchasing the newly generated renewable energy from third parties through appropriate long-term supply contracts (i.e., Long Term Corporate PPA). In this second case, the energy-intensive company also commits on behalf of the third-party producers to the GSE for the future return of the advanced electricity.

It is not yet clear whether the outcomes of the Fer X tenders, and the related awarded tariffs will be considered in determining the consideration that the GSE will request for the purchase of electricity by energy-intensive companies under the mechanism of Law Decree No. 181/2023.

It should be noted, in any case, that the Fer X decree draft under review will not be the final one: indeed, the Director General of MASE, Mr. Noce, recently stated that the Ministry is incorporating ARERA’s indications aimed at making the tenders more competitive. In its opinion dated 6 June 2024, ARERA specifically suggested (i) to introduce a limit on the number of expressions of interest that can be filed with reference to each production plant (this should lead to the possibility of participating in no more than three tenders in the period 2024-2028); (ii) to discard (for a quota equal to a minimum capacity calculated in terms of the number of offers or percentage relative to the minimum contingent provided by the tender) the offers that are in the last useful positions even in case of offers lower than the minimum contingent.

On 11 June 2024, Mr. Noce finally stated that MASE aims to obtain “temporary” approval of the Fer X decree from the European Commission for a “transitional” period until 31 December 2025, in order to start the competitive procedures already by 2024. Consequently, once this “transitional” period is over, it will be necessary to proceed with a new approval of the incentive scheme for the subsequent period until 2028.

The content of this document is for information purposes only and is not and cannot be intended as legal advice on the topics dealt with. For further information please contact Piero Viganò and Ernesto Rossi Scarpa Gregorj. 
 

[1] www.advant-nctm.com/en/news/articles/the-new-draft-of-the-ministerial-decree-fer-x-relevant-changes-and-main-novelties.

Some of the key statements of said study are examined below. Please remember that the following indications should be regarded as general and may not be valid or applicable to every case, as the relevant circumstances of the specific case must be evaluated from time to time.

State economic incentives

Incentivized RECs are eligible for three specific state grants:

1. the premium tariff stipulated in the Decree of the Minister of Environment and Energy Security No. 414 of December 7, 2023 (hereinafter the “CACER Decree”), based on the energy shared under CACER;

2. the fee for the valorization of self-consumed electricity (or ARERA fee), provided by the Integrated Paper for Distributed Self-Consumption (“TIAD”);

3. the non-repayable grant, fully financed by the PNRR, provided under the CACER Decree aimed at partially covering the costs of building or upgrading certain renewable energy production facilities.

These contributions are managed by the GSE in compliance with the Operating Rules for Access to the Service for Diffuse Self-Consumption and PNRR Contribution dated February 23 and updated on April 22, 2024 (hereinafter the “Operating Rules”). In order to benefit from the premium tariff and ARERA fee, RECs are required to access the service for distributed self-consumption provided by the GSE, through a special application submitted by the so-called referent (soggetto referente)[1]. Upon receipt of the application, the GSE will carry out technical-administrative verifications on the documentation, attached by the referent, related to the production facilities and the REC. Only in the event of a positive outcome of this control activity, the GSE will sign the agreement for the regulation of the service for distributed self-consumption. The above mentioned technical-administrative controls are aimed at verifying the occurrence of the requirements and continue even after the signature of the agreement during the performance phase; therefore, if the GSE finds the absence of one or more of the eligibility requirements or the issuance of false statements, it orders the forfeiture of the incentives, with the full recovery of any amounts already paid.

Legal subjectivity

The requirement of the legal subjectivity of the RECs, imposed by Article 31, first paragraph, letter b) of Legislative Decree No. 199/2021[2], prevents the establishment of RECs either in the form of a temporary business association (or ATI) or in the form of a public – private partnership, which do not create legal entities distinct from the associates[3].

Given the legal subjectivity of RECs, the contributions paid by the GSE are intended for the REC and not for its members, even when the REC assigns the status of referent to an entity other than itself[4]. The members of the REC, in turn, may be credited with the GSE’s contributions only possibly, if the allocation is provided for in the articles of incorporation, a regulation, or a decision of the relevant REC body. In fact, no regulation requires the REC to allocate the GSE’s economic contributions among its members.

Energy sharing

According to the current regulations, three aspects related to the sharing of self-generated energy by the REC can be identified:

1. sharing is implemented through a direct relationship between the REC and its consumer members;

2. sharing occurs virtually. In fact, members do not physically consume the self-generated power from the REC, as the REC has to feed into the public grid all the electricity it has not self-consumed on site, and REC members can consume only the electricity taken from the public grid[5];

3. the incentive tariff covers electricity sharing only and not also other energy carriers that are self-producible by the REC from renewable sources, such as thermal energy.

The essential feature of sharing, peculiar to RECs, defines their mutualistic purpose, understood in the sense of service management of the relevant body toward its members. The mutualistic purpose assumes a bilateral relationship between the REC and its members.

In the view of this bilateral relationship, the performance of the REC may consist in the sharing of profits among its members or in further performance, even of a noneconomic nature[6]. The performance of members, on the other hand, may consist of the provision of their consumption data or the work they provide to the REC.

Of course, the essential feature of sharing, peculiar to RECs, does not imply that all its members must participate in sharing. Indeed, it is not prescribed that the REC has an exclusive purpose referring only to the production and sharing of energy from renewable sources for self-consumption. So that it may be that subjects disinterested in the aforementioned activities, but interested in other[7], are part of the REC, provided, of course, that these subjects do not represent the totality of the members[8]. In detail, according to what the Operating Rules prescribe, the REC assumes the presence of (i) at least two members who are consumers and/or producers of energy and (ii) at least two PODs connected to a consumer utility and a production facility[9].

Members

REC members must fall into at least one of the following subject categories:

1. entrepreneurs whose sole or main activity is not in the energy sector falling under the European definition of MPMIs (micro and small and medium-sized enterprises)[10];

2. individuals or private entities that do not qualify as entrepreneurs;

3. private research and training organizations, religious organizations, those in the third sector and environmental protection;

4. public bodies included among the local governments contained in the list periodically released by ISTAT[11].

The “open door” requirement

The so-called “open door” requirement provided for RECs shall be interpreted as free access by interested parties and the provision of an ad nutum right of withdrawal for end customers.

By virtue of the first element, it is believed that the REC cannot legitimately deny admission to the would-be consumer member even when the current members’ consumption equals or exceeds the REC’s self-generation in the various time slots in which shared power is calculated. Moreover, the REC cannot surreptitiously deny entry to would-be members by requiring disproportionate or unfair requirements, such as excessive initial contributions; nor could the REC restrict entry to one or more of the three subsets of the notion of “final customer” of energy, namely (i) household customers; (ii) non-household customers; and (iii) energy consumers belonging to low-income or vulnerable households.         
In any case, the element of open participation does not prevent the REC from differentiating the entry requirements prescribed for aspiring members, provided that such differentiation is fair and proportionate. Further, such requirement does not preclude the REC from being formed by members from only one of the classes listed above, even though such an organization was conceived by the EU legislature as a means of preferentially promoting individuals who are energy consumers; thus, a REC, as to its minimal membership, could be formed by two members from the single class of MPMIs, if they shared the REC’s self-produced energy. 

The second element, that of ad nutum withdrawal of end customers, on the other hand, does not prevent the REC from conditioning the effectiveness of the withdrawal against it on compliance with certain conditions. In addition, if the withdrawing party has committed to remain in the REC until the expiration of a certain term, in the case of early withdrawal, any agreed-upon fees for co-participation in investments incurred remain firm, which must also, however, be fair and proportionate.

End customers

Members of the incentivized REC energy consumers retain their rights as end-customers, including the right to choose their own seller; therefore, a statutory or regulatory stipulation by which the REC required its members to purchase energy from the REC or other energy services from the owner of the energy production facility leased to the REC would be null and void.

The requirement of autonomy

Any REC must be autonomous in accordance with Article 31, first paragraph (b) of Legislative Decree No. 199/2021. The content of this requirement is not specified. However, it finds its basis in recital 71 of dir. 2018/2001/EU: “avoid abuse and ensure broad participation.”

Autonomy, therefore, serves the function of prohibiting internal and external control of the REC. This prohibition is reinforced by a second requirement in the same directive, that the REC is an entity that “is effectively controlled” by its members[12]. 

The REC, therefore, can be said to be autonomous when it is actually controlled by the whole of its members and not instead by some of its members, a minority group of them or outside parties.

Democratic character

Democratic character is imposed on any REC, regardless of the legal form used to constitute it. The necessary democratic character of RECs implies certain considerations:

1. the notion of “control powers” repeatedly used in Legislative Decree No. 199/2021 to regulate RECs[13], should be understood as voting rights exercisable in the REC. Consequently, it follows from Article 31(1)(b) and (d) of Legislative Decree No. 199/2021 that every member of the REC who is an energy consumer must be entitled to excercise at least one vote in decisions within the competence of its members;

2. the REC may not recognize participation rights other than voting in member decisions;

3. despite the conception of the RECs as instruments of activation and self-protection of energy consumers, the votes due to members falling into this category are not required to prevail. So that it might legitimately happen that, among REC members, MPMIs hold more votes than individuals;

4. public entities can never have a majority of votes in the REC, unless the REC was established to promote the use of thermal energy from renewable sources;

5. the necessary democratic character of the REC does not dictate that it should provide for capital voting for its members. However, if multiple voting were to be provided for, ceilings should still be set on the votes that can be excerised or at any rate rules should be established to prevent the realization of situations of control of the REC by individual members or their minority groups. In addition, the deliberative power of the members of the REC should, in any case, be recognized in certain matters, including: appointment, compensation, removal and liability of directors and, if any, members of the supervisory body and the statutory auditor; organization of the body in which all members have the right to participate; allocation of any profits; amendments to the articles of incorporation; and dissolution of the entity[14].

