The Renewable Energy Law Review: Italy


Since the electricity market liberalisation was conducted under Legislative Decree 79/1999,2 electricity activities have been primarily undertaken by private entities based on free competition. To date, except for distribution activity carried out under concession agreements, and the activities of transport and dispatching carried out by the national grid operator, the production, import, export, purchase and sale of electricity have been free.

Electricity generation remains a non-regulated activity. Construction and operation permits and licences need to be sought from different authorities. In this respect, since 2003, a special regulatory regime has been dedicated to renewable energy plants under Legislative Decree 387/2003 of 29 December 2003 (implementing Directive 2001/77/EC, which requires EU Member States to adopt a specific framework for renewables). This regime has been further developed under Legislative Decree 28/2011 of 3 March 2011 (implementing Directive 2009/28/EC) (the Romani Decree).

Ancillary regulation is also established by independent agencies, public entities or other subjects called upon to oversee or implement or integrate the established framework (such as Gestore Servizi Energetici SpA (GSE),3 the Regulatory Authority for Energy, Networks and Environment (ARERA)4 and the Ministry of Economic Development).

The development of renewable energy plants has increased over the years, thanks also to the dedicated support schemes that have been implemented. The first one was the CIP6 scheme, a feed-in tariff programme implemented through Law No. 9 of 9 January 1991. This was followed by the Green Certificates, which were established in 1999 (replaced in 2012 by a feed-in mechanism) under which most, if not all, existing wind plants are incentivised. The boom of renewables, however, was made possible by the dedicated support scheme for photovoltaic (PV) plants in place between 2005 and 2013 (the Conto Energia support scheme), which largely contributed to the growth and expansion of renewable energy installations, together with other forms of support also designed – although not exclusively – for other kinds of renewable energy plants (e.g., a feed-in-premium, an offtake regime and a net metering service).

Thanks to the policies implemented by the legislator, Italy achieved its 2020 target of a 17 per cent renewable energy share in gross consumption set by Directive 2009/28/EC six years before it was due (i.e., in 2014).5

Italy has experienced impressive growth in the renewable energy sector and has been successful in integrating large volumes of variable renewable generation. To date, more than 949,000 renewable energy plants have been installed in Italy.6

Renewable generated energy currently accounts for about 20.4 per cent of the national energy gross consumption, although a higher share can be found in the electricity sector (about 41.7 per cent), followed by the heating and cooling sector (19.9 per cent), and transport (10.7 per cent).

Renewable energy generation contributes to 41.7 per cent of electricity national generation. The main sources are hydro (40.7 per cent), followed by solar (21.3 per cent), bioenergy (16.8 per cent), wind (16 per cent) and geothermal (5.2 per cent)

The main current incentive framework for newly built, repowered, revamped, or partially or fully renovated renewable energy plants is represented by Ministerial Decree of 4 July 2019 (the FER Decree), setting the regulation applicable for the 2019–2021 period. The decree provides for registry and auction qualification procedures based on technological neutrality and the mechanism of contracts for difference. A new incentive scheme is currently being designed and will replace the FER Decree.

In response to the covid-19 pandemic, the European Union launched the biggest support programme ever under the Next Generation EU programme (NGEU), established by Regulation 2021/241/EU.

The NGEU is a €750 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the covid-19 pandemic, and also offers an unprecedented opportunity to speed up recovery in Europe and reinforce commitments to the twin transitions: green and digital.

In this respect, EU Member States are required, in their National Recovery and Resilience Plans (NRRPs) that set out a coherent package of reforms and public investment projects, to ensure that 37 per cent of the resources committed by the European Union go to climate investments and reforms.

To this end, in April 2021, the Italian government outlined its NRRP. On the basis of the outlined objectives, several legislative measures have been adopted and are in development by the government to ensure an effective deployment of renewable energy sources, as better illustrated in Section II.

The year in review

The year 2021 (and 2022 so far) has been characterised by the aftermath of the covid-19 pandemic that caused a general slowdown in all sectors. However, the renewable energy sector proved to be resilient and performed better than others. The recent war in Ukraine has also had consequences on the economy and increased the government's commitment towards alternative sources of energy.

Through Law-Decree No. 77/2021 (the Simplification Decree bis) – converted into law, with amendments, by Law No. 108 of 29 July 2021 – the government set a regulatory framework aimed at simplifying and facilitating the achievement of the goals and objectives established by the NRRP. It also enacted provisions dedicated to the energy transition concerning environmental and authorisation procedures, with the aim of accelerating and streamlining the same. This deeply changed the existing regulation and competences between the state and regional governments, most notably as regards environmental procedures and the role of certain entities in the authorisation procedure, resulting in changes to Legislative Decree 152/2006 of 3 April 2006 (the Environmental Code) and the Romani Decree.

