I INTRODUCTION

There has been a substantial increase in renewable energy projects in Italy in the past decade, resulting in the use of more renewable energy sources (RES) in all sectors (heating and cooling, electricity and transport).

The share of RES in the Italian energy mix has more than doubled in the past decade, already outpacing EU and Italian government RES targets for 2020. In 2017, around 31 per cent of Italian gross electricity consumption was from RES.

The Italian government has supported renewable energy projects with a range of economic incentive schemes that have simplified administrative procedures for the construction and operation of RES plants (e.g., green certificates) and have favoured RES plants over traditional thermoelectric plants in many respects (e.g., priority dispatch).

The generous incentive system led to an unprecedented level of development in renewable energy projects in Italy (especially photovoltaics) in the 2010–2013 period.2 Following this development, the Italian government reduced direct economic incentives for RES plants.3 This caused a slowdown in renewable energy projects, which are now gradually returning to growth.4 This growth is mainly due to the increase in small plants, including cogeneration plants, of power equal to or below 1MW (Small Generation), which benefit from indirect incentives, such as favourable conditions for access to the distribution grid.5 The role of 'prosumers', who both produce and consume energy, is also increasing.

Major transactions in the renewable energy sector usually involve project financing schemes, while there has recently been a trend for recourse debt financing by issuing green bonds.

Energy service companies (ESCOs) play an important role in promoting Small Generation projects, usually with contracting schemes that indemnify small customers against financial risk related to such projects.

II THE YEAR IN REVIEW

Some of the key developments in legislation in the renewable energy sector in 2017 and 2018 include:

  1. Law No. 205/2017 (the 2018 Budget Law), which extended for 2018 the tax deduction on expenses linked to energy-efficient modernisation of buildings and reviewed the penalty system for RES plants not complying with requirements for obtaining incentives;
  2. Ministerial Decree of 16 March 2017, which approved a single simplified model for the construction, connection and management of RES plants with a generation capacity below 50kW;
  3. Ministerial Decree of 14 February 2017, which provided for incentives for renewable energy on minor islands not connected to the national transmission grid; and
  4. Italian Regulatory Authority for Energy, Networks and the Environment (ARERA) Resolution No. 300/2017/R/eel of 5 May 2017, launching pilot projects for access of 'non-programmable' (e.g., wind and solar) RES generation units and Small Generation to the dispatching services market (MSD).

Some of the key corporate transactions in the renewable energy sector include:

  1. 11 April 2018: Iren SpA acquired 100 per cent of ACAM SpA, a company active in the generation of energy from wind power plants in Liguria;
  2. 12 January 2018: ERG Power Generation SpA, a subsidiary of the ERG group active in the generation of RES electricity, acquired 100 per cent of ForVEI Srl, a company with 31 photovoltaic plants in Piemonte, Emilia-Romagn a, Marche, Abruzzo, Campania, Calabria, Puglia and Sicily;
  3. 15 December 2017: EP Power Europe AS, a subsidiary of the EPH group, acquired 100 per cent of the share capital of Biomasse Italia SpA (and, thus, indirectly, 50 per cent of Fores Italia Srl) and 100 per cent of the share capital of Biomasse Crotone SpA; both of the companies acquired are active in RES power generation (mainly solid biomass and, to a minor extent, photovoltaics);
  4. 6 June 2017: the investment fund F2I acquired 100 per cent of VRG Wind 129 SpA, VRG Wind 030 Srl, VRG Wind 040 Srl, VRG Wind 060 Srl, VRG Wind 819 SpA, VRG Wind 070 SpA and VRG Wind 840 SpA, companies active in the generation of electricity from wind plants in Calabria and Sicily; and
  5. 17 February 2017: AXA Infrastructure Holding Sàrl, a subsidiary of the Ardian group, which already held 65 per cent of the capital of Tre Solar Srl, acquired the 35 per cent remaining shares. Tre Solar Srl is active in the generation of RES electricity (through photovoltaic, wind, hydroelectric and biomass plants).

According to estimates by Gestore dei Servizi Energetici SpA (GSE),6 RES electricity generation amounted to 103TWh in 2017 (5TWh less than 2016), accounting for 31.1 per cent of internal gross electricity consumption.7 On 21 May 2017, RES electricity generation accounted for 87 per cent of the Italian demand for electricity, the highest score ever achieved.