Practicable activities

The object of the REC has a dutiful component, i.e., self-production and sharing of energy from renewable sources, and an optional component, i.e., other activities, different from the two mentioned, including: the sale and storage of energy self-produced or purchased from third parties, the production of any energy (thus not only electricity) from renewable sources intended for the consumption of its members, the promotion of “integrated home automation, energy efficiency interventions,” as well as the provision of “electric vehicle charging services to its members [...]”[15].

It must be noted that the activities of the optional component also include those disconnected with energy activities, which may even be prevalent (even in terms of turnover), subject to the limitation imposed by the specific regulations applicable by virtue of the legal form adopted for the REC[16].

The self-production of energy

Energy production and storage facilities must be “in the availability and under the control of the community” according to the requirements of Article 31, second paragraph (a) of Legislative Decree No. 199/2021. Therefore, for the purpose of self-generation, it is not necessary that the REC owns the facilities, it being sufficient that it has the availability of the facilities, which is achieved through the signing of an agreement between the REC and the energy producer - third party or member of the REC. It must be possible to infer from such an agreement that the producer conducts the relevant facilities “in accordance with the agreements defined with the community for the purposes of the renewable energy community and in compliance with the provisions of the relevant regulations”[17].

It must be noted that the status of “third-party producer,” i.e. one who offers the availability of the plant to the REC, can also be assumed by large enterprises or those entities whose main business or professional activity is the production and exchange of electricity, considering that they do not belong to the REC.

The REC, which has only the availability of the plant and not its ownership, corresponds to an energy aggregator, both on the production side and on the consumption side. Moreover, in such a case, the REC is not required to pay excise tax on the energy produced and does not own any power plant (in the meaning of Article 54 Legislative Decree No. 504 of October 26, 1995).

The REC will rarely qualify as a self-producer within the meaning of Article 2(2) of Legislative Decree No. 79/1999, since it is unlikely to physically self-consume at least seventy percent of its self-generated electricity, as the latter provision requires. On the contrary, it is more likely that the self-generated electricity from the REC, possibly diminished by the little self-consumed on-site, will be fully fed into the grid, if necessary after being fully or partially stored in special facilities.

For the purpose of sharing renewable energy internally within the REC, while energy production can also be third-party only, consumption must be only of REC members.

Specifically, “shared electricity” under the TIAD, is defined as “in each hour and for the set of connection points located in the same market area that are relevant for the purpose of a configuration for diffuse self-consumption, the minimum between the electricity fed in for the purpose of sharing and the electricity withdrawn for the purpose of sharing”[18]. Whereas, “self-consumed electricity,” i.e. the shared electricity that enjoys the premium tariff, is defined as “per hour, the shared electricity pertaining only to the connection points located in the portion of the distribution network underlying the same primary substation”[19] and relates only to the energy fed in from generation plants (or by upgrades) that (a) individually considered, have a power have a capacity not exceeding 1 MW and (b) collectively considered, have a total capacity originating, for at least 70 percent, from plants that came into operation after Dec. 15, 2021[20].

The self-consumed and incentivized electricity also includes the electricity stored by the REC, after being self-generated and before being fed into the grid.

A REC may also receive the premium tariff on energy sharing realized on several primary substations, provided, however, that the corresponding referent (possibly different from the one in charge for another configuration referable to the same REC) submits, for each primary substation constituting a dedicated self-consumption configuration, an application to the GSE for access to the service for widespread self-consumption.

So, more than one CACER may belong to a REC; in such a case, statutory provision can be made for the plurality of CACERs to be matched by an organizational articulation of that REC (such as a plurality of separate assemblies), which allows its members to be subdivided according to their membership in its different CACERs.

The qualification

The REC is to qualify as a business entrepreneur for the following three reasons:

1. the commercial (i.e., non-agricultural) nature of energy activities is certain;

2. energy activities, even when carried out by a REC that is an agricultural entrepreneur, do not, as a rule, qualify as related within the meaning of Article 2135, third paragraph, of the Italian Civil Code;

3. even in the presence of RECs in the form of nonprofit entities, their activities corresponding to commercial enterprises should usually be predominant, if not exclusive, over non-business activities.

It follows that the REC will mostly be subject to the statute of the commercial entrepreneur. Therefore, if the relevant conditions are met, a REC may, for example, be required to register in the commercial register or be subject to judicial liquidation.

In particular, the incentivized REC qualifies as an energy entrepreneur[21], even assuming it outsources all its economic activities.

The possible types, subtypes, and qualifications

Regarding the legal form that can be adopted by RECs, the study confirms the already well-known situation of regulatory uncertainty. Indeed, there is no single optimal form and regulation for all RECs; as they can differ greatly in terms of membership (quantitatively and qualitatively), territorial scope, purposes, activities, and corporate and financial structure.

In any case, in adopting the legal form of RECs, it must be taken into account that their main objective, as stipulated in Article 31, Paragraph 1 (a) of Legislative Decree No. 199/2021, is “to provide environmental, economic or social benefits at the community level to its partners or members or to the local areas in which the community operates, and not to make financial profits.”

Therefore, the prevailing nonprofit purpose of the RECs, imposed by the aforementioned rule, prevents the REC from being established in one of those legal forms that must pursue, at least predominantly, the purpose of profit, pursuant to Article 2247 of the Italian Civil Code, including: simple company, general partnership, limited partnership, limited liability company, joint stock company, limited liability partnership and benefit company. 

While it can be considered that the requirement of the prevailing nonprofit purpose of RECsallows the establishment of RECs in the forms of (i) cooperative with prevailing mutuality or non-prevailing mutuality but with statutory clauses in accordance with Article 2514, first paragraph, of the Italian Civil Code or (ii) qualified as a social enterprise.

It must be also noted that the requirement under consideration shall not be considered as violated when, in compliance with the discipline of the chosen organizational model, the REC allocates GSE contributions among its members.

Notwithstanding the above, the following legal forms may in any case be considered to comply with the REC regulation outlined above:

• the association (recognized or unrecognized), first of all, as governed by the Italian Civil Code. The association may qualify as a commercial enterprise, may also have public entities among its members, and may pursue a mutualistic or altruistic purpose – but not a profit-making one. The REC-association may also acquire the status of an ETS (“Ente del Terzo Settore”) or social enterprise.

  In contrast, the REC cannot be established as a voluntary organization or a social promotion association, since the regulations of the latter two legal forms prevent the entry of certain entities – such as private for-profit entities or public entities that qualify as local governments – and, therefore, the requirement of free entry, specific to RECs, would not be met.

  The REC-association enjoys two facilities: (i) it can be formed with only two members, unlike the cooperative-REC, which requires at least 9; and (ii) it reduces the costs of establishing and maintaining the structure, especially if it is in the form of an unrecognized association, unlike RECs in corporate form. However, the association framework was not designed for the exercise of entrepreneurial activities and creates some complexities for the case where public grants received from the GSE are to be distributed among the members. In fact, due to its necessary nonprofit purpose, the association form would not allow the distribution of GSE contributions. It is only with the status of an ETS or social enterprise that the REC association can grant its members said contributions[22], provided that it regulates its activities of producing, storing and sharing energy for self-consumption purposes through partial contracts (contratti parziari) (i.e. contracts determining the price according to the profits generated by the producing entity of the goods and/or services covered by these contracts). The same REC cannot, however, distribute the same amount of profits as reversions, in that case realizing an illegitimate direct distribution of profits, which is allowed only to the social enterprise in the form of a cooperative, pursuant to Article 3, paragraph 2-bis, of Legislative Decree No. 112/2017;

   

• the foundation, provided it has an open and democratic structure, is also an adoptable form. However, according to the thesis that the foundation is not functionally neutral, it cannot be deemed suitable if a mutualistic purpose is to be assigned to the ERC, since it must always pursue a public benefit purpose; this would be the case if the majority of REC members were interested in establishing mutualistic exchanges with their foundation. In addition, this legal form does not allow the distribution, among its members, of contributions received from the GSE as an employment of profits, otherwise violating its necessary nonprofit purpose.    
  Again, the REC foundation can also acquire the status of an ETS or social enterprise;

   

• the profit-making corporation as long as it does not primarily pursue the profit-making purpose. This constraint is respectable only by adopting the status of a social enterprise;

   

• the cooperative is the optimal form for most of the RECs since its discipline best suits their requirements.     
  The REC-cooperative can, then, qualify as a social enterprise, a benefit corporation and a social enterprise (impresa sociale).

  The REC can correspond to a consortium cooperative, since this company is not directly governed by Article 2602, first paragraph, of the Italian Civil Code and is neither obliged to have a corporate purpose containing only consortium activities nor to pursue the mutualistic-consortium purpose with a membership consisting only of members with the subjective requirements imposed by the legislature.

  The REC-cooperative must consist of at least 9 members[23].

  The mutualistic purpose of the REC-cooperative can vary widely, as cooperative societies can carry out “simultaneously more than one type of mutualistic exchange”[24].

  Moreover, the REC-cooperative always qualifies at least as a production cooperative when its members are only energy consumers. Indeed, such a cooperative, in order to carry out its mutual activity, makes use of “the contributions of goods or services by its members” within the meaning of Article 2512, first paragraph, No. 3 of the Italian Civil Code; contributions which, if the REC were merely sharing electricity virtually, would have as their object the computer data on their energy consumption.

