IOVERVIEW

Since the 1990s, the Italian energy market has undergone an extensive liberalisation process that is still ongoing, with the long-awaited deregulation of gas and electricity retail prices set to come into force in July 2020.

Unlike most of its neighbours (France, Switzerland and Slovenia), Italy shut down its nuclear energy production facilities as a result of the Chernobyl incident in 1986 and the ensuing popular vote in 1987.8

The effectiveness of ARERA’s regulatory and supervisory actions is guaranteed by the power to impose administrative sanctions on market operators that do not comply with energy laws or regulations or the Authority’s resolutions.9

Furthermore, ARERA plays an advisory role to the parliament and may issue proposals and reports (for instance, the annual report on the state of the energy market).10

The Equalisation Fund for Energy and Environmental Services

The Equalisation Fund for Energy and Environmental Services (CSEA) operates in the electricity, gas and water sectors by collecting the system surcharges paid by the end users from market operators.11

CSEA manages the funds through dedicated accounts and subsequently uses them to grant subsidies to businesses based on the criteria set forth by ARERA.12

The GSE Group

The Energy Services Manager (GSE) is a state-owned company that promotes the use of renewable energy sources, mainly through incentives and information campaigns aimed at spreading the culture of environmental protection in the energy field.13

Pursuant to Legislative Decree No. 79 of 16 March 1999, the GSE set up special-purpose subsidiaries for the management of specific segments of the energy market:

  1. the Energy Markets Manager (GME) organises and manages the electricity, natural gas and environmental markets,14 in accordance with the principles of neutrality, transparency, objectivity and competition;15
  2. the Single Buyer (AU) guarantees the availability of electricity by purchasing the required electrical capacity and reselling it to distributors on non-discriminatory terms. Moreover, AU has been appointed as the central oil stockholding entity (OCSIT);16
  3. the Energy Research Body (RSE), carries out publicly funded national and international programmes in the fields of electrical power, energy and the environment.

iiRegulated activities

With regards to the electricity market, the liberalisation process started with the approval of Legislative Decree No. 79 of 16 March 1999 (also known as the Bersani Decree), which established that the production, importation, exportation, purchase and sale of electricity are free-market activities.

The transmission and dispatching of electricity, however, remain under state control and are managed through a concession scheme by the National Transmission Grid Manager (Terna S.p.A.). More specifically, Terna runs long-distance and high voltage transmission, while different Distribution Service Operators (DSOs) are responsible for providing and operating low, medium and high voltage networks for regional distribution of electricity as well as for supply of lower-level distribution systems and directly connected customers.17

As for the gas market, Legislative Decree No. 164 of 23 May 2000 (Letta Decree) stated that the activities of importation, exportation, transportation, dispatching, distribution and sale of natural gas, in whatever form and for whatever use, are free.

Subsequently, Law No. 239 of 23 August 2004 (Marzano Act) provided a common regulatory framework, by clarifying that:

  1. the production, import, export, dispatch, purchase, transformation and sale of energy is free, albeit in accordance with public service obligations;
  2. both the transportation and dispatch of natural gas and the management of energy supply networks are activities of public interest and therefore are subject to public service obligations; and
  3. the distribution of electricity and natural gas, the exploration and production of hydrocarbons and the transmission and dispatch of electricity are all subject to concession by the competent authorities.

The development and construction of new facilities and infrastructures (e.g., transmission lines, power plants and gas storage facilities) require prior authorisation under state and regional legislation, in order to ensure compliance with, inter alia, health and safety standards, environmental protection and existing infrastructure.18

iiiOwnership and market access restrictions

The Italian energy market is open to foreign investors as there are no discriminatory ownership or market access restrictions.

This does not exclude that, in relation to mergers and acquisitions, national and European antitrust authorities may impose certain limitations or prescriptions in order to enforce competition rules.

With respect to strategic assets, see Section II.iv.

ivTransfers of control and assignments

By Decree Law No. 21 of 15 March 2012 (converted into Law No. 56 of 11 May 2012), the Italian government provided market operators with an organic set of rules regarding state intervention in the context of corporate transactions involving strategic sectors such as energy, transports and communications.

Specifically, the Decree establishes that the government must be notified within 10 days of any corporate decision, act or measure concerning a strategic asset (i.e., any changes in the ownership, control or in the company objects; acquisitions, dissolutions, mergers and demergers; and the transfer abroad of the registered office).19

Within 15 days of the notification, the government may exercise what are known as its ‘golden powers’ in the form of vetoes or conditions, but only if the notified operation poses an exceptional threat to national interests.

Should no special power be exercised within the said term, the operation is to be deemed tacitly authorised.

