Feed-in tariffs (FiT) for photovoltaic plants (PV Plants) entering into operation (so called entrata in esercizio) between June 1, 2011 and December 31, 2016 are regulated under Ministerial Decree No. 52804 of May 5, 2011 (the "Fourth FiT Decree"), published on May 12, 2011 in the Official Gazette of the Italian Republic No. 109 and entered into force on May 13, 2011.
The new incentive scheme is based on: (i) targets relating to the installed power (cumulatively equal to 23,000 MW by the end of 2016) and (ii) an overall budgeted FiT cap (equal to (€6 – 7 billion), subdivided into six-month budgeted FiT caps. If the subsidy spent in one period exceeds the FiT cap, the subsidy available in the following periods is decreased by the amount overspent.
1. PV Plants’ Classification
The Fourth FiT Decree includes the distinction between PV Plants constructed on buildings and other PV Plants (e.g., ground PV Plants). In addition, the Fourth FiT Decree introduces a further classification between Small PV Plants and Large PV Plants as noted below:
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2. Transitional Regime
2.1 FiT Cap and Capacity Target
For years 2011 and 2012, the Fourth FiT Decree provides for a transitional regime relating to Large PV Plants, which is based on (i) an annual FiT cap and (ii) an installed capacity target (the Transitional Regime) as noted in the following table.
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Once the total FiT cap (i.e., €580 million) has been exceeded, further Large PV Plants will not be eligible for the feed-in tariff provided under the Transitional Regime, being subject to the ordinary regime established for years 2013-2016 (see paragraph 3 on page 4).
The Transitional Regime can be divided into two periods based on the date of entry into operation of the Large PV Plants:
- June 1, 2011 – August 31, 2011 and
- September 1, 2011 – December 31, 2012.
For years 2011 and 2012 for the purposes of the above-mentioned limits (i.e., FiT cap and installed capacity target) newly installed Small PV Plants will not be taken into account.
2.2 Eligibility conditions for feed-in tariff relating to Large PV Plants
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It is also worth noting that with respect to PV Plants with modules located on land in agricultural areas, pursuant to Article 10, paragraph 4 of Legislative Decree No. 28 of 3 March 2011 (Legislative Decree No. 28/2011), such PV Plants will be eligible for the feed-in tariff provided for under the Fourth FiT Decree on condition that they:
- Have a nominal capacity (potenza nominale) not exceeding 1 MW
- Are located at a distance not lower than 2 kilometers, if the concerned land belongs to the same landowner
- Do not cover more than 10 percent of the agricultural plot of land leased to (or owned by) the plant owner.
However, it should be specified that pursuant to Article 10, paragraphs 5 and 6 of Legislative Decree No. 28/2011, the above-mentioned limits do not apply to: (a) land that has been abandoned for more than five years and (b) PV Plants authorized before the date of entry into force of Legislative Decree No. 28/2011 (i.e., March 29, 2011) or in respect of which the application for an authorization (e.g., a Single Authorization (Autorizzazione Unica) or a DIA (Denuncia di Inizio Attività))2 was submitted before January 1, 2011, in each case provided that the PV Plant enters into operation within one year from the date of entry into force of Legislative Decree No. 28/2011 (i.e., March 29, 2012).
2.3 Register for Large PV Plants
During the Transitional Regime, the responsible entity (soggetto responsabile) for the Large PV Plant must require the GSE to be admitted to a specific register (the Register), in accordance with Table B.
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On the basis of the applications received, the GSE shall establish a ranking relating to the Large PV Plants which will (i) not operate on a revolving basis (a scorrimento), except for the cancellation from the list of those PV Plants not entering into operation within August 31, 20114 and (ii) be based on certain priority criteria, to be applied in a hierarchical order. In particular, priority is granted to Large PV Plants which, upon the application for the entry (iscrizione) in the Register, have already:
Entered into operation;
Been authorized (e.g., by means of a Single Authorization or a DIA) and awarded an estimate for the connection (preventivo di connessione) issued by a grid operator (e.g., Enel) with the following acceptance by the owner of the PV Plant.
Additional criteria grant priority to Large PV Plants that have:
- An earlier date relating to the issuance of the permit (e.g., a Single Authorization or a DIA)
- A lower installed capacity
- An earlier date of application for admission to the Register
Finally, it is worth noting that the entry (iscrizione) in the Register cannot be transferred to third parties.