  It is also necessary to point out that an important advantage of the REC-cooperative over the REC-association is the possibility of providing, in the articles of incorporation of the former, for the issuance of financial instruments in accordance with the regulations provided for S.p.A.

  However, the REC-cooperative is prevented from showing prevalent mutuality in case its corporate purpose contemplates only the self-production and sharing of energy from renewable sources, and in the related mutual exchange its performance is a share of the operating profit. In fact, according to Article 2513(1)(c) of the Italian Civil Code, the quantification of prevalence is required only on the basis of cost items represented in the income statement (conto economico), into which a share of profit cannot be computed.

[1] The characteristics of the REC Referring Party are set out in § 1.2.2.1 of the Operating Rules.

[2] According to which “the community is an autonomous subject of law”.

[3] However, to the contrary, see ARERA Resolution 318/2020/R/eel of August 4, 2020, and § 2.3 of the Technical Rules for Access to the Shared Electricity Enhancement and Incentive Service, GSE, dated April 4, 2022, according to which a REC could be established as a partnership.

[4] Thus, the amounts paid by the GSE are to be qualified, for accounting and civil law purposes, as revenue or income for the REC, so that if these amounts are to be distributed among REC members, they must be transformed into a part of the operating profit.

[5] Sharing, therefore, assumes that the REC can have data on its members’ electricity consumption.

[6] Think of an REC that offers energy efficiency or electric car charging services to its members, or an REC whose members decide to allocate economic benefits to parties other than themselves or to general interest activities in favor of the community where the REC operates.

[7] It may even be the case that some REC members do not wish to make direct use of any of the activities carried out by RECs, perhaps only wanting to finance them.

[8] It is advisable, therefore, that the deed of incorporation of the REC (even when it is not incentivized) provides for the obligation of some of its members to become energy consumers, thus ensuring continued compliance with Article 31, second paragraph, letter b) of Legislative Decree No. 199/2021, according to which “self-produced energy shall be used primarily for instantaneous on-site self-consumption or for sharing with community members [...].”

[9] See § 1.2.2 of the Operating Rules.

[10] See Art. 2 of the Annex to Rec. 2003/361/EC of May 6, 2003, which states that “[t]he microenterprise category of small and medium-sized enterprises (SMEs) consists of enterprises which employ fewer than 250 persons and whose annual turnover does not exceed EUR 50 million or whose annual balance sheet total does not exceed EUR 43 million. 2. In the SME category, a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover or annual balance sheet total does not exceed EUR 10 million. 3. In the SME category, a micro enterprise is defined as an enterprise which employs fewer than 10 persons and has an annual turnover or an annual balance sheet total not exceeding EUR 2 million”.

[11] In view of their local character, it is prescribed as an additional requirement, only for the latter class of members, that the said entities be located “in the territory of the same municipalities in which the facilities” of self-production of the corresponding CER are located, pursuant to Article 31, first paragraph, letter b) of Legislative Decree No. 199/2021.

[12] See Art. 2(16)(a) of dir. 2018/2001/EU.

[13] See, in particular, Articles 10(1)(b) and 31(1)(b) and (d).

[14] This rule, which applies in the absence of different, stricter provisions provided for specific forms, is derived from the entire system of collective bodies under private law.

[15] See Article 31, second paragraph (f) of Legislative Decree No. 199/2021.

[16] Such a situation may occur, for example, when the REC has the status of an ETS (owing to Art. 5 Legislative Decree No. 117/2017) or a social enterprise (owing to Article 2 Legislative Decree No. 112/2017).

[17] See § 1.2.2 of the Operating Rules.

[18] Article 1.1(t) of the TIAD.

[19] Article 1.1(r) of the TIAD.

[20] In any case, pursuant to § 1.2.1.2 of the Operating Rules, the aforementioned plants must have come into operation after the regular establishment of the REC or after the REC’s article of incorporation comply with all the indications contained in the Operating Rules.

[21] See Article 2, paragraph 25-terdecies of Legislative Decree No. 79/1999, which defines the electricity contractor as “any natural or legal person, excluding final customers, who performs at least one of the following functions: generation, transmission, distribution, aggregation, demand management, storage, supply or purchase of electricity, who is responsible for the commRECial, technical or maintenance tasks related to these functions”.

[22] Thanks to the final part of Articles 8, third paragraph (d) of Legislative Decree No. 117/2017 and 3, second paragraph (e) of Legislative Decree No. 112/2017.

[23] See Article 2522, first paragraph, of the Italian Civil Code. In fact, the second paragraph of this rule, which allows a cooperative company to be established by at least 3 members as long as they are natural persons and as long as the company adopts the rules of the S.r.l., places a subjective limitation that conflicts with the requirement of free participation of RECs.

[24] See Article 2513, second paragraph, of the Italian Civil Code, which provides for the so-called “mixed cooperative.”

A new draft of the Ministerial Decree of the Ministry of the Environment and Energy Security (the so-called “FER X” and, hereinafter also, the “Decree”), implementing Articles 6 and 7 of Legislative Decree No. 199/2021 and containing provisions for the definition of new support mechanisms for energy produced from renewable energy sources, began to circulate in early March. The most important aspects of the draft Decree are analyzed below.The aim of FER X is to support the production of energy by plants powered by renewable sources with generation costs close to market competitiveness, and in particular through the following types of plant:

(i) photovoltaic plants;(ii) wind power plants;(iii) hydroelectric plants;(iv) treatment plants for residual gases from purification processes.

• the “complete reconstruction of a plant other than a hydroelectric plant”, which means an operation carried out on a site on which, prior to the start of the reconstruction works, another power plant existed, of which only the electrical infrastructure, underground electrical infrastructure and buildings connected to the operation of the pre-existing plant may be re-used[1];
• the “multi-section plant”, that is the plant made up of several sections that converge on a single grid connection point and that meets the following requirements: the uniqueness of the owner of the plant sections; the presence of autonomous measuring equipment for the energy produced in each section[2] and the parallel connection to the grid of the last section within and no later than two years from the date on which the first section enters into operation;
• the “nominal power of a plant”, which is the sum, expressed in MW, of the nominal electrical powers of the alternators (or, where there are none, the generators) belonging to the plant itself, where the nominal power of an alternator is determined by multiplying the nominal apparent power, expressed in MVA, by the nominal power factor shown on the alternator’s rating plate data, in accordance with standard CEI EN 60034, with the following exceptions:

i. for wind power plants, the power is the sum of the nominal powers of the individual wind turbines constituting the plant, as defined in accordance with CEI EN 61400; where the individual wind turbine has a rated power equal to or less than 0.5 MW, the above definition applies;ii. for hydroelectric plants, the power is equal to the nominal power of the water derivation concession;iii. for photovoltaic plants, the nominal power is determined by the lower of the sum of the individual nominal powers of each photovoltaic module forming part of the same plant, measured at STC conditions (Standard Test Condition) and the nominal power of the DC/AC conversion unit, as defined by the relevant standards defined by the Italian Electrotechnical Committee, expressed in kW.

• until 31 December 2028 or,
• for plants with a nominal capacity lower than or equal to 1 MW, on the date on which the sum of 5 GW of financed capacity is reached, if that date is before the deadline of 31 December 2028.

The quota of energy that can be incentivized through auction procedures for the five-year period 2024-2028 amounts to a total of 62.15 GW, reserving:

(a) 45 GW for photovoltaics[5];(b) 5 GW for wind power;(c) 63 GW for hydropower;(d) 02 GW for residual gases from purification processes.

2. RES plants with a capacity equal to or lower than 1MW

According to Article 3 of the draft Decree, plants producing electricity from renewable energy sources (hereinafter referred to as “RES plants”) with a capacity lower than or equal to 1 MW have direct access to the support mechanism, provided that the relevant works have been started after the entry into force of the Decree (for the determination of the date of commencement of works, see what is set forth below regarding Article 3, paras. 5 and 6) and that the same plants are in possession of the performance and environmental protection requirements “necessary also to comply with the principle of Do No Significant Harm (DNSH)[6], as well as the requirements set forth in Annex 2 and declined in the operating rules set forth in Article 10”. These plants benefit from an auction price equal to the operating price, defined in Annex 1 of the draft Decree for each source, as follows:

• for the photovoltaic source: 85 €/MWh[7] ;
• for wind power: 80 €/MWh;
• for the hydraulic source: 110 €/MWh;
• for residual gases from purification processes: 100 €/MWh.

3. RES plants with a capacity higher than 1 MW

On the other hand, RES plants with a capacity higher than 1 MW access the support mechanism provided for by the Decree, through participation in competitive procedures, within the contingency limits indicated above, where participants are required to offer a discount on the above-mentioned auction prices. The discount offered cannot be less than 2% of the above-mentioned auction prices.In order to be successful in the competitive procedure, the following requirements must be fulfilled:

a) possession of the authorization title or, at the producer’s request, of the favourable decision of environmental impact assessment pursuant to Legislative Decree No. 152/2006 (“EIA”)[8];b) grid interconnection solution definitively accepted;c) compliance with national and EU environmental performance requirements and standards, which are also necessary to comply with the DNSH principle, as well as with the requirements set out in Annex 2 of the Decree and defined in the operating rules.d) possession of a declaration by a banking institution certifying the financial and economic capacity of the participant in relation to the scope of the operation, taking into account the expected profitability of the operation itself and the financial and economic capacity of the corporate group to which it belongs, or, alternatively, the commitment of the same institution to finance the operation.

