1 Introduction

Legislative Decree 199/2021 (Decree), which implements EU Directive 2018/2001 on the promotion of the use of energy from renewable energy sources (RED II) has been published in the Italian Official Gazette and entered into force on December 15, 2021.

The legislative process for adoption of the Decree was difficult, which led to a breach of the deadline, set forth by RED II as June 30, 2021.

Nevertheless, the Decree offers important new insights for the renewables sector. It aims to accelerate the Italian sustainable growth path, in line with the European objective of ensuring a 32 percent share of renewable energy sources in the EU’s gross final energy consumption by 2030.

Moreover, the Decree contains provisions for implementing the National Recovery and Resilience Plan (NRRP), with the aim of identifying a set of coordinated policies and instruments.

To achieve this, the Decree relies on, among others, two key measures: (i) the creation of new support schemes that are harmonized with existing measures, (ii) the acceleration of authorization procedures.

2 Opening of support schemes

Regarding the support schemes and instruments to promote renewables, Title I of the Decree (Titolo I) is devoted to a reorganization and enhancement of new support schemes, as well as to harmonization with similar measures (e.g. those planned in the NRRP), both (i) for the production of electricity from renewables, (ii) for the production of thermal energy and (iii) for biomethane.

2.1 Support schemes for electricity from renewable sources

2.1.1 General criteria (Article 5)

Article 5 of the Decree outlines the general characteristics that apply to each of the support schemes set out in subsequent articles.

All support schemes consist of an incentive paid by the state-owned energy services company Gestore dei Servizi Energetici (GSE), which is determined in in proportion with the project’s actual cost, in order to ensure fair remuneration of investment and operating costs.

Power plants are entitled to the incentives from the date they begin operations. This entitlement lasts for a period equal to the plant’s average useful life.

The incentives apply to new plants, reactivated decommissioned plants, completely refurbished plants, as well as revamped and renovated existing plants.

Incentive can be combined, under pre-established conditions, with other support schemes (e.g. NRRP support schemes).

The new support schemes also promote the combination of renewables with storage systems. In the event of multiple plants with equal capabilities, preference will be given to plants built in areas classified as suitable (see 3.2 below for details).

Incentives with preferential benefits will also be given to investors who install photovoltaic plants following asbestos removal. In this respect (i) the area where the asbestos has been replaced does not have to be the same area where the plant is installed as long as it is the same building or neighboring buildings (as indicated in the cadastral register) and (ii) the plants may occupy a larger area than that of the replaced asbestos.

The Decree also reiterates the prohibition of “artato frazionamento”—splitting plants into smaller ones in order to obtain higher incentives.

2.1.2 Support schemes for different power thresholds

The Decree splits the support schemes into two different categories depending on the size of the plant. “Large plants” are those with a capacity equal or higher than 1 MW, while “small plants” have a capacity below this threshold.

The Ministry for Ecological Transition, which sets out the procedures for implementing the support schemes will issue a decree in this respect (MITE Tariff Decrees) within 180 days of the Decree’s entry into force.

Support schemes for large plants(Article 6)

Incentives will be awarded through a competitive bidding process.

Every five years, GSE will set out (i) the capacity quotas made available for bidding, (ii) the incentives, and (iii) the maximum capacity that is eligible for incentives.

These features may vary according to geographical area. Auctions will be held on a regular basis. Guarantees may be required, and deadlines may be set for commencement of the construction works.

The incentive paid will be equal to the difference between the awarded tariff and the market price for the electricity.

If this results in a negative value, the relevant contributions will be reimbursed to GSE.

Support schemes for plants with capacity above 10 MW (Article 6, letter h)

An experimental phase will be launched for plants with a capacity above 10 MW.

Applicants are entitled to ask the GSE to issue an opinion on their plant’s eligibility for the incentives; such opinion can be requested to the GSE already during the permitting procedures.

Support schemes for small plants (Article 7)

The criteria are different for smaller installations.

Plants whose generation costs are closer to market competitiveness can take advantage of a direct access scheme. This simplifies access, as applicants do not have to first apply to registers or to calls for tenders. Instead they can apply for incentives directly at the start of plant operation. This access is guaranteed only until established capacity caps have been reached, and these caps will be set every five years. Among plants, the Decree notes that self-consumption will be favored, as well as combining renewable energy plants with storage systems.

On the other hand, for innovative plants and for those plants with higher generation costs, there will be calls for tenders with set power quotas. Priority will be given to (i) the most deserving initiatives in relation to environmental impact (ii) the most cost-effective initiatives.

2.1.3 Monitoring and control (Article 6 letters f-g)

Monitoring procedures will be provided, with particular attention being paid to the divergence between reported and target power, or to whether there are substantial variations in costs in comparison to actual market costs. The minimum power thresholds set out in MITE Tariff Decrees may then be reduced over time, taking into account the gradual development of technologies.

2.1.4 Interim period (Article 9)

Until the MITE Tariff Decree enters into force the Decree extends the current incentive system, established by the Ministerial Decree of July 4, 2019.

The GSE is obliged to set out new competitive procedures to allocate power not yet awarded in the previous rounds.

90 days after the entry into force of the MITE Tariff Decrees, the net metering (scambio sul posto) will be terminated.

For plants operating under the existing is scheme, the MITE Tariff Decrees will set parameters for converting the existing scheme into the newly established support schemes set forth for small plants.