IIITRANSMISSION/TRANSPORTATION AND DISTRIBUTION SERVICES

iVertical integration and unbundling

The unbundling obligations model (OU model) on vertically integrated energy operators represents one of the main regulatory instruments adopted by the EU in order to impose impartiality and neutrality in the management and development of the energy infrastructure network, which is a natural monopoly market system (the ‘essential facility’).20

With regard to the electricity transmission grid, Legislative Decree No. 93 of 1 June 2011 imposed the independence of the transmission system operator (Terna S.p.A.) from businesses operating in the generation, distribution and sale of energy.21

The OU model was also implemented in the natural gas market, with regards to the role of the network operator, Snam Rete Gas S.p.A.22

In 2015, ARERA codified the detailed obligations of vertically integrated companies in terms of unbundling (ownership separation) and debranding (brand and communication separation) between distribution and sale or other lines of business.23

The electricity and gas distribution is regulated as a territorial monopoly, meaning that a public tender for the concession of the distribution service to a single operator (DSO) in each minimum geographical area must be held.

However, in the electricity sector, such tenders shall start no earlier than 2030, because the concessions issued on 31 March 2001 shall remain in force until 31 December 2030.24

In the gas sector, the above-mentioned Letta Decree and the subsequent Law-Decree No. 159 of 1 October 2007 entrusted the local authorities with the duty to award the distribution service through public tenders for a maximum of 12 years, but the opening up of the market to competition is far from concluded. In fact, in most geographical areas, the public tenders have not been launched or have been delayed. As of October 2018, Milan was the only area where such tenders have concluded (with the confirmation of the outgoing operator Unareti S.p.A., a subsidiary of the A2A Group, in which the municipality of Milan holds a substantial equity stake). The procedure is currently under judicial review by the Administrative Court of Milan (Case No. 2304/2018).

iiTransmission/transportation and distribution access

All network operators must ensure that any interested service provider has access to the transmission and distribution networks of gas and electricity. At the same time, the third-party access (TPA) must not affect the continuity and safety of the transmission and distribution service.

With reference to the electricity sector, ARERA’s Consolidated Text of Active Connections sets forth the detailed technical and economic conditions for TPA to transmission and distribution networks.25

Moreover, with prior approval by ARERA and MiSE, TSO Terna S.p.A. has enacted its own Grid Code, which contains non-discriminatory TPA rules with specific reference to the national transmission grid.26

Similar regulatory instruments have been implemented in the gas sector through the Network Type Code (as a reference model applicable to all network operators)27 and the Snam Network Code.28

In the event that a dispute arises with a network operator, service providers may avail themselves of a special ADR proceeding before ARERA.29

Finally, it is also noteworthy that the Ministry of Economic Development (upon consultation with ARERA) may exempt those network operators that invest in the development of new interconnections with EU countries or in the expansion of the transport capacity of pre-existing infrastructure from TPA obligations.30

iiiRates

In accordance with a pro-competition regulatory strategy, ARERA predetermines the rates for transmission/transportation and distribution of electricity and gas through a pricing mechanism based on a balance between the several interests at stake (network maintenance, promotion of investments, safety and efficiency of the network, environmental protection and accessible costs for the customers).31

With respect to the electricity market, on 23 December 2015 ARERA adopted the Pricing Regulation on electricity transmission, distribution and metering for the period 2016–2023.32

The tariffs of remuneration of transmission and distribution networks are supposed to safeguard the fair allocation of the efficiencies achieved by the service among businesses and consumers, in accordance with the price cap method.33 In fact, price-cap regulations set a cap on the price that the utility provider can charge. The cap is set according to several economic factors, such as the price cap index, expected efficiency savings and inflation. The presence of a price-cap regulation can compel utility companies to find ways to reduce their costs in order to improve their profit margins.

As regards the gas market, in August 2017 ARERA set down the Pricing Criteria for the rates of transportation and dispatching of natural gas for the period 2018–2019.34

A separate tariff regulation for distribution and metering was issued in 2013 for the period 2014–2019: in particular, ARERA predetermines both the tariffs (which should cover all the distribution costs) and the permitted revenue level, subject to balancing mechanisms with the Equalisation Fund whenever the actual revenues differ from the latter.35

ivSecurity and technology restrictions

As mentioned above, energy infrastructure is of strategic importance for the economy and is therefore subject to particular safety measures.36

A fundamental element for the security of electrical infrastructure is the continuity of the service, as measured by the ‘energy not supplied’ and other indicators.37 For this reason, ARERA demands that distribution operators disclose the relevant data on service continuity every year.38

The regulation of the quality of the natural gas transportation service in terms of security, continuity and commercial quality in the period 2018–2019 is governed by Resolution No. 43/2018/R/gas of 1 February 2018.

Furthermore, Part I of the Consolidated Text on the regulation of quality and tariffs of gas distribution and metering services 2014–2019 regulates certain activities relevant to the safety of the gas distribution service.39 Said regulation is intended to minimise the risk of explosions and fires caused by the gas distributed, and therefore its ultimate goal is to protect people and property from damages due to accidents caused by gas.

Additional protective measures must be taken in respect of European Critical Infrastructure, subject to prior identification by an inter-ministerial committee with the participation – in case of energy assets – of representatives from the Ministry of Economic Development.40

In order to face the new challenges arising from smart grid infrastructure and cyber-attacks, Italy has recently transposed into national law the provisions of the 2016 Network and Information Security (NIS) Directive.41

Consequently, all operators of essential services are bound to: (i) take appropriate and proportionate technical and organisational measures and; (ii) notify, without undue delay, the competent authority (in the energy sector, the Ministry of Economic Development) of incidents having a significant impact on the continuity of the essential services they provide.