With Law-Decree No. 130/2021 – converted into law, with amendments, by Law No. 171 of 25 November 2021 – the government introduced modifications to the Simplification Decree bis.

Under Legislative Decree No. 199 of 8 November 2021 (the RED II Decree), the Italian government finally implemented Directive 2018/2001/EU (the RED II Directive), whereby it completed the framework on renewable energy communities and also set specific authorisation procedures for green hydrogen generation plants, similar to those existing for storage facilities. Further provisions have also been introduced with regard to authorisation procedures, suitable and unsuitable areas for renewable energy plants, modifications to projects and plants, support schemes, and future incentives.

With Legislative Decree No. 210 of 8 November 2021, the government implemented Directive 2019/944/EU (the New Electricity Market Directive), containing provisions for developing national storage capacity and systems.

Attention has also been given to offshore plants, for which the newly established Ministry of Ecological Transition (MITE) published a call for interest, receiving 64 manifestations of interests by several operators. The technical meetings with the operators and the MITE are yet to be organised to set the pace of development for the initiatives. In this respect, an initial regulation can be found for PV plants in Law-Decree No. 17/2022 (the DL Energia) – converted into law, with amendments, by Law No. 34 of 27 April 2022 – that also provided for further changes to the existing authorisation framework.

Several decrees have also been adopted in connection with the Ukraine crisis to face the energy price shock, among which is Law-Decree No. 4 of 27 January 2022 – converted into law, with amendments, by Law No. 25 of 28 March 2022 – whereby the government, with the aim to compensate the most vulnerable users, established the collection of a levy from renewable energy producers.

With regard to the most recent trends in the energy market, the renewable energy sector is confirmed as being one of the most dynamic, despite the covid-19 pandemic.7 In 2021, mergers and acquisitions (M&A) transactions in the energy and utilities market increased by 20 per cent compared to the previous year and represented about €9.67 billion8 for the 49 announced transactions, of which 37 are complete as at June 2022.

M&A trends in 2022 suggest that transactions are to be driven by six main objectives:

  1. making existing businesses more green by reducing the carbon emissions of activities;
  2. building green energy hubs;
  3. repositioning portfolios in the direction of energy transition;9
  4. building an integrated value chain (i.e., ownership of the entire value chain to provide integrated energy transition products and services);
  5. using M&A to transform business models by acquiring new capabilities; and
  6. making strategic investments in start-ups to acquire technology.10

In addition to investments, renewables stocks proved to be resilient and thriving. The IREX Index, which tracks the performance of pure renewable small to mid-caps listed on the Italian Stock Exchange, closed 2021 with an outstanding performance exceeding 35,000 points for an aggregate value of €5 billion.11

The policy and regulatory framework

i The policy background

The Italian policy towards renewable energy is strictly connected with European policies. The support and development of renewables has been one of the cornerstones of EU policy since the White Paper issued in the 1990s, and Member States have ruled accordingly to ensure the achievement of the objectives established over time by the European Union under directives and regulations.

In line with the EU standard, Italy is strongly committed to the promotion and support of renewable energy plants.

The current policy is based, from an authorisation perspective, on the framework that derives from Legislative Decree 387/2003, the Romani Decree and the Environmental Code, providing for an ad hoc regime, as amended from time to time.

From an incentive perspective, Italy has provided for different kinds of support schemes (e.g., Green Certificates, feed-in tariffs, offtake regimes and net metering services).

The current incentive policy for newly built plants is based on competitive tender for awarding incentives, adopting a neutral approach among groups of technologies with similar structures and levels of cost. The incentives are paid based on contracts for difference executed with the GSE, the entity in charge of managing the renewable energy support schemes and paying the related incentives (i.e., the incentive amount is equal to the difference between the awarded tariff and the market price). This mechanism is considered to be ideal because it enables predefined power levels to be programmed, providing certainty to operators. At the same time, it controls the costs of the support scheme and avoids overcompensation with benefits for consumers that bear the costs of a support scheme passed on the electricity bill when the market price of electricity goes above the recognised tariffs.

As per future developments, according to what was provided under the NRRP, the government intends to increase the share of renewable energy sources and stimulate the growth of an industrial chain in the technological sectors linked to the production of energy from renewable sources (specifically PV and wind).

The main current support regimes in place for renewables are the following.

All-inclusive feed-in tariffs

This is a support scheme under the Ministerial Decree of 18 December 2008 for small renewable energy source plants (excluding PV plants). The tariff includes both the incentive and the value of electricity fed into the power grid. The tariff is granted on request to plants entering into operation after 31 December 2007 with a capacity not exceeding 1MW (200kW for wind farms). The support period is 15 years.

