The Italian Government has approved law decree of 24 June 2014 No. 91 (the “Decree”) which includes, inter alia, provisions for the reduction of electricity bills of consumers and small‑to‑medium businesses by 10%.

The Decree was published in the Italian Official Gazette No. 144 and has come into force today, 25 June 2014. The Italian Parliament must convert the Decree into Law within 60 days from publication for it to remain in force. As the Ministry of Economic Development also pointed out on the day before publication, the Decree may be subject to changes at conversion.

This alert deals with the provisions of article 26 of the Decree regarding the changes to the feed‑in‑tariff system, which include the mandatory choice between a feed‑in‑tariff period extension (spalma incentivi) or an outright cut for PV plants with capacity over 200 kW as well as the redetermination of the feed‑in‑tariff payment terms.

The Period Extension

The Decree provides for an extension of the period of the feed‑in‑tariffs from 20 to 24 years for PV plants with capacity over 200 kW, and a reduction of the feed‑in‑tariff amount on the basis of the below:

Click here to view table.

With regard to the all‑inclusive tariffs (tariffe omnicomprensive) as per Ministerial Decree of 5 July 2012 (“Fifth Energy Account”), the percentage reductions will only apply to the “incentive component” of such all‑inclusive tariffs.

The owner of the PV plants affected by the period extension may apply for bank loans, funded or guaranteed by Cassa Depositi e Prestiti S.p.A., whose commitments will be ultimately guaranteed by the Italian State, for a maximum amount equal to the difference between the amount of feed‑in‑tariffs owing as at 31 December 2014 and the re‑calculated amount.

In addition, Regions and local authorities are required to extend the validity period of the permits issued for the construction and operation of the PV plants to cover the extended period of the feed‑in‑tariff.

The Outright Cut Option

As an alternative to the period extension as described above, the owners of PV plants with capacity over 200 kW may opt for an 8% reduction of the remaining amount of the applicable feed‑in‑tariff as of 25 June 2014.

The option must be exercised and notified to the GSE (Gestore Servizi Energetici S.p.A.) by 30 November 2014 and the reduction in the amount of the feed‑in‑tariff will become effective from 1 January 2015.

If the option is not exercised by 30 November 2014, the feed‑in‑tariff period extension (spalma incentivi) will automatically apply.

Payment Terms

Starting in the second half of 2014, the GSE (Gestore Servizi Energetici S.p.A.) will pay the feed‑in‑tariffs in monthly instalments, in an amount equal to 90% of the forecast annual average production of the relevant PV plant. 

The actual‑production‑based balance will be paid on or before 30 June of the year following the year of production.

The GSE (Gestore Servizi Energetici S.p.A.) will issue detailed rules on payment terms within 15 days of publication of the Decree.