In the gas and electricity sectors, all supply, distribution, transmission and storage operators are considered as operators of essential services and are therefore subject to the obligations established by the NIS Directive.

IVENERGY MARKETS

iDevelopment of energy markets

As previously mentioned, the Energy Markets Manager (GME) runs the Italian Power Exchange (IPEX), a platform dedicated to the wholesale trading of gas, electricity and energy efficiency certificates.

More specifically, GME organises and manages two main venues:

  1. the Forward Electricity Market, where forward electricity contracts with delivery and withdrawal obligations are traded;
  2. the Spot Electricity Market, which consists of:
    • the Day-Ahead Market (MGP), an auction market where hourly energy blocks are traded for the next day and participants submit bids by specifying the quantity and the minimum/maximum price at which they are willing to sell/purchase;
    • the Intra-Day Market (MI), which allows participants to modify the schedules defined in the MGP by submitting additional supply offers or demand bids; and
    • the Daily Products Market (MPEG), a continuous trading venue for the trading of daily products with the obligation of energy delivery.

Moreover, GME manages, on behalf of Terna S.p.A., both the Ancillary Services Market (MSD) through which it collects offers and communicates the results, as well as a platform registering the transactions carried out over the counter. On this platform, the parties that have concluded contracts outside the IPEX register their trade obligations and set forth the relevant electricity input and output plans, committing to perform these contracts.42

Finally, in 2009, GME was entrusted with the organisation and economic management of the natural gas markets on an exclusive basis.43

The main markets in the gas sector are:

  1. the gas trading platform (P-GAS), where the gas quotas of parties subject to the obligations of Article 11 of Law-Decree No. 7/2007 are bid, and where investors participating in virtual gas storage may fulfil their obligation to bid the gas quantities made available by the virtual storage operators associated with them. In order to trade on the P-GAS, operators must be authorised to carry out transactions at the virtual trading point;44 and
  2. the wholesale gas market (MGAS), where parties authorised to carry out transactions at the virtual trading point may make forward purchases, also functional in the balancing of the gas system, and spot purchases and sales of volumes of natural gas. In the MGAS, GME plays the role of central counterparty to the transactions concluded by market participants.45

The old balancing platform (PB-GAS) is now inactive.46

iiEnergy market rules and regulation

The Bersani Decree has entrusted GME with the responsibility of organising and supervising transactions in the electricity market under the criteria of neutrality, transparency, objectivity and competition between producers.47

On 19 December 2003, the Ministry of Economic Development approved the Integrated Text of the Electricity Market Rules.48 It falls within the competence of GME to draft amendments, which are subject to approval by MiSE and ARERA.49

On 6 March 2013, the Ministry approved the Integrated Text of the Gas Market Rules.50 As in the case of the electricity market, one of the main tasks of GME is to propose the necessary amendments to MiSE and ARERA so that the regulatory framework is up to date with the most recent market developments.51

These regulations include the criteria and procedures for the admission of new participants, the trading and settlement rules, as well as disciplinary procedures in case of misconduct by the market operators.52

Within the boundaries of said regulatory framework, GME is also entitled to issue specific technical provisions (DTF) that help operators understand the rules established in the aforementioned integrated texts.53

iiiContracts for sale of energy

At wholesale level, contracts for the sale of electricity and gas can be signed either within the organised markets managed by GME or over the counter. In the latter case, the parties are free to agree the price for the supply, as well as the injection and withdrawal profiles, but the transactions must be registered onto the OTC Registration Platform (PCE), where they will be checked for consistency with the transmission constraints on the National Transmission Grid.54

At retail level, since 2003 (gas)55 and 2007 (electricity),56 consumers are free to choose the gas or electricity provider that applies the best economic and technical conditions, under the regulatory supervision of ARERA.

However, until 1 July 2020, consumers can choose to purchase electricity and gas under the tariffs laid down by ARERA.57

ivMarket developments

The retail market in Italy is divided into three categories, and the first two are subject to regulated prices:

  1. an enhanced protection service for domestic customers and small companies connected to the low voltage grid that have not signed a contract for purchases in the free market. Operation of this service is reserved to the single buyer;
  2. a safeguarded service for all customers not eligible for the enhanced protection service and that have no contract for purchases on the free market. This service is delivered by providers selected by the single buyer through a competitive tender; and
  3. the free market, namely the remainder of the retail market.

However, starting from 1 July 2020, the free market will be the only option available for energy consumers, meaning that ARERA will no longer regulate prices.58

The reform is based on the assumption that free competition between energy suppliers will result in lower prices for consumers. For the reform to succeed, the 2017 Competition Law has established:

  1. the creation of a web portal for the collection and publication of suppliers’ offers;59
  2. the obligation for sellers to formulate a variable-price and a fixed-price offer;
  3. the adoption of ARERA guidelines aimed at facilitating the aggregation of small consumers and the creation of purchasing groups;60 and
  4. the obligation for suppliers to provide adequate information to consumers and a high level of disclosure.61

Much has been done, but the transition towards the free market is still in progress as the regulators are struggling to take all the necessary countermeasures to protect the consumers from any negative impact of price deregulation.

