Regulation of electricity utilities – power generation

Authorisation to construct and operate generation facilities

What authorisations are required to construct and operate generation facilities?

The general principles governing authorisation procedures for the construction and operation of generation facilities are set out under national law, notwithstanding each region may implement regional laws regulating the authorising procedure within the national framework. Generally speaking, the authorising procedures for the construction and operation of generation facilities depend upon the type of source (eg, conventional or renewable), the capacity of the plant, the type of installation (ie, ground-mounted or roof-top mounted), and the area where the project is supposed to be built (eg, an area safeguarded from a landscape perspective).

From an environmental perspective, generation facilities having capacity above certain thresholds are subject to an environmental pre-screening procedure, which is a preliminary, streamlined assessment of the impact a project may have on the environment. When the pre-screening procedure has a negative outcome, the project is required to undergo a full environmental impact assessment procedure. Furthermore, projects that are to be built within certain areas of high landscape and environmental value, owing to the presence of specific flora or fauna, must undergo an additional assessment, the ‘environmental incidence assessment’, which evaluates the impact the project may have on the flora and the fauna living within that area or zone.

Combustion plants with a thermal capacity of more than 50MW and combustion plants for the production of electricity with a thermal capacity of more than 300MWe, are also required to obtain an integrated environmental authorisation to operate. This authorisation sets out certain threshold limits for emissions of pollutants and noise by the plant.

Since 2004, as a general principle, a single authorisation issued by the competent region (or the province if it is so empowered by the region) is required to construct and operate any renewable energy plant having a capacity higher than a certain threshold (ie, 60kW for wind, 20kW for solar photovoltaic, 100kW for hydroelectric, 200kW for biomass, and 250kW for gas from waste and depuration treatments and biogas). For generation facilities fueled by non-renewable energy sources having a capacity higher than 300MW, the single authorisation is issued by the Ministry for Economic Development.

The single authorisation, when issued, substitutes all the authorisations, licences and permits that would otherwise be required to build and operate the generation facility under applicable laws (except for the environmental assessments described above, if needed). The single authorisation is issued upon the completion of a single administrative procedure, during which all the positions of the interested public authorities are jointly evaluated.

Renewable energy plants with an installed capacity lower than the abovementioned thresholds are exempt from the single authorisation requirement and benefit from a simplified ‘deemed consent’ procedure (known as the PAS procedure). Regions can increase the thresholds for the simplified authorisation procedure up to 1MW. Certain categories of construction works that have a minor impact on the surrounding environment, can be carried out in a deregulated regime by filing with the competent municipality a notice of the planned start of the works.

Grid connection policies

What are the policies with respect to connection of generation to the transmission grid?

The energy produced by renewable energy plants has interconnection and dispatch priority. Moreover, the operator of the national transmission grid (ie, Terna) and the operators of the local distribution grids, have the obligation to connect every plant that makes a connection request to the grids that they operate. A request to be connected to the power grid can be filed well before the construction of the plant is completed, or even started, because no time limit is set as to how long before the start of operations the request can be filed. The request to be connected to the power grid must be filed with either the operator of the local distribution grid, if the capacity requested is below 10,000kW, or Terna, if the capacity requested is equal to or more than 10,000kW.

Alternative energy sources

Does government policy or legislation encourage power generation based on alternative energy sources such as renewable energies or combined heat and power?

The Italian government has introduced a number of schemes to support power generation based on renewable energy sources.

To promote and increase the use of renewable energy sources in electricity production and to create demand for electricity from renewable energy sources, the Italian government introduced in 1999 an annual obligation for electricity producers and importers to input a minimum quota of energy produced using renewable energy sources into the national electricity system. An energy operator could discharge its obligation by either producing the entire minimum quantity of energy from renewable sources by itself or by purchasing the whole or part of an equivalent amount, or the related rights (green certificates), from other producers. Green certificates evidence the renewable attributes of the electricity generated. They provided a benefit to the producer in that they could be traded separately from the underlying electricity at a national and international level. From 1 January 2016, green certificates were replaced by a feed-in premium mechanism known as GRIN.

In 2005, an incentive system specifically dedicated to solar photovoltaic plants, known as Conto Energia, was introduced. Conto Energia consisted of the payment of fixed incentive tariffs for 20 years starting from the date of entry into operation of the relevant photovoltaic plant (depending upon the capacity of the plant and the level of integration of the plant). Conto Energia is no longer in place for new photovoltaic plants because the budget was reached in July 2013.

Projects aimed at increasing energy efficiency may be eligible to obtain white certificates (also known as energy efficiency certificates). White certificates are tradable instruments that give proof-of-end-use energy savings. The scheme aims at supporting the production of thermal energy from renewables and high performance cogeneration units as well as small-scale interventions of energy efficiency for private persons and the public administration.

A simplified sale and purchase arrangement is another tool offered by the Gestore dei Servizi Energetici SpA - GSE under which producers are paid a minimum guaranteed price for every kWh. Producers with small-sized plants and a nominal electrical capacity up to 1MW may benefit from this scheme for the first 2 million kWh per year fed into the grid, with the possibility of receiving more if the hourly zonal prices prove to be more advantageous.

Through the net metering service, producers or users may feed into the grid the electricity that they generate on site, but do not consume immediately, and take from the grid part or all of the electricity that they need at a different time. This system applies to renewable energy plants having a capacity up to 200kW commissioned after 31 December 2007 and to high efficiency combined heat and power plants with a capacity up to 200kW. Under this service, the producer gets from the Gestore dei Servizi Energetici SpA - GSE a yearly net metering contribution in Euros. This contribution refunds the producer or user for part of the costs incurred for importing electricity from the grid.

Climate change

What impact will government policy on climate change have on the types of resources that are used to meet electricity demand and on the cost and amount of power that is consumed?

The government policy on decarbonisation may imply an increase of renewables in power generation as well as in heat uses, and the increase of energy efficiency projects.

Storage

Does the regulatory framework support electricity storage including research and development of storage solutions?

The National Energy Strategy approved in 2017 has set a target of providing the power system with innovative instruments and infrastructure to:

  • guarantee its adequacy and to meet security standards;
  • guarantee its flexibility required to accommodate the growing penetration of renewable energy sources (which will also be facilitated by technological advances);
  • promote its resilience to extreme weather events and contingencies; and
  • to shorten the timescales of and streamline the permitting process and the implementation of projects.

Among other things, the National Energy Strategy proposes to increase the capacity of energy storage systems and to integrate new resources such as storage systems into the market.

Government policy

Does government policy encourage or discourage development of new nuclear power plants? How?

In June 2011, a referendum led to the end of the nuclear programme previously proposed by the Italian government, with the abrogation of all the nuclear provisions already implemented. As a consequence, the quota of the energy mix theoretically assigned to nuclear energy for the year 2020 (24 per cent) will have to be covered by other sources, particularly by renewable energy sources.