1. the mitigation of climate change, if such activity leads to significant greenhouse gas emissions;
2. the adaptation to climate change, if such an activity leads to a worsening of current and future expected adverse climate effects on the activity itself or on people, nature or assets;
3. the sustainable use and protection of water and marine resources, if such activity is detrimental to the good ecological status or potential of water bodies, including surface and groundwater, and to the good ecological status of marine waters;
4. to the circular economy, including waste prevention and recycling, if:

• this activity leads to significant inefficiencies in the use of materials or in the direct or indirect use of natural resources such as non-renewable energy sources, raw materials, water resources and soil, at one or more product life stages, including in terms of the products’ durability, reparability, upgradeability, reusability or recyclability;
• this activity results in a significant increase in the production, incineration or disposal of waste, with the exception of the incineration of non-recyclable hazardous waste;
• long-term disposal of waste could cause significant, long-term damage to the environment;

5. the prevention and reduction of pollution, if that activity results in a significant increase in emissions of pollutants into the air, water or soil, as compared with the situation prior to its commencement;
6. the protection and restoration of biodiversity and ecosystems, if such activity significantly impairs the good condition and resilience of ecosystems or harms the conservation status of habitats and species, including those of Union interest[10] .

In addition to the special causes of exclusion provided for in paragraph 4, paragraph 5 of Article 3 of the draft Decree denies access to the incentives to plants whose construction works have commenced prior to the submission of the application for participation in the same competitive procedures. In this regard, paragraph 6 of the same Article 3 reiterates that the commencement of works coincides with the moment of the first obligation that renders the investment irreversible (e.g. the ordering of equipment or the commencement of construction works, the latter not including the purchase of land and preparatory works such as obtaining permits and carrying out preliminary feasibility studies). In this regard, since this provision is almost identical to the one contained in the Ministerial Decree of 15 September 2022 (setting forth incentives for the production of biomethane), it appears that the interpretation rendered by the GSE in an FAQ following the entry into force of the same Ministerial Decree 15 September 2022 and concerning the date of commencement of the works can also be applied in this context.  In such FAQ, it was clarified, inter alia, that “entering into a supply contract whose validity is subject to the admission in a useful position in a ranking announced by the GSE does not constitute a firm commitment to the construction of the plant”[11].In addition, it should be noted that for the purpose of participating in the competitive procedures, the responsible persons are required to submit a provisional deposit and a final deposit (the terms and conditions for the provision, enforcement and, with specific reference to the provisional deposit, also its amount, will be set forth in the GSE’s operating rules according to Article 10 of the Decree). With specific reference to the final deposit, its amount is set at 10% of the investment cost (as determined by Annex 1 of the draft Decree)[12]. This provision represents an innovation, since the Ministerial Decree of 4 July 2019 (so called “FER 1”), in Article 15, para. 3, establishes that the final deposit is determined to the extent of 10% of the investment cost envisaged for the construction of the plant, “conventionally set at 90% of the costs set forth in Table 1 of Annex 2 of the Decree of 23 June 2016”.For the procedures carried out in 2024, the operating prices to be tendered are those indicated in Annex 1 of the draft Decree, i.e. the same prices indicated for direct access to the support mechanism indicated above. Worthy of mention is also the provision of paragraph 5 of Article 4, pursuant to which the values of the operating prices will be updated, at the time of publication of the individual calls for tenders, by the GSE on a monthly basis, making reference to the national consumer price index for the entire community, in order to take into account the average inflation accumulated between the date of entry into force of the Decree and the month of publication of the call relating to the individual procedure.In the context of participation in the auctions, with equal percentage reductions offered as a result of the application of the coefficients referred to in Article 4, para.8, the following items constitute priority criteria:

a) the complete removal of covering made of asbestos or in any case containing asbestos (only for photovoltaic plants), for which there is also a correction in the award price, see below;b) construction on areas identified as suitable in implementation of Article 20 of Legislative Decree No. 199/2021 (the so-called “Suitable Areas Decree”);c) the presence of an energy storage system at the service of the plant that guarantees at least one daily modulation of the electrical energy, according to the criteria defined in the operating rules set out in Article 10 of the Decree;d) the signing of a long-term power purchase agreement (so-called “Power Purchase Agreement” or “PPA”) with a duration of at least ten years, in the manner provided for in Article 3, para. 9;e) the earliest date of completion of the application for participation in the procedure.

a. 21 months for photovoltaic plants;b. 34 months for wind farms;c. 54 months for hydroelectric plants;d. 54 months for plants treating residual gases from purification processes.[13]

• 19 months for wind farms;
• 39 months for hydroelectric plants;
• 27 months for plants treating residual gases from purification processes.[14]

Failure to comply with the aforementioned deadlines shall entail a 0.2% reduction of the award price for each month of delay for the first nine months, and a 0.5% reduction for the following six months, up to a maximum limit of fifteen months, beyond which the GSE shall declare the forfeiture of the ranking and enforce the final deposit. 

4. Provisions common to all plants

An important novelty included in Article 9, para. 3 of the draft Decree, consists in the updating by the GSE of the award price on the basis of the annual rate of change of consumer prices for factory and office workers’ households surveyed by ISTAT, in order to take into account the inflation recorded:

a) in the period between the date on which the competitive procedure is held and the plant’s expected entry into operation date, with an indexation on 100% of the award price;b) over the term of the contract from the date of the effective entry into operation of the plant, with a partial indexation of the contract price commensurate with the share of the operating and maintenance costs of the plant itself, as defined in the operating rules.

a) payment by the GSE to the producer, starting from the date the plant enters into operation, of an all-inclusive tariff for plants with a capacity not exceeding 200 kW. Consequently, the GSE provides for the withdrawal and sale of the electricity produced, without prejudice to the right of the owners of such plants to adhere to the mechanism referred to in Article 9, para. 1, lett. b (the so-called “two-way contract for difference”);b) payment by the GSE to the producer, as from the date of entry into operation of the plant, of an amount equal to the difference between the auction price determined following the auction procedure and the greater of 0 and the zonal price of electricity, with the producer retaining the availability of the electricity produced and the possibility of exploiting it on the market. If the aforementioned difference is positive, the GSE disburses this difference in the form of a fee; in the event of a negative difference, the GSE equalizes or claims the difference from the producer.

a) plants subject to shutdowns as a result of orders placed by network operators outside the market for dispatching service in order to resolve local grid constraints and/or force majeure;b) zero or negative zonal prices on the Day-Ahead Market, but within the limits of the sum of the program entering the Balancing Market and the power offered at a zero, or negative, price on the Balancing Market;c) plants subject to a production cut as a result of dispatching orders placed by Terna S.p.A. on the Balancing Market and/or European balancing platforms through the acceptance of downward bids that must be submitted at a price no lower than zero[15].

a) capital grants (up to a maximum of 40% of the investment cost) only for newly built plants;b) guarantee funds and revolving funds;c) tax breaks in the form of tax credits or tax relief from business income for investments in machinery and equipment.

i. photovoltaic plants replacing asbestos or eternit (+35 €/MWh);ii. photovoltaic plants realized on roofs if the power of the installation is less than or equal to 1 MW (+10 €/MWh).

5. Large-scale projects

The accelerated assessment procedure for large projects, provided for in Article 6 of the draft Decree, is certainly an element of considerable interest for operators in the sector. This procedure envisages, for plants with a power exceeding 10 MW, the possibility for the proposer[16] to formulate a specific request, together with the application for the single authorization, for the GSE to examine the project electronically in parallel with the preliminary investigation procedure pursuant to Article 5 of Legislative Decree No. 28/2011 and, within 30 days from the date of issuance of the single authorization, to issue the proposer with a qualification of eligibility for the application to access the support mechanism.The consequence for plants with a qualification of eligibility lies in the fact that, should they participate in the first useful tender under the Decree, they are not required to submit the documentation for obtaining the authorization title. The content of this document is for information purposes only and is not and cannot be intended as legal advice on the topics dealt with. For further information please contact Piero Viganò, Giovanni De Luca and Ernesto Rossi. [1] If the realized plants are located on areas affected by constraints that occurred after the construction of the pre-existing plant, reconstruction may only concern the works, infrastructure and buildings that do not fall within the constrained areas.[2] Each has its own section code and “UP” code as identified in Terna’s Gaudì system.[3] For interventions of repowering, access to the support mechanism is allowed only for the new section of plant attributable to the repowering.[4] In this case, the requirement of the obligation to qualify for the provision of dispatching services pursuant to Art. 9, para. 5 (see below) shall be deemed to be met for the total power of the plant.[5] Annex 2 of the draft Decree sets out the specific requirements for access to incentives for each type of plant. With reference to photovoltaic plants, it is specified that photovoltaic plants include agri-voltaic plants (Annex 2, point 3).[6] The “Do No Significant Harm (DNSH)” principle consists in “not causing significant harm” to the environment. In light of Art. 10 of the draft Decree, the operating rules of the Gestore dei Servizi Energetici - GSE S.p.A. (hereinafter the “GSE”) will regulate the construction, performance and environmental protection requirements with which the plants must comply also in order to comply with the DNSH principle and the public notice schemes for each of the procedures foreseen, in accordance with the same principle.[7] This includes photovoltaic plants on agricultural lands pursuant to Article 4-ter, para. 2 of Law Decree No. 181/2023 (the so-called “Energy Decree”), converted by Law No. 11/2024.[8] Art. 3, paras. 2 and 3 of the draft Decree.[9] Regulation (EU) No 241/2021, available at: https://eur-lex.europa.eu/legal-content/IT/TXT/PDF/?uri=CELEX:32021R0241 .[10] Art. 13 of Regulation (EU) No 2020/852, available at: https://eur-lex.europa.eu/legal-content/IT/TXT/PDF/?uri=CELEX:32020R0852 .[11] FAQ published on 21 April 2023 on the Customer Service Portal of the GSE website, available at the following link: https://supportogse.service-now.com/csm?id=faq&sys_id=2f2bc31ec3d2a114ff379b6ce00131d2 .[12] According to Annex 1, point 1 of the Draft Decree, the investment cost is set at:

• 900 €/kW for photovoltaics;
• 1,300 €/kW for wind power;
• 4,800 €/kW for hydro power;
• 7,000 €/kW for residual gases from purification processes.