Offtake regime

Regulated under Annex A to ARERA Resolution No. 280/2007, the offtake regime is managed by the GSE and applies to plants below 10MVA. Under agreements with the GSE, producers sell the electricity generated and to be injected into the grid to the GSE instead of selling it through bilateral contracts or directly on the power exchange market. The GSE purchases and resells the electricity to be fed into the grid at the zonal price or at a minimum guaranteed price (for plants below 100kW only).

Net metering service

Under this service, regulated by the Consolidated Text on the Net Metering Service,12 the electricity generated by a consumer or producer in an eligible on-site plant and injected into the grid can be used to offset the electricity withdrawn from the grid. The GSE pays a contribution to the customer based on injections and withdrawals of electricity in a given calendar year and on their applicable market values. Net metering is not compatible with the offtake regime or the all-inclusive feed-in tariff. The service applies to:

  1. owners of renewable energy source electricity generation plants with a capacity of up to 20kW;
  2. renewable energy source electricity generation plants with a capacity of up to 200kW (commissioned after 31 December 2007); and
  3. high-efficiency combined heat and power plants with a capacity of up to 200kW.

Following the changes introduced under the RED II Decree, this regime will cease to apply after 90 days as of the entry into force of the ministerial decrees defining the new framework of incentives for renewable energy plants to be adopted by 13 June 2022. Plants entering into operation after this date could access the new incentives provided, if eligible, or opt for the offtake regime, while the net metering service would be precluded.13 Existing plants currently benefiting from the net metering service will transition to the incentive regime that will be in place at that time for small-scale plants.

FER Decree

Issued on 4 July 2019, the FER Decree sets the support regime for renewable energy plants – including PV plants – for the 2019–2021 period. The support scheme applies to newly built, fully rebuilt, and reactivated and repowered plants as well as plants undergoing power renovation.

Access to incentives is based on qualification as a result of:

  1. plants with a capacity greater than or equal to 1MW: Dutch auctions up to the available capacity made available at each auction; and
  2. plants with a capacity of less than 1MW: registry enrolment up to the power quota made available for each enrolment session.

Tariffs are awarded based on the reduction on the base tariff offered by each participant. The base tariff varies according to the kind of energy power source as listed in Table 1.1. of Annex 1 to the FER Decree.

Rebates on the base tariff are allowed up to 30 per cent in the case of registries procedures and up to 70 per cent (but not less than 2 per cent) in the case of auction procedures.

Starting from the registry or auction procedures opened as of 1 January 2021, the amount of the base tariff reported in the FER Decree is reduced by 5 per cent. This reduction does not apply to previous registry or auction procedures.

The final incentive paid is equal to the difference between the awarded tariff and the hourly zone price. The mechanism is based on contracts for difference, and thus the producer may have to pay back an amount in the case that the difference between the awarded tariff and the hourly zone price is negative.

Transfer of a project before the publication of the qualification ranking entails the application of a 50 per cent reduction to the awarded tariff.

To participate in the qualification procedure (auction or registries), the producer shall:

  1. secure the authorisation title;
  2. obtain the estimate of connection and accept it;
  3. register the plant on the GAUDI system managed by Terna SpA; and
  4. meet the capitalisation requirements that vary according to the value of the investment.

Moreover, it is imperative that construction works are not commenced before the publication of the qualification ranking by the GSE.

Upcoming support regime

Articles 5 to 8 of the RED II Decree provide the main principles for the implementation of a new support regime for large-scale (1MW or more) and small-scale (lower than 1MW) renewable energy plants and energy communities. The implementation is left to ministerial decrees to be adopted within 180 days of the entry into force of the RED II Decree (i.e., by 13 June 2022).

The main principles of the new regime can be summarised as follows:

  1. the incentive is assigned through a tariff paid by the GSE on the electrical energy produced by the plant, or on the portion of such production that is injected into the grid or self-consumed;
  2. the incentive period starts from the date of entry into operation and is equal to the average conventional useful life of the type of plant in which it falls;
  3. the incentive is proportionate to the costs of the intervention to guarantee fair remuneration and is applicable to the construction of new plants; the reactivation of decommissioned plants; and the complete reconstruction, upgrading and refurbishment of existing plants, also taking into account the different specific costs and the peculiar characteristics of the different applications and technologies;
  4. the incentive may be diversified on the basis of the size and dimension of the plant to take into account the scale effect;
  5. the incentive is designed to favour the coupling of renewable energy plants with storage facilities; and
  6. priority is given to plants installed on suitable areas as defined pursuant to Article 20 of the RED II Decree.

