The entry into force of Articles 19 and 30 of the Ministerial Decree 6 July 2012 (so-called FER Decree) with effect as from January 1, 2016, which replace the green certificates scheme with a new incentive, has an impact on the existing project financing facilities.

Energy producers benefitting of Green Certificates, from the 1st of January will benefit of a new incentive calculated on the basis of the energy production. Notwithstanding that the implementation of the new system has not yet been finalized (e.g., the dedicated website (GRIN) has been activated only in February 2016) all the energy producers shall stipulate a new specific convention with the GSE, on the basis of a draft recently published on the GSE website.

On the basis of the new convention, GSE will pay the incentive on a producers' bank account (and no longer on the green certificate account). Moreover, in particular, energy producers having acceded to project finance facilities will probably be required to assign to the lenders the incentives receivables, considering that under project finance it is customary to assign all receivables as a guarantee to the lenders.

The assignment should consequently replace the pledge over the green certificates account customarily executed with the lenders in this kind of transactions.

The GSE has not yet issued specific rules about such assignment but, considering that the new convention is similar to the one already issued in the past with reference to the photovoltaic power projects, we assume that the rules will be almost the same, requiring a private deed authenticated by a Public Notary subsequently notified to the GSE.

One of the most controversial points of the new set of rules is the new payment term. The new incentive - in case of power plants whose production can be calculated on a monthly basis (including wind power plants) - will be paid by GSE on a quarterly basis, within the last working day of the second quarter following the reference quarter. Such new payment terms have been strongly criticized by the operators, which, in particular in 2016 (which is a transitory year) could face difficulties in the reimbursement of their facilities, bearing a serious risk of default.

In case the lenders do not consent to the use by the borrowers of the Debt Service Reserve Account, it will then be necessary to amend the existing financing agreements.

It is therefore easy to assume that most of the producers will ask the lenders for a waiver, supported - to the extent possible - by a specific GSE certification of the accrued incentive (a draft certification is already available).

Furthermore, it cannot be excluded that in case of a waiver, the borrowers will also require an amendment of the amortization plan (or of the leasing fee, in case of leasing agreements) in order to adapt it to the new cash flows of the project. It could also be necessary to review the existing warranties granted to the lenders in order to confirm their validity under the reimbursement and amortization programs.