[13] For installations in the ownership of public administrations, the deadlines are increased by six months.[14] Idem.[15] The provisions of Article 9, para. 6, letters b) and (c) do not apply to plants that are not subject to the obligation to be qualified to provide dispatching services and to plants for which such qualification is not decided. For non-enabled plants with a capacity of more than 200 kW and less than 6 MW, dispatch is suspended during the hours in which prices equal to 0 or negative, where provided for in the Italian electricity market regulation, are recorded on the Day-Ahead Market for a period of more than 6 consecutive hours. Therefore, the period of entitlement to the support mechanism is calculated net of the total hours in which the suspension was recorded (Art. 9, para. 7).[16] It should be noted that, for the purposes of Art. 6, plants owned by local governments, planned and financed under the experimental and innovative measures of the National Recovery and Resilience Plan, are excluded.

• energy-consuming companies will be able to purchase energy from renewable sources “even indirectly”;
• the plants necessary to implement the new generation capacity will have a minimum power of 200 kW (instead of 1 MW).

Secondly, art. 4, para. 2, of the Decree Law, which established an annual contribution for RES-plants holders with power exceeding 20 kW, to be paid for the first 3 years from the entry into operation, if the holders had obtained the permit for the construction of the plant between January 1, 2024, and December 31, 2030, has been removed. This annual contribution, amounting to 10 Euros for each kW of plant power, would have been paid to the GSE and would have sustained a Ministry of Environment and Energy Security’s fund to the benefit of the Regions, to adopt decarbonization measures and promote sustainable territorial development. With the abolition of para. 2, the fund for the Regions under para. 1 is sustained by part of the proceeds from auctions of carbon dioxide emission allowances under art. 23 of Legislative Decree No. 47/2020.Another novelty is represented by the addition of Article 4-bis, through which the scope of application of the environmental impact assessment subjection check (so-called EIA Screening) is extended to interventions, even substantial modifications, for revamping, repowering, and rebuilding of electricity production plants from wind or solar sources.Art. 4-ter, para. 2, of the Decree Law reintroduces, after almost 12 (twelve) years, the possibility of accessing incentive mechanisms provided by Legislative Decree No. 199/2021 (and not also by Ministerial Decree July 4, 2019, so-called “FER 1”) for photovoltaic plants on agricultural land.Art. 4-ter, para. 3, of the Decree Law amends Legislative Decree no. 199/2021, where it prioritizes the participation to incentives of those who carry out refurbishment interventions on existing photovoltaic plants located in agricultural areas and involving the creation of new plants or new plant sections, on the same area and with the same occupied agricultural surface, with an increase in total power.Furthermore, art. 4-septies of the Decree Law introduces Article 7-bis into Legislative Decree no. 199/2021, which states that one or more decrees of the Ministry of Environment and Energy Security shall define the modalities for the establishment of a new incentive mechanism, alternative to those already provided by Articles 6 and 7, aimed at promoting investments in renewable energy production capacity and setting forth a series of principles and criteria (letters a-o).By inserting para. 3-ter into art. 5 of the Decree Law, GSE incentives provided by Ministerial Decree of September 15, 2022, initially restricted, among others, to new biomethane production plants powered by OFMSW, are also extended to plants powered by OFMSW which have undergone conversion.Regarding the development policies for floating wind turbines at sea, art. 8 of the Decree Law has been amended so that the Ministry of Environment and Energy Security shall publish a notice for the acquisition of expressions of interest for the identification, in at least 2 (two) ports in southern Italy or port areas adjacent to those undergoing gradual coal use elimination, of maritime state-owned areas allocated for the construction of infrastructures suitable for ensuring the development of investments in the shipbuilding sector for the production, assembly, and launching of floating platforms, and electrical infrastructures functional to the development of shipbuilding for offshore wind energy production. With the same amendment, the publication of a vademecum by the above Ministry for proponent entities has been stipulated, relating to the minimum information and obligations necessary to initiate the single authorization procedure for offshore wind installations.With para. 9-undecies of art. 9 of the Decree Law, it is stipulated that the start of authorization procedures for RES plants and electrochemical storage systems, including connected works thereof, does not require the technical conformity opinion on the project solutions regarding network systems by the network operator. In any case, such conformity opinion must be acquired during the authorization process for the issuance of the final measure.Moreover, the thresholds for EIA and EIA Screening in suitable areas were raised (to 25 MW and 12 MW, respectively), as well as the threshold for PAS access in suitable areas (up to 12 MW).Finally, art. 12-bis of the Decree Law amends the legislation on the disposal of photovoltaic panels (Legislative Decree No. 49/2014), in that it excludes that the non-correspondence between the reported DEEE serial numbers and those present on-site may constitute a violation relevant for the provision of incentives and, therefore, sanctionable under art. 42 of Legislative Decree No. 28/2011, without prejudice to the obligation for the responsible party to communicate to the GSE any maintenance intervention involving the replacement of photovoltaic modules.Also, on the same subject-matter, it is now provided that, with reference to the retention of the quota for end-of-life management of panels by the GSE, said quota shall be equal to twice the amount based on average costs of joining consortia or costs determined by collective systems.For a complete analysis of the conversion bill text, click here. This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For any further information please contact  Piero Viganò, Giovanni Battista De Luca, Ernesto Rossi Scarpa Gregorj and Alessandro Vittoria.

• on the one hand, energy-intensive companies will be able to buy electricity from renewable sources and the related guarantees of origin in advance for a period of 3 (three) years by entering into a two-way contract for difference with respect to a price fixed in advance by the GSE itself (“First Contract”) and against the assumption by the energy-intensive companies of certain undertakings (see below);
• on the other hand, and from the entry into operation of the Plants (as defined below), the energy-intensive companies will enter into a contract for difference with the GSE having as its object the return, for a term of 20 (twenty) years, of the amount of electricity advanced (and the related guarantees of origin) during the period referred to in the preceding point (“Second Contract”).

To be eligible for the Energy Release mechanism as described above, energy-intensive companies will have to commit, at the time of the conclusion of the First Contract, to build additional plants and thus new power generation capacity from renewable sources. Alternatively, energy-intensive companies may undertake to purchase renewable energy from third parties through specific forward purchase agreements (Long-Term Corporate PPAs). In the latter case, energy-intensive companies commit themselves also on behalf of third-party producers to the GSE for the future return of advanced electricity.The new generation capacity may be achieved alternatively through:

• installation of new photovoltaic, wind and hydroelectric plants with a minimum nominal capacity of 1 MW;
• photovoltaic, wind and hydroelectric plants undergoing upgrading or refurbishment allowing for a power increase of at least 1 MW.

 Other requirements/criteriaThe plants through which the new generation capacity is realised shall come into operation within 40 (forty) months from the conclusion of the First Contract, except in cases of force majeure or delays in the authorisation procedures not attributable to the company.The amount of electricity from renewable sources that each energy-intensive company requests in advance shall not exceed, on an annual basis, the average annual consumption qualifying for the registration in the list of energy-intensive companies.In order to return the amount of energy being advanced, the companies may also allocate even only a portion of the capacity of the plant(s) constructed.To secure the obligation to build/purchase new renewable electricity generation, companies will be required to provide appropriate guarantees. Final remarksIt looks as if energy-intensive companies will be called upon to contribute to the development and creation of additional renewable electricity generation capacity, and the mechanism will clearly support the further development of newly emerging Long-Term Corporate PPAs market. In order to have a final picture of the mechanism outlined above and its possible interactions with these agreements and the development of new projects, we must wait for:

• the conversion into law of the Energy Decree;
• the publication of a Ministerial Decree of the MASE determining the “methods and criteria” to access the Energy Release mechanism; and
• the determination by the GSE of the price of the energy to be advanced, which will have to be decided on the basis of the “average efficient cost of producing renewable energy from efficient scale plants using competitive mature technologies”.

 This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For any further information please contact Piero Vigano and Ernesto Rossi Scarpa Gregorj

i. applicability of the three-year deadline for the commencement of the construction works under Articole 15, para. 2, of Presidential Decree no. 380/2001 (as amended by Articicle 7-bis of Decree Law no. 50/2022) also to the authorizations under Article 12 of Legislative Decree no. 387/2003;

ii. applicability, also to the authorizations under Article 12 of Legislative Decree no. 387/2003, of the two-year extension under art. 10-septies of Decree Law no. 21/2022 of the deadline for the commencement and end of construction works for authorizations issued or formed by December 31, 2023.

• the minimum area devoted to agricultural activity (≥ 70% of the total area of the agrovoltaic system);
• minimum height of the modules above the ground (1.3 meters for livestock activity, 2.1 meters for crop activity);
• electrical output of the system must be ≥ 60% of the producibility of a standard system.