The consumption of thermal energy generated from RES in 2017 amounted to 11Mtoe8 (0.5Mtoe more than in 2016), while the consumption of biofuels in the transport sector amounted to 1.1Mtoe (slightly higher than 2016).9

In 2017, RES accounted for 17.6 per cent of total energy gross consumption, slightly higher than in 2016 (17.4 per cent) and 2015 (17.5 per cent).

III THE POLICY AND REGULATORY FRAMEWORK

i The policy background

Implementing Directive 2009/28/EC, the Italian legislature set a target for RES of a 17 per cent share in the energy mix by 2020.10 Italy achieved this national objective for the first time in 2014, well in advance of the 2020 target date.

In November 2017, the Ministry of Economic Development (MSE) published the National Energy Strategy, a 10-year road map setting out the objectives for 2030 and encouraging further RES development.11

The National Energy Strategy set the ambitious target for RES of a 28 per cent share of gross final energy consumption by 2030, comprising:

  1. a 55 per cent target for electricity (it was 33.5 per cent in 2015);
  2. a 30 per cent target for thermal energy (it was 19.2 per cent in 2015); and
  3. a 21 per cent target for transport (it was 6.4 per cent in 2015).

A generous incentive system, comprising a variety of mechanisms, has encouraged a significant increase in RES in Italy.

In particular:

  1. the Cip 6/92 mechanism, which is a feed-in tariff.12 This mechanism is available only for the plants that came within the scope of the Cip 6/92 resolution while it was still in force, and is applicable for a certain period, typically up to 20 years (accordingly, the number of plants entitled to benefit from the incentive is gradually decreasing);
  2. the Energy Account system (a feed-in premium)13 for electricity produced by photovoltaic plants that had commenced activities by 26 August 2012;14
  3. green certificates, which were certificates awarded by GSE in proportion to the amount of energy produced by RES and cogeneration plants that had commenced activities by 31 December 2012. The number of green certificates awarded depended on the type of plant used for the energy generation.15 As of 1 January 2016, the green certificate system has been replaced by a new incentive system in the form of extra remuneration granted by GSE to operators formerly entitled to green certificates;16
  4. feed-in tariffs for electricity conveyed into the grid by RES plants (except for photovoltaic plants) not exceeding 1MW power (200kW for wind plants) that had commenced activities by 31 December 2012;17
  5. tariff incentives for electricity conveyed into the grid by photovoltaic plants that had commenced activities between 27 August 2012 and 6 July 2013 (in the form of a feed-in tariff for plants not exceeding 1MW in power and in the form of a feed-in premium for the other plants); and
  6. tariff incentives for net electricity conveyed into the grid by RES plants (except for photovoltaic) and thermo-dynamic solar plants that had commenced activities from 1 January 2013 (in the form of a feed-in tariff for plants not exceeding 500kW in power and a feed-in premium for plants exceeding the 500kW threshold).18 The threshold for access to the feed-in premium was then increased to 1MW by a Ministerial Decree of 6 July 2016.

Therefore, the Italian legal framework still provides economic incentives for new RES plants, except for new photovoltaic plants. In 2017, more than 4,400 small RES plants came into operation, mainly wind power plants (79 per cent), hydroelectric plants (11 per cent) and bioenergy plants (9 per cent), benefiting from the incentives provided by a Ministerial Decree of 23 June 2016.19

The governmental incentives for RES generated electricity amounted to around €12.5 billion in 2017 (a decrease compared to 2016, when they amounted to around €14.4 billion) and were entirely covered by the A3 tariff component of electricity bills.20 Electricity produced by RES benefiting from these incentives amounted to around 66TWh in 2017.21

In addition to purely economic incentives such as those mentioned above, the Italian legal framework provides for other important measures that favour renewable energy projects, such as simplified and expedited administrative procedures for the construction and operation of new RES plants22 and, more importantly, priority access to the electricity transmission grid for RES generated electricity (e.g., priority dispatch).23 These measures are neutral with regard to the type of RES feeding the plant.