The government is also focused on more innovative technologies, such as storage systems and hydrogen. In this respect, a specific authorisation framework has been developed for both types of technologies based on the no-authorisation (Edilizia Libera) regime, the simplified procedure (PAS) or single authorisation, depending on the relevant features.

ii The regulatory and consenting framework

The main sources of law and regulation for renewable energy are represented by laws and legislative decrees passed by Parliament and the government; any implementing decrees adopted by the Ministry of Economic Development, which is often tasked with detailing certain aspects of the framework; decrees by the President; and regulations by other authorities tasked with further regulatory powers or management of certain activities.

That said, the main regulatory framework includes, among other things:

  1. Legislative Decree 387/2003, setting the reference framework for the authorisation of renewable energy plants and interconnection works;
  2. the Environmental Code, defining the environmental procedures;
  3. the Romani Decree, integrating the renewable energy plants authorisation regime; and
  4. Annex A to ARERA Resolution No. ARG/elt 99/08 issued on 24 July 2008 as further amended and integrated, namely the Consolidated Text for Connection to the Grid.

Other rules can be found in various laws, royal decrees, ministerial decrees and other pieces of legislation, as well as all the specific regulations introduced by Parliament, the government and the ARERA.

Edilizia Libera regime

This regime applies to small-scale plants that meet the requirements under Paragraphs 11 and 12 of the National Guidelines. In such a case, no formal authorisation title is necessary and the intervention can be performed by simple notice to the relevant municipality. Regions may extend the scope of application of the Edilizia Libera regime to renewable energy plants up to 50kW or to PV plants to be installed on buidling. The Edilizia Libera regime, however, does not exclude the need for any environmental authorisation, as applicable.

The Edilizia Libera regime also applies to certain kinds of variations on PV, wind and hydroelectric plants, or projects and related works that meet the requirements set forth under Article 5, Paragraph 3 of the Romani Decree.

Certified works declaration

This is a declaration certified by a technician to be filed with the municipality that allows the applicant to start the works without waiting for the expiry of any term. The certified works declaration (DILA) was first introduced for the purpose of providing a simplified authorisation in relation to certain kinds of interventions considered to be non-substantial on renewable energy plants (even plants under construction) or the construction of a certain kind of renewable energy plant. If the DILA applies, no further environmental and landscape authorisations are required.

Following the DL Energia, the scope of application of the DILA has been widened. Now, the DILA can also be used to build ground-mounted PV plants and related connection works with a power lower than 1MW, provided that they are located on suitable areas, not subject to the provisions of Legislative Decree No. 42/2004 (the Cultural Heritage Code) and fall outside the constrained areas referred to in Ministerial Decree No. 1444 of 2 April 1968, for the realisation of which no expropriation procedures are implemented.

Moreover, the DILA can be used to authorise any interconnecting infrastructure related to non-substantial changes that entail an increase in the power capacity provided that no new areas are occupied.


The PAS consists of a declaration concerning the plant installation that must be filed with the municipality at least 30 days before the start of the works. Within the subsequent 30 days, the relevant municipality shall verify the documentation and, should it find that one or more of the conditions provided for are not met, will notify the interested party of an order not to carry out the intervention. If there is no response from the municipality within 30 days of the submission of the request, the PAS shall be considered effective and the works approved. When it is necessary to acquire further permits, ways of leave or other authorisations that do not fall within the municipality's competence and are not attached to the PAS, the municipality shall convene for this purpose a steering committee procedure inviting the interested entities. In such a case, the 30-day term for the effectiveness of the PAS is calculated from the day on which the final measure concluding the proceeding is issued. The PAS applies to renewable energy plants up to the thresholds specified in Annex A to Legislative Decree 387/2003 (varying according to the kind of plant) or 1MW (in case the relevant region has extended the threshold for the PAS application).

Under the Simplification Decree bis and the DL Energia, the scope of the PAS has been extended to allow the authorisation of certain kinds of PV plants together with the related connection works.

The PAS also applies to non-substantial changes to existing or authorised renewable energy plants that do not fall within the scope of application of the DILA or the Edilizia Libera regime.

Finally, it has been provided that the PAS allows the direct installation of plants and related works even when the existing urban planning requires building activities to be subject to preliminary implementing plans, thereby overcoming obstacles posed by local planning provisions.

Single authorisation

This is the main authorisation for renewable energy plants and it is issued after a one-stop proceeding involving all interested entities as a result of a steering committee convened to examine the project. All interested entities participate in the meeting and issue their opinion, permit or way of leave during the same meeting. The single authorisation is adopted by the relevant region or the province where the plant will be built.

Following the changes introduced under DL Energia, the single authorisation applies to:

  1. renewable energy plants beyond the power thresholds specified in Annex A to Legislative Decree 387/2003 (varying according to the kind of plant) or 1MW (in case the relevant region has extended the PAS threshold – see above);
  2. construction and operation of new PV plants as well as revamping, repowering and full renovation, without changing the authorised area, of PV plants beyond 10MW located on suitable areas as identified pursuant to Article 20 of the RED II Decree; and
  3. substantial variations to renewable energy plants, which are yet to be defined by the legislator under a specific ministerial decree.