VRENEWABLE ENERGY AND CONSERVATION

iDevelopment of renewable energy

In accordance with EU legislation, Italian law considers renewable energy as the power generated by non-fossil sources, namely wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment, plant gas and biogases.62

The authorisation, certification and licensing procedures that are applied to plants and associated transmission and distribution network infrastructures for the production of electricity, heating or cooling from renewable energy sources, and to the process of transformation of biomass into biofuels or other energy products, are simplified and proportionate.63

Depending on the technical specifications of the power plant, the law provides for three different administrative regimes: the single authorisation, issued by the region pursuant to a single meeting of the authorities involved; the simplified authorisation procedure, managed by the competent municipality; and the free construction regime, subject to a simple notification to the municipality.64

These special procedures aim to promote power production from renewable energy sources by providing for shorter processing times and more streamlined proceedings compared to ordinary ones.

In the context of the most recent administrative reforms, Italian lawmakers have paid more attention to the simplification of authorisation procedures for renewable energy plants. For instance, the installation of photovoltaic panels on buildings was recently exempted from any kind of prior bureaucratic procedure.65

For final customers to know the amount of renewable energy in the fuel mix of a given energy supplier, Italy has introduced the guarantees of origin (GO), which are tradable certificates issued by GSE that may be sold or bought in the GO market or bilaterally.66 Each supplier must have an amount of GOs equal to the energy sold.67

A significant development in the promotion of renewable energy is represented by the recent ministerial decree that finally extended the economic incentives to the production of biomethane for transport: a key role is played by GSE, which collects the product and then issues the incentives.68

Lastly, it should be noted that an organic reform of the incentives related to solar, wind and biomass power sources (the FER 1 Decree) is being formulated: according to the general lines of the reform, access to the new incentives will be granted pursuant to public tenders based on economic and environmental criteria.69 A separate decree (the FER 2 Decree) for geothermal sources has been announced.70

iiEnergy efficiency and conservation

According to a June 2018 report drafted by the Polytechnic of Milan, the energy efficiency sector appears to be a flourishing segment of the energy market in Italy, with €6.7 billion in investments registered in 2017, in line with a positive trend dating back to 2014,71 and an estimated growth of between €37 and €27 billion in the period 2018–2021.72

In particular, Italy has so far invested about 130 million euros for the improvement of energy efficiency of public buildings.73 This is the result of framework agreements awarded by CONSIP;74 tenders launched by the regions;75 and specific project financing deals between public administrations and private undertakings.76

Within the framework provided by the European Union,77 Italy has established its own energy efficiency strategy, which is based – among other factors – upon:

  1. the energy efficiency certificates, which are issued by the GME under an authorisation granted by the GSE and give evidence of energy savings that electricity and gas distributors with over 50,000 customers are required to achieve. They may be sold or bought in the energy efficiency certificates market or bilaterally. Bilateral transactions should then be registered on the Platform for Registration of Energy Efficiency Bilaterals;78
  2. the Thermal Energy Account, an economic incentive system, which can be accessed by both public administrations and private businesses and households that implement energy efficiency improvement actions in buildings and technical installations;79
  3. the National Fund for Energy Efficiency, dedicated to the financing of energy-saving measures introduced by public administrations and private undertakings,80 including district heating and cooling networks;81
  4. tax reliefs on renovations to improve the energy efficiency of existing buildings,82 such as the replacement of windows and doors and the installation of biomass boilers, solar panels and micro-cogenerators;83 and
  5. specific construction regulations aimed at ensuring that new buildings comply with the most advanced energetic performance standards. For instance, pursuant to Article 11 and Annex III of Legislative Decree No. 28/2011 (the Romani Decree), the projects of new buildings or huge renovation works must ensure that most of the power consumption is covered by renewable energy sources. Otherwise, the competent municipality shall reject the building application. Moreover, pursuant to Article 15 of Legislative Decree No. 257 of 16 December 2016, every Municipality is expected to amend the local building regulations by establishing that new buildings must be provided with electric-vehicle charging stations.

The National Agency for Energy Efficiency provides assistance for the realisation of new projects and runs information campaigns on the importance of energy saving,84 while several Energy Service Companies (ESCOs) compete on the free market by offering their energy efficiency improvement measures to private and public entities.85

The law defines ESCOs as natural or legal persons that deliver energy services or other energy efficiency measures in a user’s facility or premises, and accept some degree of financial risk in so doing.86 The payment for the services delivered is based (either wholly or in part) on the achievement of energy efficiency improvements and on the meeting of the other agreed performance criteria. According to the already mentioned report published by the Milan Polytechnic, in 2017 the number of ESCOs increased by 30 per cent, with almost 10,000 employees working in the sector.87 Moreover, the same report highlights the recent tendency of large utility operators to acquire or incorporate major ESCOs in order to achieve a higher degree of vertical integration.88

Therefore, it can be argued that the Italian regulatory system displays a wide array of opportunities and instruments designed to promote energy saving, and more of them are expected to come into force following the transposition of the 2018 Energy Efficiency Directive.89 In fact, by 10 March 2020, each Member State shall establish a long-term renovation strategy to support the renovation of the national stock of residential and non-residential buildings, both public and private, into a highly energy efficient and decarbonised building stock by 2050, facilitating the cost-effective transformation of existing buildings into nearly zero-energy buildings.