2.4 Certificate of completion of the works for Large PV Plants
During the Transitional Regime, the responsible entity (soggetto responsabile) of a Large PV Plant entered in the Register shall file with the GSE a communication relating to the completion of the works, attaching a sworn assessment (perizia asseverata). Both the communication and the sworn assessment (perizia asseverata) shall be transmitted to the grid operator (e.g., Enel), which verifies the compliance and notifies the outcome to the GSE.
If as a result of the ranking drawn up by the GSE, (i) a Large PV Plant is eligible for the feed-in tariff provided for the Transitional Regime and (ii) the certificate for the completion of the works is not notified to the GSE within the established term (i.e., within seven or nine months of the publication of the ranking), its entry (iscrizione) in the Register will no longer be valid for the relevant subsidized period. In the event that such a PV Plant is completed and becomes eligible for the feed-in tariff for a later period, it will be entitled to receive the feed-in tariff applicable at the time the PV Plant enters into operation, reduced however by 20 percent.
3. Ordinary Regime
Following conclusion of the Transitional Regime, as from 2013 the feed-in tariffs will be granted based on a different mechanism: the feed-in tariff will consist in an all-inclusive tariff for the energy injected into the electricity grid (i.e., including both the value of the energy and the value of the incentive), plus a bonus tariff on the quota of energy consumed by the producer.
For years from 2013 to 2016, if the subsidy spent in one period exceeds the approximate FiT cap established for the relevant period, a PV Plant may be still eligible for the feed-in tariff; however the subsidy available in the following periods is decreased by the amount overspent.
3.1 Cumulative effect / Requalification — also applicable during the Transitional Regime
For the purposes of granting the feed-in tariff, more than one PV Plant (i) constructed by, or referable to, the same responsible entity (soggetto responsabile) and (ii) located on the same cadastral parcels of land, or on contiguous cadastral parcels of land, are considered as a single PV Plant whose power is equal to the sum of the powers relating to each single PV Plant. The GSE is expected to issue further technical guidelines on the matter.
3.2 Indemnification remedies — also applicable during the Transitional Regime
If the PV Plant is not eligible for the expected feed-in tariff as a consequence of the grid operator (e.g., Enel) failing to (i) complete the works relating to the connection or (ii) activate the connection, the indemnifications remedies (misure di indennizzo) provided under AEEG Resolution No. 181/2010 (and subsequent amendments) will apply.
In this respect AEEG Resolution No. 51/20115 provides that the grid operator shall activate the connection of the PV Plant within 10 working days as of the "date of completion of the connection"6.
4. Feed-In Tariffs
The Fourth FiT Decree sets out that the feed-in tariff to be granted to the PV Plant is the tariff in place upon its entry into operation.
However, in a way that is partially different from the Fourth FiT Decree, the technical guidelines issued by the GSE provides for an exception in respect of Large PV Plants (i) which enter into operation between August 31, 2011 and December 31, 2012; (ii) that are admitted to the Register in a location that does not fall under the relevant FiT cap; and (iii) for which the responsible entity (soggetto responsabile) has requested the GSE to be granted the feed-in tariff starting from year 2013. In such a case, for the purposes of establishing which feed-in tariff will be granted to the Large PV Plant, a specific date (data convenzionale), relating to its entry into operation, will be agreed. In particular, this date will be coincident with the first day of the semester in which the request has been filed with the GSE (request which shall be filed after January 1, 2013).
Within 15 solar days as of the date of entry into operation of the PV Plant, the responsible entity (soggetto responsabile) is required to submit to the GSE the application for the granting of the relevant feed-in tariff.
Failure to comply with the aforesaid provision will imply the ineligibility for the feed-in tariff with respect to the period between the date of entry into operation and the date of the application submitted to GSE. However, the PV Plant may benefit from the relevant feed-in tariff as of its effective date of entry into operation.
The Fourth FiT Decree envisages that PV Plants whose modules consist in building elements of greenhouses are eligible to benefit from a feed-in tariff equal to the arithmetical average of the feed-in tariff provided for "PV Plants constructed on buildings" and the "other PV Plants" (e.g., ground PV Plants).
The energy produced from PV Plants constructed under the Fourth FiT Decree and entered into operation during 2011 will be eligible for a feed-in tariff reducing each month from June 2011 to December 2011, while during 2012 the feed-in tariffs will be reduced on January 1, 2012 and July 1, 2012.
With respect to PV Plants entering into operation as from 2013, feed-in tariffs will be reduced each semester up to the second semester of year 2016. In this semester the reduction is expected to be 30 percent in comparison with the feed-in tariff applicable to the first semester 2013.