The single authorisation covers not only the construction and operation of the plant, but also the construction and operation of the relevant interconnection facilities. Therefore, plants authorised this way do not require separate authorisation for the construction and operation of electrical lines. The single authorisation procedure has a duration of up to 90 days from the formal start notice.

Ordinary maintenance regime

The ordinary maintenance regime is regulated under Article 7 bis, Paragraph 5 of the Romani Decree.14 Based on this provision, the installation of solar PV and thermal systems on buildings15 or on overground structures and constructions other than buildings and related interconnection works, as well as in the relevant appurtenances, is considered an ordinary maintenance intervention. Therefore, it is not subject to the acquisition of permits, authorisations or clearances however named, including those provided under the Cultural Heritage Code (i.e., landscape or cultural heritage authorisations, or both), with the exception of plants that fall in areas or properties referred to in Article 136, Paragraph 1, Letters B and C of the Cultural Heritage Code.

From an environmental perspective, renewable energy projects must also undergo an environmental impact assessment (EIA) procedure aimed at excluding negative impacts on the environment. Pursuant to the Environmental Code, two main environmental procedures may apply: the screening procedure or the EIA procedure.

Both the screening and the EIA procedures are concluded with an express measure adopted by the competent authority (usually the region or the province). Recently, the competence structure of EIA procedures for renewable energy plants has been reorganised in light of the NPRR objectives, with the establishment of an ad hoc EIA committee at the MITE in charge of conducting the EIA procedure for renewable energy plants listed under Annex I bis of the Environmental Code, among which are PV plants beyond 10MW, offshore plants and onshore wind plants beyond 30MW.

If the project interferes with protected areas under the Habitats Directive16 and the Birds Directive,17 the project is subject to the VINCA procedure, which is aimed at determining any negative effect on this protected area. The VINCA procedure is regulated under Presidential Decree No. 345/1997 and, if the project is also subject to an EIA, it is conducted within the EIA procedure.

With regard to cultural heritage aspects and landscape aspects, reference shall be made to the Cultural Heritage Code. If a project interferes with any constrained areas of landscape or cultural heritage items listed under the Cultural Heritage Code, a specific authorisation must be obtained by the competent authority (usually the region or the delegated municipality) upon the favourable opinion of the local cultural heritage department.

Renewable energy project development

i Project finance transaction structures

Project financing in Italy is implemented by means of a non-recourse or limited recourse banking loan facility.

In both the energy and the infrastructure sectors, finance parties and sponsors can draw on established practice for the structuring and implementation of a non-recourse or limited recourse banking facility.

More recently, because of a change in law that has made this viable from a tax point of view, the capital markets have become an alternative to standard project financing through project bonds or mini bonds for the energy sector. In some cases, hybrid solutions with a traditional banking facility and capital market tranches have also been applied.

The main parties in a project financing transaction depend on the structure of the transaction (whether there is limited or non-recourse financing, or bond issuance) and the risks relating to the project.

ii Power purchase

Generally, energy generated by renewable energy plants can be sold either on the market through power purchase agreements (PPAs) or directly on the Italian Power Exchange (IPEX); or to the GSE as a buyer of last resort under the offtake regime.

For the most part, PPAs executed in Italy are physical PPAs, whereby a party purchases (and acquires the related right to) the energy generated by a specific power plant delivered by the grid operator through the grid to the interested consumption units.

However, recently, financial PPAs have started to be introduced. These contracts are conceived as derivatives to make the energy sale contract more appealing from a bankability perspective. Indeed, under a financial PPA, the seller and the buyer agree to a strike price that will be paid for each unit of energy generated over an agreed period of time. The energy generated is sold on the open market and the buyer purchases power from that market. If the market price rises above the strike price, then the developer pays the difference to the offtaker. Conversely, the offtaker compensates the developer in the event that the market price falls below the strike price.

Corporate PPAs (i.e., the direct sale of energy to private companies or subjects) are limited only in relation to certain kinds of private energy distribution systems (i.e., a consumption and production system composed by production plants serving consumption units within a limited area). It is no longer necessary to obtain a formal qualification to be considered as such, although the private energy distribution system configuration must be indicated to the grid operator during the plant connection procedure and it is necessary to comply with ARERA configuration requirements for each kind of private distribution system.

The PPA market is developing, but the number of PPAs concluded accounts for less than 400MW of capacity and usually concerns large-scale plants, of which there are not many.18

Most PPAs are short-term agreements with a duration of between one and three years, which is a result of the fact that traders are not keen to undertake the energy price risk.