iiiTechnological developments

The implementation of ICT technologies and artificial intelligence within the energy supply chain continues to play an important role in the Italian market. Smart grids are energy networks that can automatically monitor energy flows and adjust to changes in energy supply and demand accordingly. When coupled with smart metering systems, smart grids reach consumers and suppliers by providing information on real-time consumption. With smart meters, consumers can adapt – in time and volume – their energy usage to different energy prices throughout the day, saving money on their energy bills by consuming more energy in lower price periods.90

Following the smart-grid pilot projects carried out by several operators in Italy since 2011,91 the Ministry of Economic Development has established a state-aid programme dedicated to investments for the construction of intelligent electricity distribution networks.92 The programme is valid until 31 December 2020.93

The relevant ministerial decree provides a common legal and economic framework for public administrations to launch calls for tenders, in order to promote the upgrading and optimisation of the electrical network in specific areas of the country.94

As for second generation smart metering (i.e., the remote reading and control of power consumption), in the electricity sector ARERA has issued detailed rules on the recognition of costs for low-voltage electricity metering,95 while in the gas sector it has laid down the mandatory commissioning amounts and requirements of smart gas meters.96 The purpose of these regulations is to both encourage and compel distribution undertakings to upgrade their assets to meet the ongoing technological developments.

VITHE YEAR IN REVIEW

The 2019 Budget Law (Law No. 145 of 30 December 2018) introduced several measures related to the above-mentioned aspects of the energy market, namely:

  1. the extension of the tax deductions for renovations aimed at improving the energy performance of buildings until 31 December 2019;
  2. the extension of the duration of old incentives97 for biogas plants with a power of less than 300kW, pending the adoption of new incentives under the aforementioned ‘FER 2’ Decree, on the condition that the power is used for self-consumption in the production process of agricultural undertakings;
  3. the increase of the National Energy Efficiency Fund by €25 million in 2019 and €40 million for each year from 2020 to 2022, in order to accelerate the energetic requalification of state properties;
  4. the renegotiation of the economic conditions of the bilateral agreements signed by local authorities with the owners of renewable sources plants prior to 3 October 2010, in accordance with the national guidelines for the authorisation of such plants;98 and
  5. further tax incentives for the construction of electric-vehicle charging stations.

The 2019 Budget Law thus confirmed the role of energy efficiency and requalification as key drivers for economic growth within the Italian energy agenda.

Shortly after, the parliamentary ratification (with amendments) of the Simplifications Decree No. 135/201899 brought two significant changes to the regulatory framework of energy sources:

  1. a temporary moratorium on both the issuance of new permits for hydrocarbon exploration and the effectiveness of pre-existing ones (together with a recalculation of the concession charges effective from 1 June 2019), while the Ministries of Economic Development and Environment prepare an ad hoc plan for the identification of suitable exploration areas;100, 101
  2. the principles according to which the regions should set up tender procedures for the awarding of the large water concessions that have expired or are going to expire in the next few years.102

VIICONCLUSIONS and OUTLOOK

To conclude, it is worth recalling the main contents of the 2017 National Energy Strategy,103 since it lays down the steps to be taken by 2030, in accordance with the long-term scenario drawn up in the EU Energy Roadmap 2050 for a reduction of greenhouse gas emissions by at least 80 per cent from the levels of 1990.104

The Strategy aims to bring the national energy system to a higher degree of:

  1. competitiveness, by aligning Italian energy prices with European ones to the benefit of both companies and consumers, opening up new markets to innovative companies, creating new employment opportunities and fostering research and development;
  2. sustainability, by accelerating the decommissioning of coal-fired thermal power plants by 2025, based on a detailed plan of infrastructural actions in line with the long-term targets of the Paris Agreement on Climate Change (2015), and by furthering energy-efficiency projects that maximise sustainability benefits; and
  3. security, by improving the security of energy supply, while ensuring its flexibility and strengthening Italy’s energetic independence.105

The parliamentary elections of March 2018 and the subsequent change of government do not appear to have affected Italy’s overall strategy as far as energy policy is concerned, since the targets set out in the draft National Energy and Climate Plan dated 31 December 2018 are essentially in line with the above-mentioned objectives.106

According to the draft NECP, by 2030 the share of energy deriving from renewable sources should amount to 30 per cent of the gross consumption and the greenhouse gas emissions from non-ETS sectors should drop by 33 per cent.

In the course of 2019, the draft plan will be assessed by the European Commission and will also undergo a strategic environmental assessment at national level.107


Footnotes

1 Andreina Degli Esposti is one of the founding equity partners of Studio Legale Villata, Degli Esposti e Associati.

2 In 2008–2010 the Italian government started a new civil nuclear programme, which was later abandoned following the 2011 referendum.