Furthermore, the Budget Law 2018 extended for 2018 a tax deduction of 65 per cent on expenses related to the energy efficient modernisation of buildings (an 'ecobonus'), including for the installation of photovoltaic panels to heat water. It also confirmed a tax deduction of 50 per cent on building renovation, which, as the Revenue Agency Guidelines 2018 have clarified, includes installation of RES plants. However, the deduction is conditional on the plant being installed to meet residential energy needs.24

Moreover, under Italian law, starting from 1 January 2018, construction projects for new buildings and restructuring of existing buildings must include the use of RES to cover at least 50 per cent of the building's energy needs (both electricity and heat). Failure to comply with this provision will result in refusal of the building authorisation.25

ii The regulatory framework

The renewable energy sector is regulated by primary (both national and regional)26 and secondary legislation. The secondary legislation is adopted by the MSE and the Ministry for the Environment, Land and Sea (MATTM) or the ARERA. In particular:

  1. The MSE is responsible for formulating and implementing Italy's energy policy, by defining the strategy and setting out general principles for the organisation and functioning of the renewable energy market.27
  2. The MATTM is responsible for climate policy. It also co-signs with the MSE policy measures promoting renewable energy and energy efficiency.
  3. The ARERA is an independent regulatory body governed by a committee of five members elected by Parliament for seven years. It regulates, controls and monitors the electricity and gas markets in Italy. It was established under Law No. 481/1995 for the purpose of protecting consumer interests, promoting competition and ensuring quality, efficiency and cost-effectiveness of energy services. The ARERA determines its costs, which are entirely recovered by means of compulsory annual contributions paid by energy service providers.28 Its regulatory powers include setting tariffs, defining service quality standards and regulating the technical and economic conditions governing access and interconnections to the networks. The ARERA issues general regulations applicable to energy market operators and resolutions or orders applicable to single operators, for which it must provide comprehensive reasons. The ARERA may also issue fines.29
  4. Every year, the ARERA submits to the relevant parliamentary committees a report on the use and development of RES plants30 and a report on the development of Small Generation.31
  5. The state-owned company GSE was established by Legislative Decree No. 79 of 16 March 1999 for the promotion and support of RES in Italy. In particular, GSE works to foster sustainable development by providing support for electricity generated from renewables. It is in charge of: (1) determining which plants meet the conditions set by law to benefit from incentive mechanisms; (2) disbursing economic incentives; (3) checking that the conditions for the recognition or maintenance of incentives are met by carrying out inspections and controls of the plants that have an agreement with GSE; (4) forecasting and monitoring electricity conveyed into the grid by RES plants to minimise imbalances in the electricity system; (5) promoting information campaigns to spread the culture of environmental sustainability; and (6) monitoring the development of RES projects.

There are simplified and expedited procedures for the regulatory approvals required to construct and operate RES plants.32 In particular:

  1. The construction and technological enhancement of new RES electricity plants is subject to a single permit issued by the region concerned or the delegated province (or by the Ministry of Economic Development for plants of power equal to or above 300MW), following a single procedure involving all the administrative entities concerned.33 This single permit procedure applies even if the project concerns more than one region or delegated province34 and also with regard to regions having a special statute under the Italian Constitution.35 The competent public entity must issue a decision on the request for the licence within 90 days.36
  2. The construction of small plants with low generation capacity (e.g., photovoltaic plants on the roofs of buildings)37 is subject to a further simplified authorisation procedure. The owner of the building is only subject to the obligation to notify the competent municipality with a declaration and a detailed technical description of the project at least 30 days before starting the construction activities.38
  3. There is further simplification for the construction of very small electricity or cogeneration plants, which, in principle, are only subject to a communication to the competent municipality with a detailed technical description of the project. The construction activities can start immediately after the communication.39

The table below shows when the building of small RES plants is subject to the simplified authorisation procedure or to the simple communication regime.40

RES

Plant type

Generation capacity (kW)

Applicable administrative procedure

Photovoltaics

Plant attached to or integrated into the roof of existing building and whose surface does not exceed that of the roof on which it is built

Simple communication

Plant on existing building or on existing building's premises

0–200

Photovoltaic module placed on building and whose total surface does not exceed that of the roof on which it is located

Simplified authorisation procedure

Other photovoltaic plants

0–20

Biomass, landfill gas, waste gas from purification processes and biogas

Cogeneration plant (microgeneration)

0–50

Simple communication

Plant in existing building

0–200

Cogeneration plant (small cogeneration)

50–1,000

Simplified authorisation procedure

Plant powered by biomass

0–200

Plant powered by landfill gas, gases left over from purification processes and biogas

0–250

Wind

Individual wind generator plant with a height not exceeding 1.5 metres and a diameter not exceeding 1 metre installed on the roof of existing building