 Operating Rules and Access to IncentivesThe MASE Decree, in Article 12, provides for the approval of Operating Rules within 15 days of its entry into force. These rules will govern the size and construction of facilities and monitoring systems. Tariffa Incentivante e soggetti beneficiariAnnex 1 of the MASE Decree establishes reference rates for AVs with an increase for those in Central and Northern Regions.The following entities are eligible for the incentives:

• agricultural entrepreneurs as defined in Article 2135[1] of the Italian Civil Code, in individual or corporate form, including cooperatives, agricultural companies, consortia and temporary associations of agricultural enterprises (“Subject A”); or
• temporary associations of enterprises, which include at least one Subject A (“Subject B”).

Plants that meet the access requirements can benefit from the incentive tariff through registration in the registers (only Subject A with power ≤ 1 MW) or participation in competitive procedures (both Subject A and Subject B with any power).Annex 1 defines the reference tariffs (“Reference TI”):

• 93 Euro/MWh for plants with a capacity (P) between 1 kW and 300 kW (1 < P ≤ 300) and
• 85 Euro/MWh for plants with a power (P) greater than 300 kW (P>300)[2].

Regarding access to competitive procedures, participants will have to offer in the application for participation a percentage reduction of the Reference TI of at least (≥) 2% (“Expectant TI”). Regarding the application for registration in the registers this percentage reduction of the Reference TI will not apply[3].Finally, on the nature of the TI, Article 10 of the MASE Decree specifies that for Advanced AV Plants[4] or PNRRs[5] of power not exceeding (≤) 200 kW, the TI takes the form of an all-inclusive tariff and the GSE directly provides for the withdrawal and sale of the energy produced[6]. While, in the case of plants of more than 200 kW, the TI is a premium and the energy produced by the plant remains the property of the producer (see Art. 10, para. 1, letter a).However, one more step is still needed in order to define how to calculate the TI that will actually be disbursed by the GSE (“Erogated TI”). Therefore, several assumptions can be identified:

1. in the case of Advanced AV Plant or PNRR registered and of power (P) ≤ 200 kW, the Erogated TI will be all-inclusive in nature and will be equal to the Reference TI;
2. in the case of Advanced AV Plant or PNRR enrolled in the registries and with power capacity 200 kW < (P) ≤ 1 MW, the Erogated TI will be in the nature of a premium tariff and will be equal to the difference between the Reference TI and the market price of reference electricity;
3. in the case of Advanced AV Plant or PNRR in a useful position following participation in the competitive procedures referred to in Article 6 of the MASE Decree and with a power (P) ≤ 200 kW, the Erogated TI will have an all-inclusive nature and will be equal to the Expected TI; finally
4. in the case of Advanced AV Plant or PNRR in a useful position as a result of participation in the competitive procedures referred to in Article 6 of the MASE Decree and power (P) > 200 kW, the Erogated TI will be in the nature of a premium tariff and will be equal to the difference between the Expectant TI and the market price of reference electricity.

In case the Erogated TI is a premium tariff, the producer remains the owner of the energy produced and will be able to value it in the market, while in case the Erogated TI is an all-inclusive tariff then the GSE directly provides for the withdrawal and sale of the energy. Finally, in case the TI is premium in nature and, therefore, the Erogated TI is calculated as the difference between the Reference TI (or the Expected TI) and the market price of energy, in the case of positive difference, then the GSE disburses the incentives with respect to the production of energy fed into the grid. Otherwise, in the case of a negative difference, the GSE will equalize or claim the corresponding amounts from the incumbent (see Article 10, Paragraph 1(b)). Capital Contribution Eligible expenses, specified in Annex 3, must be paid by bank transfer with receipt by June 30, 2026. The maximum contribution is specified according to the power of the installation, specifically:

• 1,700 Euro/kWh for PNRR AV Plants with a power (P) between 1 kW and 300 kW (1 < P ≤ 300);
• 1,500 Euro/kWh for PNRR AV Installations with a power (P) greater than 300 kW (P > 300).

 Temporary Enterprises Association and Participation in ProceduresThe MASE Decree provides for the temporary enterprises association (“ATI”) of Legislative Decree 36/2023, defining ATI as essential for AVs. The application of ATI in the agrovoltaic context is discussed, highlighting the freedom of legal form and the possibility of participating as “in the process of being established” (costituende). This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For any further information please contact Piero Francesco Viganò, Ernesto Rossi Scarpa Gregorj e Stefano Biraghi.  [1] Article 2135 of the Italian Civil Code states, “1. An agricultural entrepreneur is one who engages in one of the following activities: cultivation of the land, silviculture, animal husbandry and related activities. 2. Cultivation of the land, silviculture and animal husbandry shall mean activities directed to the care and development of a biological cycle or a necessary stage of the cycle, of a plant or animal nature, which use or may use the land, forest or fresh, brackish or sea water. 3. In any case, activities, carried out by the same farmer, directed to the handling, preservation, processing, marketing and exploitation that have as their object products obtained predominantly from the cultivation of the fund or forest or from the rearing of animals, as well as activities directed to the provision of goods or services through the prevailing use of equipment or resources of the farm normally used in the agricultural activity exercised, including activities of enhancement of the territory and rural and forest heritage, or reception and hospitality as defined by law, are considered related”.[2] Annex 1 of the MASE Decree does not clearly indicate whether the power output of the plants has MWh or kWh as the unit of measurement; however, given the ranges provided in the MASE Decree and just outlined, it seems more reasonable to support kWh as the reference unit of measurement.[3] See Art. 6, para. 3 MASE Decree.[4] Plants that meets the requirements of A, B, C and D of the June 2022 Guidelines.[5] Facility that meets the requirements of A, B, C, D and E of the June 2022 Guidelines.[6] However, the producing entity may apply for the scheme related to plants with a power exceeding (>) 200 kW.

(i) operate in any of the sectors at risk - including high risk - of relocation listed in Annex 1 to the Communication of the European Commission 2022/C 80/01 of 18 February 2022, «Guidelines on State aid for climate, environmental protection and energy 2022» (“Communication”);(ii) despite not operating in any of said sectors, have benefited, in the years 2022 or 2023, of the allowances under the Decree of the Minister of Public Development of 21 December 2017, «Provisions on tariff reductions to cover general system charges for energy-intensive companies», having met the requirements under article 3, paragraph 1, a) or b), of the same decree;(iii) despite not operating in any of said sectors under (i) and despite not meeting the requirement under (ii), operate in a sector or subsector deemed eligible under point 406 of the Communication. In such case, the deadlines and terms for the submission - by the companies or the trade associations concerned - of the proposal for admission of the sector or subsector shall be set out by decree of the Ministry of the Environment and Energy Security.

• for the purpose of the determination of the Allowance the “electric intensity index” under former Ministerial Decree of 21 December 2017 is no longer relevant, but only the “gross added value” of the company is relevant (“GAV”);
• the quantum of the Allowances has increased, compared to other companies, for some of the energy-intensive companies that meet their energy consumption needs from “sources that do not emit carbon” by at least 50%, of which:
  • at least 10% through a “forward purchase agreement”; or
  • at least 5% through self-consumption by means of a direct on-site or remote connection[2];
• as an alternative to performing the obligations in the energy audit (to which all energy-intensive companies are obliged in any event), they may:
  • prove that they cover their needs from “sources that do not emit carbon” by at least 30%;
  • invest at least 50% of the allowance amount in projects involving substantial reductions in greenhouse gas emissions (see below for further details).

 With respect to the determination of the Allowance, the new state of the art is summarised in the following table:[3]There is a favourable approach to those companies that take steps to consume energy from “sources that do not emit carbon”. In this regard, it is believed that this notion should refer to all those sources of electricity production that do not lead to an increase in the amount of carbon dioxide in the atmosphere, even if the production of energy involves the emission of carbon. In other words, those sources of electricity production that, while producing carbon emissions, do not use fossil fuels and are, therefore, neutral with respect to the amount of carbon dioxide must also be included. The meaning of “purchase agreement”By using the expression “forward purchase agreement”, we believe that lawmakers want to refer to power purchase agreements (“PPAs”), but it is worth noting that there are certain interpretative difficulties. On the one hand, the expression “forward” might suggest a PPA without physical delivery of the energy produced, but, on the other hand, the expression “purchase” leads one to refer to PPAs with physical delivery. It could be assumed that by the expression “forward”, therefore, lawmakers intended to refer to the category of long-term PPAs, but without indicating a minimum duration, and that “purchase” implies the physical delivery of electricity produced even from existing plants, since it does not have to derive from new plants. The measure would therefore not necessarily have the effect of favouring the installation of additional electricity generation capacity from renewable sources.It is also noted that the rule only refers to certain particular configurations of self-consumption and, in particular, those that exclude the use of the public distribution network[4]. continued: the energy audit - coordination issuesAs already mentioned, companies accessing the Allowances must carry out an energy audit[5] and are required to adopt either of the following measures:

• implement the recommendations of the audits, if the amortisation time of the investments required for such purpose is no longer than three years and the related cost is no higher than the amount of the allowance received;
• prove that they cover their needs from “non-carbon emitting sources” for at least 30%; or
• invest at least 50 per cent of the amount of the allowance in question in projects leading to substantial reductions in greenhouse gas emissions (see below for more details).