However, recently, one of the market major players – ERG SpA – executed with TIM (the Italian national telephone company) a 10-year PPA for the supply of 3.4TWh of 100 per cent renewable energy deriving from ERG wind farms over the 2022–2031 period. This PPA structure is based partially on baseload and partially on pay-as-produced.19

In general, PPAs are considered to be over-the-counter (OTC) agreements and as such shall be registered on the OTC Registration Platform (PCE), an online record-keeping track of agreements concluded outside the IPEX established under ARERA Resolution No. 111/06 and managed by the Electricity Market Operator (GME). To promote the development of long-term PPAs, Article 28 of the RED II Decree and the DL Energia provide for a series of measures. On the other hand, sales on the IPEX are subject to the rules and regulations of the energy exchange and accessible only to those parties that have been certified as qualified operators by the GME. All transactions take place on the GME's online trading centre under the terms and conditions established under the regulation of the relevant market.

Most transactions take place on the day-ahead market (MGP). On the MGP, participants submit offers for buying and selling electricity, specifying the quantity and the minimum or maximum price at which they are willing to sell or purchase as well as the energy injection and withdrawal programmes for the day after that of the market session. Offers are accepted after the closure of the market session in an order based on their economic merit and taking into account transmission capacity limits between geographical zones. The MGP market is an auction-based market and not a continuous-trading market. The GME acts as a central counterparty.

Transactions are valued at the market price (which, in simple terms, is the result of the interactions between energy demand and supply on the day the transaction occurs). Any plants can participate in the IPEX, notwithstanding the size, power or type.

Any bilateral agreement for the sale and purchase of energy executed outside the GME trading venue is considered an OTC agreement and is subject to registration on the PCE.

Other energy markets are outlined below.

Dispatching service or ancillary services markets

This is the venue where Terna SpA (i.e., the TSO) obtains the resources required to ensure balance between electricity production and consumption, thereby guaranteeing the correct and constant functioning and safety of the overall network to avoid any energy loss (in case of energy surplus) or blackouts (as a result of overconsumption). The resources are acquired from operators that own qualified generation or consumption units (i.e., units able, because of their technical features, to guarantee the system needs by providing, storing or absorbing the required energy amount upon short notice). In the dispatching service or ancillary services markets, accepted offers and bids are valued at the offered price. In these markets, Terna SpA acts as a central counterparty.

Forward electricity market

This is where forward electricity contracts with delivery and withdrawal obligations are traded. Trading on the forward electricity market takes place on a continuous basis and the GME acts as a central counterparty.

With regard to the offtake regime, all the energy produced by a specific plant, net of any energy used for self-consumption, is purchased by the GSE in accordance with the standard and non-negotiable terms and conditions set forth in the agreement entered into by the GSE and the producer.

This agreement has a term of one calendar year and tacitly renews for an additional period of one year at a time. The producer, however, can withdraw from the agreement at any time by giving 60 days' written notice to the GSE through registered mail.

iii Non-project finance development

Apart from project finance, the construction of plants is also financed through financial lease agreements and traditional financing agreements.

Under a financial lease agreement, the owner of an asset sells the same to the leasing company that leases the asset to the user, who can redeem the same upon expiry by paying a redemption fee.

Traditional financing agreements are medium- to long-term loans assisted by traditional securities such as mortgages, assignments of receivables or pledges over shares.

Recently, bond issues have been included among the possible non-project finance solutions. In terms of a security package, the bond is usually assisted by the same securities applicable in a project financing. In some cases, bonds are used in combination with bank financing (thus creating a hybrid structure).

Distributed and residential renewable energy

Distributed generation (GD) by renewable energy sources in Italy has developed significantly in the past 10 years, in terms of the number of plants and capacity installed.

According to data provided by ARERA,20 as at 2019, the number of plants connected to the grid was 895,350 for a total gross efficient power of approximately 33,066MW (about 27.7 per cent of the gross efficient power of the plants that comprise the GD network). See the table below for a breakdown of these renewable energy sources.

Type of plantNumber of plantsGross efficient capacity (MW)Production (approximate TWh)GD production (%)
Wind power5,3913,24368.7

Small-scale generation (i.e., plants with a capacity of up to 1MW based on the definition provided by Legislative Decree 20/2007) represents a large share of GD, with 892,273 plants installed for a total gross efficient power of approximately 19,550MW.

PV plants are the main kind of installation, with 878,940 plants installed for a gross efficient power equal to 16,387MW and a production equal to about 18,174GWh (57 per cent of the overall small-scale generation).