Simple communication

Other wind power plants

0–60

Simplified authorisation procedure

Hydroelectric and geothermal

Hydroelectric and geothermal plant built in existing building

0–200

Simple communication

Other hydroelectric and geothermal plants

0–100

Simplified authorisation procedure

The Italian regulatory framework also provides RES plants with favourable conditions for access to the distribution grid. In particular, the following special schemes are available for conveying RES-generated electricity into the electricity grid:

  1. Simplified purchase–resale can be requested by non-programmable RES plants, irrespective of their capacity generation, except for plants benefiting from feed-in-tariff incentives (which already include the value of electricity) and plants benefiting from incentives provided under the Ministerial Decrees of 6 July 2012 and 23 June 2016. Under this scheme, GSE plays the role of trade intermediary between the producer and the electricity system. GSE purchases electricity from producers at a standard rate defined by the ARERA based on market prices (e.g., the regional price under the day-ahead market on the Italian Power Exchange)41 and then resells the electricity to the market. The simplified purchase–resale scheme does not provide any economic incentive42 but a simplification for producers benefiting from this sale scheme, as they avoid the accreditation procedures for trading on the Italian Power Exchange.
  2. The net metering scheme can be requested by RES plants with a capacity generation not exceeding 200kW and that commenced activities from 2015. The net metering scheme is a regulatory measure enabling RES plants to economically exchange the value of electricity that they convey into the grid in a given hour with the value of electricity that they take from the grid in a different hour.43 This scheme actually results in an economic incentive, as RES plants do not pay transport tariffs for the network use with regard to electricity that they convey into the grid under the net metering scheme.

Furthermore, and even more importantly, the legal framework grants RES-generated electricity priority access to the transmission and distribution grid, thus giving it a competitive advantage over electricity generated from conventional sources.44

Moreover, non-programmable RES plants can also benefit from a more favourable regime for the application of imbalance payments, which are the penalties plants must pay if they fail to comply with their daily generation plan.45 Unlike the previous regime, which fully exempted non-programmable RES from the application of imbalance payments, the current regime, which applies imbalance payments to RES plants, aims at fostering better generation forecasting from non-programmable RES, thereby reducing the costs passed on to consumers.

IV RENEWABLE ENERGY PROJECT DEVELOPMENT

i Project finance transaction structures

Project finance is the most used scheme for financing renewable energy projects in Italy. In a project finance scheme, the specific project is evaluated exclusively with regard to its profitability (i.e., on cash flows the project will generate). The cash flows also serve as the primary guarantee for the debt reimbursement to the financing entity.46

A project finance transaction usually includes a number of participants, each having a specific role. The sponsors are the project promoters, who design the project and evaluate the costs, the bankability and the profitability of the project. The core business of sponsors of renewable energy projects is often manufacturing goods used in renewable energy projects (e.g., turbines and solar panels) or providing services associated with these projects.

To achieve complete legal and economic separation of the project sponsors from the project, the project financing scheme usually requires setting up a specific legal entity (a special purpose vehicle or SPV), which is in charge of implementing the specific project assigned to it. The SPV is usually a limited company and its by-laws limit its purpose and activities to the mere implementation of the project. The SPV does not have any financial means other than those provided to it for the implementation of the project. Its assets are isolated, by means of guarantees and contractual constraints, for the benefit of the institutions financing the project (ring-fencing).47

The structure described above limits the risk for the capital invested by the promoters and indemnifies them from the risk of losses by the SPV. The success of project financing for renewable energy is mainly due to the unlikelihood of losses by the SPVs operating RES plants, because of the economic incentives and the dispatching priority for RES plants.

The sponsors, or, if it is set up immediately, the SPV, submit the project to the competent public entities and authorities (the MSE, the regions concerned, or municipalities) to obtain the necessary approvals according to the applicable administrative procedure.

The contractual structure for project financing of renewable energy projects is complex. It includes a network of agreements involving the sponsors, the SPV (which manages the operation and maintenance contracts), financing institutions (which manage financial contracts), public entities, companies in charge of the engineering, procurement and physical construction of the plant (EPC contractors) and companies in charge of the operation and maintenance of the plant (O&M contractors). As mentioned, the EPC contractors are often the sponsors.48

The main document for renewable energy project finance is the project finance loan agreement, which governs the relationship between the financing institution and the SPV. The terms of the project finance loan agreement do not take into account the financial stability of the sponsors or the SPV – only the capability of the financed project to generate cash flows.