Apparently, according to the new rules, the implementation of the recommendations referred to in the energy audit is an alternative to the other two measures listed above. In fact, the use of the expression “recommendations of the audit” in Decree Law No. 131/2023, does not strictly reflect the specific rule concerning the content of the energy audit, which provides that such document must specify a series of energy “efficiency measures” to be implemented[6]. Therefore, lawmakers should intervene in order to clarify: (i) whether or not recommendations refer to the energy efficiency measures outlined in said energy audit; and (ii) whether or not the implementation of any of the measures outlined in the energy audit is still an obligation, or whether it is an alternative to the implementation of any of the other two new measures set out by the 2023 lawmakers. Indeed, if by “recommendations” lawmakers were to refer to energy efficiency measures, the implementation of said measures would be an alternative to the implementation of any of the other two new measures outlined by the 2023 lawmakers. Otherwise, it should be necessary to clarify the meaning of recommendations in order to coordinate the obligations resulting from the energy audit with the two different measures proposed by the 2023 lawmakers.With reference to the implementation of the audits, it should be noted that access to the incentive mechanism of energy efficiency certificates[7] (or white certificates) is subject, inter alia, to the verification of the existence of the condition of the so-called additionality of energy efficiency measures, whereby “energy efficiency projects designed to comply with regulatory constraints or administrative requirements are not eligible for the White Certificates system, except in the case of projects generating additional savings when compared to the design solutions specified by the aforementioned constraints or requirements and projects implemented pursuant to Article 8, paragraph 3 of Legislative Decree No. 102 of 4 July 2014 that generate additional savings”[8]. Therefore, given the regulatory obligation to implement the measures, such measures, if implemented, will not be eligible for the incentive mechanism insofar as they do not generate additional savings.With reference to the first of the alternatives to implementing the recommendations contained in the energy audit, it seems clear that lawmakers are referring to the aforementioned PPAs and to self-consumption configurations whose production plant, even in cogeneration mode, is from renewable sources.As for self-consumption, it should be pointed out that lawmakers did not limit the specific case at issue to self-consumption configurations that do not involve the use of the public distribution network.Finally, the last alternative to the implementation of the recommendations of the energy audit introduces for the first time the possibility of fulfilling the obligations typical of energy companies through the investment in projects to reduce greenhouse gas emissions whose value of emission reduction subtracted from the emissions actually produced by the company leads to a level lower than that determined at the European Union level[9], for each sector, for the free allocation of emission allowances (so-called EU Allowances).In other words, an energy-intensive company can fulfil its obligations to access the relevant Allowances by proving that it has invested in one or more projects that lead to a certain level of greenhouse gas reduction to be determined on the basis of the company’s type and size (in terms of emissions). Final remarksIn any event, in order to have a final text of the provisions examined, it is necessary to wait for: (i) the conclusion of the parliamentary work for the conversion into law of Decree Law No. 131/2023, which must be completed by the end of November 2023; and (ii) the publication of a Ministerial Decree of the MASE (Ministry of the Environment and Energy Security) whereby the “methods and criteria” for the fulfilment of the conditions and the fulfilment of the obligations referred to above will be determined. This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For any further information please contact the Energy and Infrastructures Department [1] As to the classification of the state of difficulty see the European Commission’s Communication 2014/C, 249/01.[2] Article 30, paragraph 1, a), Nos. 1 and 2.1, Legislative Decree No. 199/2021 and Article. 3.6, Resolution ARERA No. 727/2022 and Annex A to ARERA Resolution 578/2013.[3] In any case, the contributions owed by energy-intensive companies may not be less than the product of 0.5 Euro/MWh and the electricity taken from the public grid.[4] Reference is made, in particular, to the configurations under Article 30, paragraph 1, a), Nos. 1 and 2.1, of Legislative Decree No. 199/2021.[5] Article 8 of Legislative Decree No. 102/2014.[6] Article 8, paragraph 3, of Legislative Decree No 102/2014.[7] Ministerial Decree of 11 January 2017.[8] Article 6, paragraph 6, of Ministerial Decree of 11 January 2017.[9] Commission implementing Regulation (EU) 2021/447 of 12 March 2021.

This document aims to provide a summary of the regulations on identification of suitable areas included in the draft decree implementing Legislative Decree 199/2021 and addresses the most significant issues for those who intend to develop projects for the installation of renewable energy source (“RES”, in Italian “FER”)- based systems in the national territory[1]. 

2. Purposes of the Guidelines

A draft implementing decree was prepared, in implementation of Article 20, paragraphs 1 and 2 of Legislative Decree 199/2021, containing guidelines (“Guidelines”), several versions of which were circulated, one dating back to July 2023 and the most updated one dated September 2023, for identification of the Suitable Areas (“Suitable Areas”) for the installation of RES-based plants. More specifically, such decree establishes the principles for identification of Suitable Areas in order to achieve the goal of installing an additional 80 (eighty) GW power from RES throughout the national territory by 2030 (Article 1 of the Guidelines).In this regard, Article 2 of the Guidelines includes a table showing the regional minimum power allocation for each year from 2023 to 2030.Once the decree comes into force, the Regions will have to enact a law for the identification of the Suitable Areas according to the criteria set out by the Guidelines. 

3. Types of areas and criteria for the identification of the Suitable Areas

The Guidelines divide the areas into three different categories:a) Suitable Areas;b) unsuitable areas; andc) so-called “ordinary” areas.As far as Suitable Areas are concerned, Article 8 of the Guidelines includes  the criteria that Regions should take into account for their identification. Specifically, point e) of such article provides that specific criteria are identified to qualify as Suitable Areas:

• areas including water storage reservoirs and artificial canals for hydraulic defence of land;
• brownfield and divested industrial areas as well as other impaired areas, abandoned and marginal areas such as, by way of example, unclassified areas, used for unlawful activities, unproductive land, mines and quarries, landfills, contaminated areas, former military areas.

Furthermore, under point f) of the same article, Suitable Areas are deemed:

• sites where plants of the same source are already installed and where changes are made for upgrade or reconstruction purposes, possibly combined with storage systems, which, in any event, do not involve changes in the area concerned greater than 20% (twenty percent). Such limit does not apply to photovoltaic systems (“PV Systems”) installed on areas classified as agricultural areas, enclosed in a perimeter whose points are no more than 500 (five hundred) meters away from industrial, artisanal and commercial use areas, including sites of national interest, as well as quarries and mines pursuant to Article 20, paragraph 8, letter c-ter), number 1, of Legislative Decree 199/2021;
• sites subject to reclamation under Legislative Decree 152/2006;
• quarries and mines that have ceased, have been abandoned and are not suitable for further exploitation;
• sites and plants available to Ferrovie dello Stato, managers of railway infrastructures, highway concession companies and airport management companies included in airport property;
• without prejudice to the preceding points, areas that neither fall within the scope of property to be protected under Legislative Decree 42/2004 (“Code of Cultural Heritage”) nor within the buffer area intended for protection of the assets to be protected under second section or Article 136 of said Legislative Decree. For the sole purposes of this point, the buffer area is 3 (three) kilometres for wind power plants and 500 (five hundred) metres for PV Systems;
• property in the military domain, property in the State domain or for any reason used by the Ministry of the Interior, property identified by the Agenzia del Demanio (State Property Agency);
• areas of the buildings, facilities and artifacts on which PV Systems are built, as well as the areas for the construction of works functional to the connection to the electricity grid, if falling among the types for which the ordinary maintenance regime is applicable pursuant to Article 7-bis, paragraph 5, of Legislative Decree 28/2011.

Only with regard to PV and biomethane production plants, in the absence of constraints under second section of the Cultural Heritage Code, the following areas are deemed suitable (so-called solar belt):

• agricultural areas enclosed in a perimeter whose points are no more than 500 (five hundred) meters away from any industrial, craft and commercial areas, including sites of national interest, as well as quarries and mines;
• areas inside industrial plants and factories under Legislative Decree 152/2006, as well as agricultural areas enclosed in a perimeter whose points are no more than 500 (five hundred) meters away from the same plant or factory;
• areas adjacent to the motorway network within a distance not exceeding 300 (three hundred) metres.

For wind power plants, without prejudice to the provisions of Article 8, paragraph 1, (f)  of the Guidelines, Suitable Areas shall be identified based on the assessment of adequate windiness of the area. For such purposes, the Guidelines, in the version circulated in September 2023, classify as “adequate” a windiness such as to ensure a producibility greater than 2,150 (two thousand one hundred and fifty) hours equivalent to 100 (one hundred) metres in height, as opposed to the 2,250 (two thousand two hundred and fifty) hours envisaged, on the contrary, by the draft circulated in July 2023.Unsuitable areas are, on the other hand,  the sites deemed unsuitable for the installation of specific types of plants. In this regard, the Guidelines provide that Regions and Provinces, where necessary, must update the list of unsuitable areas identified in accordance with the criteria set out in Annex 3 of the guidelines for the authorization of plants powered by renewable sources introduced by the Ministerial Decree of 10 September 2010, as amended and supplemented.Finally, the draft decree classifies ordinary areas as those areas that do not fall into any of the categories under (a) and (b) above and are subject to application of the authorisation regimes set out in Legislative Decree 28/2011. 

