The draft ministerial decree on renewables (non PV) (“MD”) has been a long time coming and is welcomed by operators in the renewables industry. The increase in the budget available for technologies other than solar PV is a positive sign. The move away from green certificates (for plants coming into force as of 1 January 2013, whilst for plants entered into operation up to 31 December 2012 as of 1 January 2016) is a move in the right direction in order to simplify procedure and provide greater certainty of revenues.
As with the fifth energy bill (“EB 5”), the focus of the decree appears to be on smaller or medium sized plants rather than larger plants. Red tape is decidedly less onerous for smaller plants compared to large and medium sized plants. At this initial stage, the returns would appear to be workable in terms of market expectations, particularly in respect of the smaller and medium sized plants. The bureaucracy for larger and medium sized plants (in particular the reverse auction process for large plants) may dampen investor appetite for such projects.
The draft Ministerial Decree
The official draft MD was made available on 13 April 2012 by the Ministry of Economic Development. The MD sets out the new incentive regime for nonsolar PV renewable energy generation technology. The draft is to be reviewed by the Italian Authority for Energy and Gas and the State-Regions Conference before being enacted by way of publication in the Official Gazette. It is likely to take a further 3 - 4 weeks before being published. It is expected to enter into force as of 1 July 2012 or 1 September 2012 at the latest, depending on how fast the approval process is. Any suggested amendments from the State-Regions Conference are not binding but are likely to be implemented.
The main technologies covered by the MD are hydroelectric, on and offshore wind, geothermal, biogas, biomass/anaerobic digestion, and bio liquids. The MD shall apply to those plants entering into operation from 1 January 2013.
An overview of the draft bill
- Timing: Law expected to be passed at the same time as the Fifth Energy Bill (i.e. 1 July 2012 or 1 September 2012) with the regime to take effect as of 1 January 2013
- Available budget: Increase in annual budget from €3.5b p.a. (under current regime) to €5.5b p.a. up to 31 December 2014
- Technology covered: Hydroelectric, geothermal, wind (on and offshore), biogas, biomass/anaerobic digestion and bioliquids
- Accreditation criteria: Mechanism to control number of installations. Reverse auction process for large plants (>5MW except for hydroelectric and geothermal >20MW); registration priority criteria for medium sized plants (50kW – 5MW); small plants will have automatic accreditation on entering into operation
- Tariffs: New regime moves away from current green certificates regime. Tariffs vary according to type and size of plant. Small to medium sized plants appear to be advantageous