Other fundamental documents in the project financing scheme are the engineering, procurement and construction contracts (entered into by the SPV and the EPC contractors), the operation and maintenance contracts (entered into by the SPV and the O&M contractors), the direct agreements (under which the financing institution is entitled to intervene in the relationships between the SPV, the EPC contractors and the O&M contractors) and the financial collateral arrangements (the 'security package', including the loan guarantees).

A notable opportunity provided by the Italian regulatory framework to promote the bankability of renewable energy projects is that plants admitted to a tariff incentive scheme may assign to third parties (namely credit institutions) the receivables from GSE.49 This is a further specific guarantee in addition to the other standard guarantees that are part of the security package.50

ii Distributed and residential renewable energy

Distributed generation by RES in Italy has developed significantly in the past 10 years, both in terms of number of plants and capacity installed.

Electricity produced by RES Small Generation amounted to 28.39TWh in 2016, of which 57.7 per cent was from photovoltaics, 28.5 per cent was from biomass, biogas and bioliquids, 9 per cent was from hydro and 1.9 per cent was from wind power. Of the electricity generated by RES Small Generation, 13.9 per cent was consumed on-site.51

Puglia is the Italian region with the highest value of electricity generated by RES Small Generation, mainly because of the strong presence of photovoltaic and wind power plants,52 while generation from hydroelectric plants is highest in the north of Italy, because of the greater presence of waterways.53

Different ownership structures are available for Small Generation in Italy. Households and small businesses can purchase their own RES plants directly, generally as part of a service including design, installation, connection to the distribution grid and testing and maintenance of the plant (a turnkey service).

Alternatively, RES Small Generation projects can be carried out by ESCOs,54 usually under the Energy Performance Contracting (EPC) scheme. Under the EPC scheme, the ESCO conducts an in-depth analysis of customer cost savings from a given distributed RES generation project. The ESCO then implements the project, often with the financial support of third parties, and becomes the owner and manager of the plant, while the customer pays the ESCO periodical fees that are calculated by reference to the amount of energy generated by the plant and to the level of cost savings achieved by the customer. With the EPC, the ESCO guarantees its customer a certain level of energy generated by the plant and a certain level of cost savings by means of the ESCO RES plant project. ESCO projects in Italy tend to involve the commissioning and installation of the plant equipment.55

iii Non-project finance development

While project financing is the most common scheme for financing renewable energy projects in Italy, some big players finance renewable energy projects using traditional schemes, both equity and debt financing.

Regarding debt financing options, green bonds have increased in popularity in Italy in the past few years.56

Green bonds have the same features as ordinary bonds, but the issuer undertakes a specific obligation to use the capital collected for renewable energy projects. Returns on these bonds for investors do not differ from returns on ordinary bonds, but issuers and traders are driven by the common intention to promote renewable energy.

The Italian market for green bonds started in 2014, when the Italian energy operator Hera SpA for the first time issued a €500 million green bond. The capital was employed in the financing of 26 renewable energy projects. In the following years, many other Italian energy operators issued green bonds, with a commitment to employ the capital in renewable energy and energy-efficiency projects.

By January 2018, green bonds issued by Italian companies already amounted to almost €6 billion, and more than half of these were only issued in 2017. Enel Finance International NV, a wholly owned subsidiary of the leading Italian energy operator Enel SpA, has already issued €2.5 billion in bonds.

Italian financial institutions' interest in financing renewable energy is rapidly increasing.

The Italian company Assicurazioni Generali SpA, which is the third-largest insurance company in the world, announced in January 2018 an underwriting commitment to increase the percentage of its portfolio related to the renewable energy sector by investing €3.5 billion in green bonds by 2020 and gradually divesting away from coal-related companies.

V RENEWABLE ENERGY MANUFACTURING

Renewable energy manufacturing in Italy mainly concerns photovoltaic panels, windmill blades and wind turbines with a power rating below 80kW.57

The leading European factory manufacturing photovoltaic panels is located in Catania (Sicily) and is owned by the Italian energy operator 3SUN Srl, a company of the Enel Group. In March 2018, 3SUN Srl launched a project to convert the factory, with a view to making it the first worldwide and exclusive manufacturer of HJT bifacial photovoltaic panels, which are based on heterojunction technology. This technology brings together two different kinds of silicon, amorphous and crystalline, generating particularly high yields.58 The 3SUN Srl factory conversion project entails an investment of over €80 million, partially financed by the European Commission,59 the MSE through the 'Ampere' project60 and the Sicily region.