4. Percentage limits on the installation of plants on suitable agricultural areas

As far as suitable agricultural areas are concerned, point g) of Article 8 provides that  PV Systems may cover a maximum percentage of no less than 5% (five per cent) and no more  than 10% (ten per cent) of the agricultural land available  to the party carrying out the work. The draft Guidelines, in the July 2023 version, provided for such percentages to be doubled (i.e. no less than 10 percent and no more than 20 percent) with respect to plants classified as (non-advanced) agrivoltaic under the Guidelines of June 2022 on agrivoltaic systems (“Agrivoltaic Guidelines”);The draft Guidelines, updated September 2023, on the contrary, provide for the 5% (five percent) - 10% (ten percent) limit on availability of agricultural land to apply not only to so-called “standard” PV systems but also to (non-advanced) agrivoltaic ones, thus excluding, for the latter, the possibility of benefiting of preferential percentages. On the other hand, such latest draft also introduces the novelty of eliminating such percentage limits in the event that standard PV systems and (non-advanced) agrivoltaic systems  are built on unused agricultural land.The other provisions included in point g) of Article 8 remained unchanged, which lay down that percentage limitations:

• do not apply for the so-called “advanced” agrivoltaic systems, i.e. systems built pursuant to Article 65, paragraph 1-quater of Decree Law 1/2012;
• do not apply for the installation of RES-based systems in the areas referred to in point e) of Article 8 of the Guidelines (reservoirs, artificial canals, divested industrial areas, impaired areas), which therefore cannot be used for agricultural activities; and
• higher percentages of use may be established in the case of land classified as agricultural but actually unused.

Moreover, the September 2023 draft provides, in Article 7, paragraph 1, point b), that solely for the purpose of installing advanced agrivoltaic systems, in addition to agricultural areas classified as PDO (DOP) and PGI (IGP), already included in the former draft, also areas classified as TSG (STG), DOC, DOCG, organic production and traditional production are to be considered suitable.For the sake of clarity, systems classified as (non-advanced) agrivoltaic are those that meet requirements A, B and D.2 of the Agrivoltaic Guidelines and that, at present, cannot benefit from incentives if they are installed on areas used for agricultural purposes. In a nutshell, such requirements are:

• requirement A, which is met when at least 70% (seventy per cent) of the area concerned by the work is intended for agricultural activities and when the percentage of the total area covered by the modules (“LAOR”) does not exceed 40% (forty per cent) of the total area concerned by the work;
• requirement B, which concerns the value of agricultural production, the continuation of the production activity and the minimum electricity production, which cannot exceed 60% (sixty per cent) of that of a standard photovoltaic system; and
• requirement D.2, which concerns the implementation of a monitoring system with reference to the continuity of the agricultural activities referred to in the previous point.

“Advanced” agrivoltaic systems means those systems that not only meet the requirements listed above, but also requirements C (minimum height of the modules from the ground) and D.1 (monitoring system for water saving).Upon reaching a maximum exploitation percentage no lower than the values indicated in column A of the Table in Annex 1 of the Guidelines, which specifies the minimum and maximum targets for the development of photovoltaic systems in agricultural areas, and no higher than the values indicated in column B of the said Table,  Regions are allowed to classify the remaining agricultural areas as areas not suitable for the construction of PV systems. Such limitation shall not apply to advanced agrovoltaic systems. 

5. Preliminary observations

First of all, the meaning of “availability” to the party carrying out the work is not clear with reference to the percentage limits of land use and, in particular, with reference to the areas not concerned by the work. In other words, it is not clear whether the lawmaker requires holding a property right, right of superficies, leasehold right or a simple negative easement preventing the construction of facilities of the same kind. In such respect, considering the experience to date in Emilia-Romagna, where such percentage limits were already in force, we hope that obtaining a simple negative easement in relation to areas not concerned by the work will be deemed sufficient.Secondly, it should be noted that Article 8 of the Guidelines indicates as suitable some of the examples of areas mentioned also in Article 22-bis of Legislative Decree 199/2021, namely, the areas of buildings, facilities and artifacts as well as the areas for the construction of works functional to the connection to the electricity grid. However, industrial, craft and commercial areas, landfills or landfill lots closed and restored, quarries or quarry lots or portions not suitable for further exploitation, although in turn mentioned in Article 22-bis of Legislative Decree 199/2021, are not expressly referred to in the Guidelines. The reason for such omission is not clear, since in all the areas listed in Article 22-bis of Legislative Decree 199/2021 the construction of photovoltaic systems is allowed without the prior acquisition of permits, except for possible environmental assessments, since it is considered as ordinary maintenance. It would therefore be appropriate, precisely because of the supposed attempt to facilitate the installation of renewable systems, for the decree to indicate all the sites listed in Article 22-bis of Legislative Decree 199/2021 as suitable areas.Furthermore, the Guidelines do not specify which plant components must be in the suitable areas in order for the plant to benefit from any favourable regimes, in other words, it is not clear whether it is sufficient for only modules and inverters to be in such an area or whether it is necessary for the grid connection works to be included as well.As regards, instead, the temporal scope of application, apparently the lawmaker is exempting only those authorisation procedures commenced before the entry into force of the regional laws implementing the Guidelines and concerning suitable areas pursuant to Article 20, paragraph 8, of Legislative Decree 199/2021, i.e. those areas that are “immediately” suitable. It follows that the aforesaid regional rules should be immediately applicable also to all the other authorisation procedures that will be in progress at the date of entry into force of such rules.In addition, the market negatively responded the intention to introduce the above-mentioned limits to land occupation.At present, the status of Suitable Area is mainly relevant for the possibility, reserved to PV systems to be installed on such areas, to be granted access to less burdensome authorisation procedures and, in particular, to the simplified authorisation procedure (“PAS”) referred to in Article 6 of Legislative Decree 28/2011, whose paragraph 9-bis provides that in Suitable Areas it is possible to authorise PV systems up to 10 MW by means of a PAS (and not by means of single authorisation pursuant to Legislative Decree 387/2003). As regards incentives, to date, the only mechanism currently in force for PV is still the one laid down in the Ministerial Decree of 4 July 2019 (“FER I”) implementing Legislative Decree 28/2011, where the status of Suitable Area is irrelevant.However, in perspective, Suitable Areas will also be relevant with reference to the possibility to access future incentive mechanisms that will be implemented pursuant to Legislative Decree 199/2021. In particular, as an exception to the prohibition set out in Article 65, paragraph 1 of Decree Law No. 1/2012, systems installed on agricultural areas will also be able to access the aforesaid incentives, provided that such areas are unused and provided that they have the status of Suitable Areas. However, with regard to the latter, the lawmaker does not clarify the time period after which an agricultural area can be considered unused and which requirements must be met in order for it to be classified as such. In Article 10 of Legislative Decree 28/2011, a provision that has now been repealed, the lawmaker provided a derogation to the access of incentives for PV systems in agricultural areas in the event of land “abandoned for at least 5 (five) years”. Therefore, not only is it not clear when an area can be considered unused, but in light of the aforementioned provision, the term “unused” is ambiguous, since it does not clarify whether or not it coincides with the qualification of “abandoned land” already used in the past by the lawmaker.Moreover, again with a view to the future, the status of Suitable Area will make it possible to obtain a reduction in terms of the time required for the authorisation, as well as the non-binding nature of the opinion of the competent Superintendency, where required.Finally, although the Guidelines provide for a favourable treatment for advanced agrivoltaic systems, the September 2023 version apparently eliminates any kind of benefit for simple agrivoltaic systems as they are essentially equated with standard PV systems.In conclusion, all that remains to be done is to wait for future developments regarding the ongoing interlocution between the State and the Regions[2] to assess which new limits will actually burden the possibility of developing photovoltaic systems and, in general, RES-based systems in Italy. This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For any further information please contact Piero Francesco Viganò, Ernesto Rossi Scarpa Gregorj and Elisa Maria Babbini. [1] This document should not therefore be considered exhaustive, taking into account that specific assessments will be necessary from time to time depending on the characteristics of the individual project and/or business case concerned. It should also be noted that the contents of this document may change as regulations evolve. Therefore, we invite you not to fully rely on this document for specific projects and cases, but to consider it as intended to provide only a summary of the regulation as of the date of the drafting thereof.[2] Indeed, the Guidelines are currently being examined by the Unified State-Regions Conference.

• the creditor is contractually protected by the guarantee represented by all assets of the debtors and not by self-protection measures considered illegitimate, except for those provided by the articles 1460 and 1461 ItCC;
• current situations of default by a weak contracting party towards the monopolist (Terna) justify both the automatic termination of the contract and the refusal by the monopolist to enter into a new contract; but
• a situation of composition with creditors with business continuity is not comparable to a situation of current default towards Terna.

Why is it important? The ruling of the TAR is relevant for two main reasons:

• (i) In relation to the possible incompatibility of the composition with creditors with the amendments introduced by ARERA Resolution, the Ruling protects market operators similar to the Claimant in this period of strong economic uncertainty, avoiding the exclusion from the market of potentially recoverable companies burdened by economic difficulties and unfavorable and unlawful provisions.
• (ii) In relation to the creditor self-protection (autotutela creditoria), the ruling provides a rigorous legal reasoning that could be applied in other judicial proceedings concerning the other amendments introduced by ARERA Resolution on the Grid Code. An example is the ongoing proceeding before the TAR regarding the power of Terna to terminate the Contracts of Dispatchment or refuse to enter into new ones with companies whose director is “in common with companies in default of payment obligations towards Terna or with companies that have been parties to a contract of dispatchment with Terna terminated for non-compliance” (chapter 4, point 4.3.1.2, letter (iii) of the Grid Code). The supervision order (ordinanza cautelare) of the TAR (no. 2178/2021) considered this modification potentially harmful.

As can be noted on the basis of the aforementioned Preliminary Order (No. 2178/2021), the TAR Lombardy Ruling has broader implications than those pertaining to the individual case examined offering a legal framework that could influence future proceedings regarding other amendments introduced by the ARERA Resolution. In this sense, the Judgment provides the basis for further intervening proceedings aimed at protecting market players such as the Applicant in a beyond uncertain economic environment.