Out of 935,838 plants, 756,799 PV plants are installed in the domestic sector (i.e., houses and residential buildings).21

According to a study performed by Politecnico University of Milan, the development of energy communities would generate potential revenues of €460 million for the companies specialised in supplying these technologies, and they could also share with the self-consumption group the benefits that derive from the incentives awarded by the GSE to the group of users (the receivables deriving from the incentives can, in fact, be assigned to third parties).22

It has been estimated that there is a potential for 7GW of new installations with the creation of energy communities in the coming years that will add to the existing initiatives. There are currently 24 such communities.23

Renewable energy supply chains

The renewable energy supply chain is characterised by a variety of enterprises, mainly small and medium-sized, although there are also some large companies.

The main companies active in the production of components for renewable energy plants and related technology operate in the wind and PV sectors, where technology research and evolution has been more rapid and boosted by development that derives from the support policies that originally targeted these two sectors.

With regard to solar systems components, the main Italian companies active in the supply chain (by number of known resellers) are:

  1. Panels:24 Peimar; Futura Sun Srl; Solar Day SpA; Solbian Energie Alternative Srl; Sunerg Solar Srl; EXE Srl; Waris; Eclipse Italia Srl; Azimut Srl; and Abba Srl.
  2. Trackers:25
    • Convert Italia SpA:26 among its various patents, the outstanding one is a modular single-axis tracker easily integrated with the most widely used technologies in the industry, which allows for an increase in the performance of PV parks;
    • ATEC Robotics: dual-axis tracker;
    • COMAL Impianti Srl: single-axis tracker;
    • Enertronica Santerno SpA: dual and single-axis tracker;
    • Rem Tec Srl: dual and single-axis tracker; and
    • Soltigua: single-axis tracker.
  3. Inverters:27 Fimer SpA; AROS Solar Technology (RPS SpA); Enertronica Santerno SpA; Zucchetti Centro Sistemi SpA; Peimar; Siel SpA; and Western Co Srl.

In relation to wind plants' manufacturing,28 there are 10 manufacturing companies that cover 75 per cent of the demand for wind turbines globally. Five of these companies are headquartered in the European Union: Vestas, Siemens Gamesa Renewable Energy, Enercon, Nordex SE and GE Renewable Energy. In addition, Europe is home to two of the top five offshore wind turbine manufacturers: MHI Vestas and Siemens Gamesa Renewable Energy.

The above-mentioned players – among which Vestas, Nordex SE and Siemens Gamesa Renewable Energy are active in Italy and often supply wind farm components (e.g., towers and blades) – get together with operations and maintenance (O&M) services as part of the contractual package.

Currently, there are 17 manufacturing facilities in operation in Italy producing blades, forging, castings, converters and towers. Italy exports wind plant components to the rest of the European Union for an overall market value of €46 million and to other non-EU countries for a turnover equal to €1 million.29

Under the NRRP, the government has undertaken to strengthen and promote the creation of a national supply chain, committing approximately €4 billion to this project.

Other key considerations

In connection with the development of renewable energy plants, O&M services have also developed. The market for the management and maintenance of PV plants has become more and more concentrated. Fewer operators are now managing significant amounts of megawatts.30 This way, they have access to resources to invest in new services and technological innovation oriented, for example, to preventive maintenance.

Among the most recent transactions, it is worth mentioning the acquisition by Terna Energy Solutions Srl of 75 per cent of LT Enerray, one of the main O&M companies that is also active in the design and realisation of revamping and repowering existing plants, as well as in the construction of new plants for third parties. This has led Terna to actually manage approximately 1GW of the Italian solar portfolio.

Other notable O&M operators are EF Solare Italia (850MW), Ecoprime (610MW), Esapro (500MWP) and ENEL Green Power (160MW).

In the wind sector, the traditional full-service approach to O&M is the most common. However, also in this sector, the full-internalisation and hybrid approaches can be found. Investment funds tend to prefer a full-service approach because it reduces risks.

At the same time, plant owners are becoming increasingly service-oriented. O&M contractors are no longer required to simply perform unscheduled maintenance, but there is a growing demand for tools and activities aimed at preventing potential problems in the field and ensuring high performance throughout the life cycle of installations.

In this respect, the sector has experimented a great deal of digitalisation to minimise and improve on field intervention through, for example, the use of drones and augmented reality.31 Digitalisation has been an asset to develop software solutions to optimise the control activities for the performance of the power plants, with even more advanced platforms able to analyse all data in real time and to act promptly in the event of faults or anomalies.32

Most of the plants installed in Italy (especially solar and wind plants) have been operating for almost half of their operating life. In this context, to maintain the current trend of renewable energy production and meet the 2030 and 2050 decarbonisation objectives, it will be necessary to preserve as well as upgrade the existing plants.