There are also some other smaller factories in Italy manufacturing solar panels, as well as an important factory manufacturing windmill blades, located in Taranto (Puglia) and owned by the Danish wind energy operator Vestas. The manufacturing of turbines for small hydroelectric plants is also growing notably.61

VI CONCLUSIONS AND OUTLOOK

Italy has experienced an impressive increase in renewable energy projects in the past decade, outpacing the target set by the EU and the Italian legislature for 2020. This progress, resulting from governmental policies committed to environmental sustainability and to the involvement of credit and finance institutions in the green economy, has made Italy one of the global leaders in countries developing renewable energies.

The 2017 Italian National Energy Strategy has established even more ambitious targets for 2030, which should act as a key driver towards higher environmental sustainability and security of supply. Achieving these targets calls for efficient governmental policies encouraging investor confidence and decreasing the costs for the development of renewable energy projects over the long term.

Furthermore, the increasing proportion of non-programmable renewable energies (especially wind and solar) in the electricity generation mix requires a reform of the electricity system. In particular, real-time communication between electricity producers and the transmission system operator is fundamental. The development of non-programmable renewable energies also requires developing adequate infrastructure with a view to ensuring the capability of the energy system to maintain balance between generation and load when there is uncertainty in electricity demand or supply.

In the future, in response to the ARERA White Paper on renewables in the wholesale market, it cannot be ruled out that the ARERA may discuss with stakeholders rules promoting greater integration of RES into the electricity market (including into the balancing and intraday markets, and regarding dispatch based on order of merit).


Footnotes

1 Marco D'Ostuni is a partner, Luciana Bellia is a senior attorney and Giuliana D'Andrea is a trainee lawyer at Cleary Gottlieb Steen & Hamilton LLP.

2 See ARERA, Report No. 464/2017/I/efr of 22 June 2017, p. 11.

3 In particular, feed-in tariffs are no longer available for RES plants that commenced activities after 31 December 2012 (see Section III.i).

4 Energy Strategy Group, Renewable Energy Report, 2017, p. 8.

5 Energy Strategy Group, Renewable Energy Report, 2017, pp. 8–9. See Section III.ii for further details on favourable conditions for Small Generation.

6 GSE is the state-owned company that, pursuant to a Ministerial Decree of 15 March 2012, monitors and calculates the consumption of RES generated energy.

7 GSE, Annual Report, p. 185.

8 Million tonnes of oil equivalent.

9 GSE, Annual Report, pp. 185–186.

10 Legislative Decree No. 28/2011, Article 3 provides that the national target for final consumption of energy in the transport sector produced by RES is at least 10 per cent. In addition, a Ministerial Decree of 15 March 2012 (the Burden Sharing Decree) sets out the objectives for each Italian region for 2020, with a view to proportionally sharing the activities necessary to achieve this national target. It also made the state-owned company GSE responsible for monitoring and calculating the consumption of RES generated energy.

12 A feed-in tariff includes an 'incentive' component and a component for remuneration for electricity conveyed into the network.

13 A feed-in premium is an incentive granted exclusively for the electricity produced, not including remuneration for the sale of that energy, which might even be self-consumed by the producer or sold to the market, generating extra profits.

14 The Energy Account system includes a standard premium related to the amount of energy produced.

15 Green certificates were issued by GSE and represented the environmental value of electricity generated by an RES plant (i.e., an amount of CO2 emissions lower than that produced by a plant fired by traditional fuels, such as oil). Green certificates could be traded separately from the electricity produced over the counter or through a trading platform managed by the state-owned company Gestore dei Mercati Energetici SpA, thus representing a further remuneration for RES electricity producers. Indeed, according to the legislation, each electricity producer (or importer) had an obligation to generate (or put into the grid) a given share of electricity generated from RES or, alternatively, to obtain a corresponding amount of green certificates.

16 Ministerial Decree of 6 July 2012, Article 19. The value for 2018 of the incentives replacing green certificates has been set out in ARERA Resolution No. 32/2018/R/EFR of 25 January 2018.