3 ARERA, Relazione annuale sullo stato dei servizi e dell’attività svolta, 26 July 2018, available at https://www.arera.it/it/relaz_ann/18/18.htm. Please note that, at the time of writing, the forthcoming Annual Report (which provides important and reliable information on the energy market) has not yet been published: it is expected between the spring and summer of 2019. For this reason, the present work will not deal with corporate operations (e.g., mergers and acquisitions) that took place in the past year.

4 Megatons of oil equivalent.

5 ISTAT, Nota mensile sull’andamento dell’economia italiana, February 2019, available at https://www.istat.it/it/files//2019/03/Nota-mensile-febbraio-2019.pdf.

6 See Law No. 55 of 9 April 2002.

7 See Law No. 481 of 14 November 1995, Law No. 214 of 22 December 2011, Legislative Decree No. 102 of 4 July 2014 and Law No. 205 of 27 December 2017.

8 E Picozza and S M Sambri, eds, Il Diritto dell’Energia, X: Trattato di Diritto dell’Economia (Vicenza: Cedam, 2015), p. 153.

9 See Article 2.20 of Law No. 481 of 14 November 1995 and Article 45 of Legislative Decree No. 93 of 1 June 2011. For a recent analysis of the nature and limits of ARERA’s regulatory powers, see E Quadri, I provvedimenti tipici dell’ARERA; la loro classificazione e i riflessi sull’ambito del sindacato giurisdizionale, published on 11 March 2019 on www.giustizia-amministrativa.it.

10 M Roggenkamp, C Redgwell, A Ronne and I del Guayo, Energy Law in Europe: National, EU and International Regulation (3rd Edition, Oxford University Press, 2016), p. 665.

11 E Picozza, S Sambri, op. cit., p. 155. The Inter-Ministerial Prices Committee established the Equalisation Fund in 1961 with the mandate to compensate the losses due to the unification of electricity prices. The current structure of the CSEA is the result of the reform enacted by Law No. 208 of 28 December 2015.

12 See, for example, ARERA Resolution No. 921/2017/R/eel of 28 December 2017, as last amended by Resolution No. 644/2018/R/eel of 11 December 2018, concerning the contributions in favour of energy-hungry enterprises.

13 E Picozza, S Sambri, op. cit., p. 165. GSE was founded pursuant to Legislative Decree No. 79 of 16 March 1999. The Ministry of Economy and Finance owns 100 per cent of its share capital, but the Ministry of Economic Development sets down the strategic and operational guidelines. Originally, its main function was the management of the electricity transmission grid. However, in 2005, this function was transferred to Terna S.p.A., while GSE specialised in renewable energy and public incentives.

14 The Environmental Markets consist of the Energy Efficiency Certificates Market and the Market of the Guarantees of Origin.

15 E Picozza, S Sambri, op. cit., p. 176.

16 See Legislative Decree No. 249 of 31 December 2012 and EU Directive 2009/119/CE.

17 See Legislative Decree No. 79 of 16 March 1999.

18 See Legislative Decree No. 164 of 23 May 2000.

19 Pursuant to Article 1 of Presidential Decree No. 85 of 25 March 2014, the national electricity and gas network infrastructure is considered of strategic importance for the purposes of the Golden Power rules. Moreover, Law No. 172 of 4 December 2017 delegated to the Government the task of identifying further high-tech assets that should undergo the Golden Power screening. However, the relevant regulations have not been adopted yet.

20 EU Directives 2009/72/EC and 2009/73/EC.

21 On 5 April 2013 Terna S.p.A. was declared compliant with the OU model (see ARERA Resolution No. 142/2013/R/eel).

22 On 14 November 2013 Snam Rete Gas S.p.A. was declared compliant with the OU model (see ARERA Resolution 515/2013/R/Gas).

23 See ARERA Resolution 296/2015/R/COM, as last amended by Resolution 15/2018/R/COM.

24 See Article 9 of Legislative Decree No. 79 of 16 March 1999.

25 See Article 1.4 of the Decree of the President of the Council of Ministers dated 11 May 2004 and ARERA Resolution No. 99/2008, as last amended by Resolution 592/2018/R/eel.

26 See the Decree of the President of the Council of Ministers dated 11 may 2004 and ARERA Resolution No. 79/2005, as last amended by Resolution 83/2019/R/eel.

27 See ARERA Resolution No. 108/2006, as amended by Resolutions No. 247/2007 and 324/2007.

28 See Article 24.5 of Legislative Decree No. 164 of 23 May 2000 and ARERA Resolution No. 75/2003.

29 See Article 44 of Legislative Decree No. 93 of 1 June 2011 and ARERA Resolution 188/2012/E/com of 18 May 2012, as last updated by Resolution 338/2017/E/com of 18 May 2017.

30 See Article 1.17 of Law No. 239 of 23 August 2004, as amended by Article 33.1 of Legislative Decree No. 93 of 1 June 2011.

31 See Article 2.12 of Law No. 481 of 14 November 1995.

32 See ARERA Resolution No. 654/2015/R/eel of 23 December 2015, as last amended by Resolution No. 673/2018/R/eel of 18 December 2018.

33 See Article 2.18 of Law No. 481 of 14 November 1995 and Article 1 quinquies, para. 7, of Law-Decree No. 239 of 29 August 2003, converted into Law No. 290 of 27 October 2003.