Conclusions and outlook

Renewable energy policies represent a core element of Italy's energy and economic policy. The incentives system has proved to be effective in allowing the country to reach its 2020 objectives long before the deadline.

In light of the 2030 renewable energy targets, the installation of further renewable energy plants is mandatory and will likely continue. Under the NRRP, the government is working on streamlining the authorisation procedures and timing to ensure the full expansion of plant installation. In this respect, changes have been made to the existing authorisation framework with a particular focus on solar plants and opening to agrovoltaic initiatives, which may represent a good balance between entrepreneurial needs and the protection of soil consumption and depletion.

First steps have also been undertaken with regard to the identification of suitable and unsuitable areas for renewable energy plants, although the mechanism could be further revised to eliminate the subsequent need to implement the relevant yet-to-be-issued national guidelines at the regional level, which could prevent any divergent approaches from regional authorities.

In a scenario where incentives are being phased out, financial PPAs could play an important role in ensuring the bankability of projects.

Renewable energy communities could also represent a further element capable of increasing the renewable energy generation presence across territories and make consumers participants in the electricity system. In this respect, with the RED II Decree and the full implementation of the RED II Directive, large-scale energy communities are now a real possibility.

Future technology development would see an increasing role for storage systems that, combined with renewable energy plants, could contribute to stabilising plant production and let the same play an active role in the balancing of the system. The storage system could also work well as a stand-alone solution. Installations will be favoured by the trend of decreasing technology costs (down 80 per cent from 2013 in 2020). In this respect, the provisions for the development of an efficient storage network under Legislative Decree No. 210 of 8 November 2021 should be amended to align national law with the principles and provisions of the New Electricity Market Directive, thereby addressing potential competition law issues as well as ensuring an actual involvement of third parties interested in developing and operating storage facilities when it comes to the elaboration of the distribution and transmission infrastructure plans by grid operators.

Hydrogen is the power of the future, although to make that possible it is necessary for:

  1. technology costs to decrease;
  2. a wide choice of renewable energy at low price to be available;
  3. adequate demand to be demonstrated;
  4. carbon dioxide prices to be high; and
  5. a clear and straightforward authorisation framework to be in place.

With regard to existing plants, revamping and repowering activities will be crucial to ensure their performance and not to lose the targets reached, which would offer great opportunities to O&M service providers and also make them attractive for potential investments even in the absence of incentives (after the natural expiry of the current support period). In this respect, long-term PPAs seem to have been put on a track to full development.


1 Cristina Martorana is a partner and Alberto Tedeschi is a senior associate at Legance – Avvocati Associati.

2 Commonly known as the Bersani Decree.

3 GSE is the entity tasked with the management of incentive schemes from admittance to verifications.

4 ARERA is tasked with regulatory and supervisory activities in the sectors of electricity, natural gas, water services, the waste cycle and district heating.

6 GSE, 'Renewable Energy Statistical Report 2022 – Year 2020' (available at

8 These figures may be underestimated as only 51 per cent of the deal value has been made public.

9 Companies are using M&A to accelerate changes in their portfolios, which involves both divesting high-carbon assets and investing in future-proof assets.

10 An increasing number of business will make early-stage investments in (or partner with) young companies that can trigger and accelerate processes of innovation and transformation.

12 ARERA Resolution ARG/elt 74/08.

13 This is because, under the new incentive regime, self-consumption will have a dedicated incentive tariff pursuant to Article 30 of the RED II Decree.

14 As amended by Article 9 of the DL Energia.

15 As defined in Section 32 of Annex A to the building regulation format, adopted at Unified Conference No. 125/CU on 20 October 2016.

16 Council Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora.

17 Council Directive 2009/147/EC on the conservation of wild birds.

18 SolareB2B, 'PPA, un volano per il solare', January/February 2020 (available at

19 Qualenergia, 'Nuovo piano Erg, 1,9 miliardi in rinnovabili (e un PPA con Tim)' (available at

20 ARERA report on distributed generation, published on 3 August 2021 (available at

21 GSE, 'Report on photovoltaic plants 2021 – Year 2020' (available at

22 Politecnico University of Milan, Energy&Strategy Group, 'Electricity Market Report', November 2020, p. 468.

23 Qualenergia, 'Per le comunità energetiche un potenziale da 7 GW in Italia' (available at

26 One of the world's leaders in the production of trackers, which are the systems for orienting solar panels according to the sun.

28 BizVibe, 'Top 10 Wind Turbine Manufacturers in the World 2022' (available at

29 WindEurope, 'Wind energy and economic recovery in Europe' (available at

30 Solare B2B, 'O&M le acquisizioni ridisegnano il mercato' (available at

31 Solare B2B, 'La digitalizzazione trasforma l'O&M', February 2021 (available at

32 See footnote 30.

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