17 Law No. 244/2007 and Ministerial Decree of 18 December 2012.

18 Ministerial Decree of 23 June 2016.

19 GSE, 2017 Annual Report, p. 9.

20 GSE, 2017 Annual Report, pp. 8–9.

21 ARERA, Report No. 464/2017/I/efr of 22 June 2017, p. 61.

22 Legislative Decree No. 28/2011, Article 4.

23 Legislative Decree No. 79/1999, Article 3, para. 3 and Article 11, para. 4, transposing Directive 2009/28/EC. This means that, in an oversupply scenario, RES plants will still be dispatched in the context of the power exchange market irrespective of price. In their White Paper on Renewables in the Wholesale Market, ACER and CEER called for EU legislators to bring RES into the market, by removing the priority for RES in dispatching regimes.

24 2018 Budget Law, Article 1, para. 3 and Italian Revenue Agency, Guidelines on building renovations, available at http://www.nrg-energia.it/media/Guida_Ristrutturazioni_edilizie_2018.pdf.

25 Legislative Decree No. 28/2011, Article 11.

26 Article 117 of the Italian Constitution defines whether the national or the regional legislator is entitled to adopt relevant rules in the energy sector. For more details, see D. Diaco, Produzione, trasporto e distribuzione nazionale dell'energia nei giudizi di legittimità costituzionale in via principale (2004-2015), Corte Costituzionale, Servizio Studi, available at http://www.cortecostituzionale.it/documenti/convegni_seminari/stu_281.pdf.

27 Legislative Decree No. 93/2011.

28 Law No. 481/1995, Article 2.

29 Law No. 481/1995, Article 2, para. 20(c).

30 Law No. 239/2004, Article 1, para. 12.

31 Law No. 239/2004, Article 1, para. 89.

32 Legislative Decree No. 28/2011, Article 4.

33 Legislative Decree No. 387/2003, Article 12.

34 Ministerial Decree of 10 September 2010, Guidelines on the authorisation for the construction and operation of RES electricity plants, para 10.5.

35 Italian Constitutional Court, Judgment No. 275 of 6 December 2012.

36 Legislative Decree No. 387/2003, Article 12, para. 4.

37 See Ministerial Decree of 10 September 2010, Guidelines on the authorisation for the construction and operation of RES electricity plants, paragraphs 12-13, for an exhaustive list of activities subject to this authorisation regime.

38 Legislative Decree No. 28/2011, Article 6.

40 Source: our translation of KPMG Advisory study on Italian legislation in KPMG, Investing in renewables, 2011.

41 Legislative Decree No. 387/2003, Law No. 239/2004 and ARERA Resolution No. 280/07.

42 Minimum guaranteed prices are, however, available for small electricity producers and only for small volumes of electricity generated.

43 Legislative Decree No. 387/2003, Legislative Decree No. 20/2007 and ARERA Resolution No. ARG/elt/74/08.

44 Legislative Decree No. 79/1999, Article 3, para. 3 and Article 11, para. 4, transposing Directive 2009/28/EC.

45 See ARERA Resolution No. 522/2014/R/eel.

46 S M Sambri, Modalità di realizzazione di impianti di produzione di energia con risorse private (project financing), in E Picozza and S M Sambri (eds.), Il diritto dell'energia, CEDAM, 2015, p. 669.

47 Ibidem, p. 669.

48 Ibidem, p. 679.

50 S M Sambri, Modalità di realizzazione di impianti di produzione di energia con risorse private (project financing), in E Picozza and S M Sambri (eds.), Il diritto dell'energia, CEDAM, 2015, pp. 705–706.

51 ARERA, Resolution No. 222/2018/I/eel, Annex A, Monitoring the development of distributed generation plants in Italy for 2016, p. 40.

52 Ibidem, p. 42.

53 Ibidem, p. 45.

54 Legislative Decree No. 115/2008, Article 2(i), defines ESCO as 'a natural or legal person that delivers energy services and/or other energy efficiency improvement measures in a user's facility or premises, and accepts some degree of financial risk in so doing. 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.'

55 See F Arecco, G Dall'O, Energia sostenibile e fonti rinnovabili, IPSOA, 2012, p. 397.

56 Energy Strategy Group, Renewable Energy Report, 2017, pp. 11–13.

57 Energy Strategy Group, Report on renewable energies other than photovoltaic, 2013.

59 In particular, the EU funds were awarded under the European Research and Development project Horizon 2020 European Call LCE-09-2016-2017.

60 See https://ec.europa.eu/inea/en/horizon-2020/projects/h2020-energy/photovoltaics/ampere.

61 Legambiente, Report on Renewable Municipalities for 2017, p. 118.