34 See ARERA Resolution No. 575/2017/R/gas of 3 August 2017 and Resolution No. 390/2018/R/gas of 19 July 2018.

35 See ARERA Resolution No. 573/2013/R/gas, as supplemented by Resolution No. 367/2014/R/gas of 24 July 2014. With specific regards to the balancing mechanisms with the Equalisation Fund, see articles 42-46 of Part II of the Consolidated Text on the regulation of quality and tariffs of gas distribution and metering services 2014-2019 (Annex A to ARERA Resolution No. 367/2014/R/gas).

36 For instance, Terna S.p.A. updates the Grid Security Plan on a yearly basis.

37 See ARERA Resolution No. 653/2015/R/eel of 23 December 2015, concerning the quality of electricity transmission in the regulatory period 2016–2023.

38 See Article 2.20 of Law No. 481 of 14 November 1995 and ARERA Resolution No. 646/2015/R/eel of 22 December 2015.

39 See ARERA Resolution No. 574/2013/R/gas, as last amended by Resolution No. 522/2017/R/gas.

40 See Legislative Decree No. 61 of 11 April 2011 and EU Directive No. 2008/114/EC.

41 See Legislative Decree No. 65 of 18 May 2018 and EU Directive No. 1148 of 6 July 2016.

42 See Article 5 of Legislative Decree No. 79 of 16 March 1999.

43 See Article 30 of Law No. 99 of 23 July 2009.

44 For more information, visit www.mercatoelettrico.org/It/Default.aspx.

45 For more information, visit www.mercatoelettrico.org/It/Default.aspx.

46 See ARERA Resolution No. 312/2016/R/gas. For more information, visit www.mercatoelettrico.org/It/Default.aspx.

47 See Article 5.1 of Legislative Decree No. 79 of 16 March 1999.

48 See Ministerial Decree No. 12783 of 19 December 2003, as last amended by Ministerial Decree dated 21 September 2016.

49 See Article 3 of the Integrated Text of the Electricity Market Rules.

50 See Ministerial Decree dated 6 March 2013, as last amended by GME on 8 February 2019 following ARERA Resolution No. 612/2018/R/gas.

51 See Article 3 of the Integrated Text of Gas Market Rules.

52 See the Decrees of the Ministry of the Economic Development approved on 19 December 2003 and 6 March 2013 as last amended by, respectively, the Ministerial Decrees dated 21 September 2016 and 18 December 2017.

53 See Article 4 of the Integrated Text of the Electricity Market Rules and Article 4 of the Integrated Text of the Gas Market Rules.

54 See ARERA Resolution No. 111/2006 of 9 June 2006, as subsequently amended and supplemented.

55 See Legislative Decree No. 164 of 23 May 2000.

56 See Article 1.30 of Law No. 239 of 23 August 2004.

57 See Article 3 of Law-Decree No. 91 of 25 July 2018, converted into Law No. 108 of 21 September 2018.

58 See Article 1, paragraphs 59 and 60, of Law No. 124 of 4 August 2017.

59 See ARERA Resolution No. 51/2018/R/com of 1 February 2018. For more information, visit https://www.prezzoenergia.it/portaleOfferte/.

60 See ARERA Resolution No. 59/2019/R/com of 19 February 2019.

61 See ARERA Resolution No. 746/2017/R/com of 10 November 2017.

62 See Article 2.1.a) of Legislative Decree No. 28 of 3 March 2011 and Article 2.a) of EU Directive 2009/28/EC of 23 April 2009.

63 See Article 4.1 of Legislative Decree No. 28/2011 and Article 13.1 of EU Directive No. 2009/28/EC.

64 See Article 2 of Legislative Decree No. 28/2011.

65 See Article 3 of Legislative Decree No. 222 of 25 November 2016 and the Decree of the Minister of Infrastructure and Transports dated 2 March 2018.

66 See Article 34 of Legislative Decree No. 28/2011 and Article 15 of EU Directive No. 2009/28/EC.

67 See Article 3 of ARERA Resolution No. ARG/elt/104/11 of 28 July 2011, as supplemented by Resolutions No. 118/2016/R/efr and No. 96/2018/R/eel.

68 See the Decree issued on 2 March 2018 by the Ministry of Economic Development in agreement with the Ministry of Environment and the Ministry of Agriculture.

69 See ARERA Opinion No. 591/2018/l/efr dated 20 November 2018.

71 See the Energy Efficiency Report issued by the Milan Polytechnic in June 2018, p. 7, available online at https://www.federesco.org/images/EER_2018.pdf.

72 ibid., p. 315.

73 ibid., p. 185.

74 ibid., p. 188. CONSIP is the central contracting authority that awards framework agreements for the purchase of goods and services by public administrations.

75 ibid., p. 194.

76 ibid., p. 200.

77 See EU Directive No. 2012/27 of 25 October 2012, as supplemented by Directive No. 2018/844 of 30 May 2018. At national level, the main rules on energy efficiency can be found in Legislative Decrees No. 102 of 4 July 2014 and No. 115 of 30 May 2008.

78 See the Decrees issued by the Minister of Productive Activities (now Economic Development), jointly with the Minister of Environment, on 20 July 2004, as subsequently amended and supplemented by the Ministerial Decrees of 21 December 2007, of 28 December 2012, of 11 January 2017 and of 10 May 2018.

79 See the Decree issued on 16 February 2016 by the Ministry of Economic Development in agreement with the Ministry of Environment and the Ministry of Agriculture. For more information, visit https://www.gse.it/servizi-per-te/efficienza-energetica/conto-termico.

80 See Article 15 of Legislative Decree No. 102/2014 and Ministerial Decree dated 22 December 2017. With specific reference to state buildings, the Joint Decree issued on 16 September 2016 by the Ministers of Economic Development, Environment, Infrastructure and Finance provided the rules and the funds for yearly energy saving programmes to be executed from 2014 to 2020: this is the PREPAC plan.

81 As recognised by EU Directive No. 27/2012, high-efficiency cogeneration and district heating and cooling have significant potential for saving primary energy, because of the combined production of heat and electricity and the replacement of individual boilers with simple heat exchangers. With regard to this subject matter, Riccardo Villata recently delivered a speech on the legal nature of district heating at the conference ‘La regolazione del teleriscaldamento’, held by AIDEN (Associazione Italiana di Diritto dell’Energia) in Milan on 5 March 2019.

82 See Law No. 205 of 27 December 2017, as supplemented by Law No. 145 of 30 December 2018.

83 See the Energy Efficiency Report issued by the Milan Polytechnic in June 2018, p. 294, available online at https://www.federesco.org/images/EER_2018.pdf.

84 See Article 4 of Legislative Decree No. 115/2008 and Article 4 of Law No. 221 of 28 December 2015.

85 With regards to the relationship between ESCOs and Public-Private Partnership Agreements, Riccardo Villata gave the speech ‘Il Partenariato Pubblico-Privato nel settore dell’energia’ at the conference ‘Il Codice dei contratti pubblici e gli appalti nei Settori speciali dell’energia’, held by AIDEN (Associazione Italiana di Diritto dell’Energia) in Milan on 22 May 2017.

86 See Article 2.1.i) of Legislative Decree No. 115/2008.

87 See the Energy Efficiency Report issued by the Milan Polytechnic in June 2018, p. 3, available online at https://www.federesco.org/images/EER_2018.pdf.

88 ibid., p. 66.

89 See EU Directive No. 2018/844/EU of 30 May 2018.

90 For more information, visit https://ec.europa.eu/energy/en/topics/market-and-consumers/smart-grids-and-meters.

91 See ARERA Resolution No. ARG/elt 39/10 and the consultation paper No. 255/2015/R/eel.

92 See Ministerial Decree dated 19 October 2016.

93 See Article 3 of Ministerial Decree dated 19 October 2016.

94 In 2017–2018, the Ministry itself launched and concluded a tender procedure for the construction of smart grids in Basilicata, Calabria, Campania, Apulia and Sicily (see https://www.mise.gov.it/index.php/it/component/content/article?id=2037857:pon-imprese-e-competitivita-2014-2020-reti-intelligenti-online-la-graduatoria-del-bando-reti-elettriche-di-distribuzione).

95 See ARERA Resolutions No. 646/2016/R/eel of 10 November 2016 and No. 222/2017/R/eel of 6 April 2017.

96 See ARERA Resolutions No. 631/2013/R/gas of 27 December 2013, No. 117/2015/R/gas of 19 March 2015, No. 554/2015/R/gas of 20 November 2015, No. 821/2016/R/gas of 29 December 2016 and No. 669/218/R/gas of 18 December 2018.

97 See the Decree of the Ministry of Economic Development dated 23 June 2016.

98 See the Decree of the Ministry of Economic Development dated 10 September 2010.

99 See Law-Decree No. 135 of 14 December 2018, converted into Law No. 12 of 11 February 2019.

100 ‘Piano per la Transizione Energetica Sostenibile delle Aree Idonee – PiTESAI’: the first meeting for the drafting of the PiTESAI was held on 28 February 2019. Based on Law No. 12/2019, the approval of the Plan should take no more than 18 months.

101 See Article 11-ter of Law-Decree No. 135/2018, as supplemented by Law No. 12/2019.

102 See Article 11-quater of Law-Decree No. 135/2018, as supplemented by Law No. 12/2019.

103 See the Joint Decree issued on 10 November 2017 by the Ministers of Economic Development and Environment.

104 See EU Commission Communication No. COM/2011/0885 of 15 December 2011.

105 The Ministry of Economic Development has dedicated a web page to SEN, comprising all the relevant information (https://www.mise.gov.it/index.php/it/198-notizie-stampa/2037347-strategia-energetica-nazionale-oggi-la-presentazione).

106 Pursuant to Article 9 of EU Regulation No. 1999/2018 dated 11 December 2018, ‘By 31 December 2018, and subsequently by 1 January 2028 and every ten years thereafter, each Member State shall prepare and submit to the Commission a draft of the integrated national energy and climate plan.’

107 Pursuant to Article 2 of EU Regulation No. 1999/2018, each Member State shall notify the Commission with the final version of the NECP by 31 December 2019.