2.2 Support schemes for the production of thermal energy from renewable sources (Article 10)

The Decree extends to large plants incentive mechanisms for the production of thermal energy from renewable sources, previously only available for small-sized plants.
MITE will issue implementing decrees in the forthcoming months.

2.3 Support schemes for biomethane production (Article 11)

With regard to bio-methane produced or injected into the natural gas network, the Decree leaves the determination of a specific tariff to further MITE Tariff Decrees.

The Decree provides that the set-out tariff should ensure that the bio-methane producer receives the same tariff for all different uses (transport, electricity production, thermal energy production); this tariff may also be extended to the production of gaseous fuels from renewable sources of non-biological origin (such as, hydrogen).

3 Acceleration of authorization procedures

The Decree includes important guidelines that should accelerate authorization procedures. These guidelines will be implemented by ministerial decrees.

3.1 Single digital platform for authorization proceedings (Article 19)

The first important innovation is the creation of a digital platform for authorizations, known as the SUDER (Sportello Unico per le Energie Rinnovabili).

Within 180 days from entry into force of the Decree, a MITE decree will set up one digital platform for the submission of applications for (a) Single Authorization, (b) Simplified Authorization Procedure (Procedura Abilitativa Semplificata), and (c) communications for edilizia libera activities.

The platform will initially only accept applications for Single Authorization. It is also expected to provide guidance and assistance along the administrative procedure process.

At the same time, standardized templates will be adopted for the procedures, ensuring common permitting documentation among the interested entities.

3.2 Suitable areas: Regional laws and single digital platform (Articles 20, 21 and 22)

The MITE Tariff Decrees will establish standard criteria for identifying suitable areas for the installation of renewables plants. This remains an issue in some regions that are reluctant to identify land that could be suitable for renewable energy plants.

In particular, MITE Tariff Decrees will set out the following in respect of land use:

• The criteria for identifying areas suitable for the installation of wind and photovoltaic power plants, in order to reach the capacity set out in the Italian Integrated National Energy and Climate Plan (PNIEC). Environmental impact must be minimized; hence, preference should be given to using existing buildings and exploiting land that is not useable for agriculture.
• Criteria for identifying other areas, such as brownfield sites and other compromised, abandoned and decayed areas suitable for the installation of renewable energy plants.

Suitable areas will also benefit from preferential treatment from an authorization point of view. The Decree states that plants built in suitable areas will have authorization procedures reduced by a third compared with the normal timeframe. In addition, the opinion of the competent landscape authority will be mandatory, but not binding, meaning that the respective authority will be able to proceed independently, without first considering the assessment of the environmental authority.

According to the Decree, even if an area has been excluded from the list of suitable areas, this does not automatically exclude the project from authorization.

The MITE Tariff Decrees will also allocate the installed capacity between the Italian regions and autonomous provinces, with the creation of monitoring systems to ensure that the regions fulfil their commitments.

For this reason, the MITE Tariff Decrees will be complemented by regional laws that, in accordance with the criteria set out in the respective decree, will identify suitable areas within the region’s territory. Should the regions fail to adopt such laws, or should the laws enacted not be consistent with the guidelines adopted by the Decree, the so-called substitutive power of the State will apply, i.e. the MITE will replace the regions in doing so.

Moreover, in order to support the regions in the process of identifying and monitoring such areas, the Decree has delegated the GSE to set up new digital platform.

The Decree opened up to the possibility of incentives for plants built over “unexploited” agricultural areas, provided that such areas are identified by the regions as suitable.

Statistical transfers of capacities between regions will be allowed, but these transfers will be independent of the achievement of the target set out for a particular region or autonomous province.

Nevertheless, the Decree emphasizes that, while suitable areas are being identified, no moratorium or suspension of authorization deadlines may be imposed.

3.3 Off-shore plants: speeding up of authorization proceedings and suitable areas (Article 23)

The competence for the adoption of the Single Authorization (according to art. 12 of Legislative Decree 387/2003) is transferred to the Ministry of Ecological Transition, together with the Ministry of Infrastructures and Sustainable Mobility and, for aspects related to maritime fishing, the Ministry of Agriculture, Food and Forestry Policies.

In terms of speeding up authorization procedures, the Decree provides that a maritime state concession will be included in the single authorization procedure (whereas until now such concession had to be granted in advance and separately).

A potential acceleration could take place with respect to the identification of suitable areas for the installation of offshore plants.

Suitable areas should have been identified as part of maritime spatial planning (MSP), an instrument introduced by Directive 2014/89/EU (implemented by Legislative Decree 201/2016), which analyzes and organizes the various human activities in marine areas.

Such MSP, which should have been submitted to the European Commission by March 31, 2021, are to be adopted within 180 days from the entry into force of the Decree.

The identification of such suitable areas will also be binding for the issuance of maritime state concessions and should result in a one-third reduction in the ordinary procedural deadlines and, as mentioned above, will require an opinion of the competent landscape authority, which will be mandatory but not binding.

3.4 Bio-methane and other bio gasses: Authorization proceedings to speed up (Article 24)

The authorization procedure for infrastructure construction for the production of bio-methane will be simplified. Any infrastructure required for the construction and operation of plants, including those for injecting methane into the grid, will now fall under the Simplified Authorization Procedure (PAS).

Moreover, innovations are also planned for a partial or complete conversion to bio-methane production of plants that produce electricity using biogas, landfill gas and gas from purification processes. For such plants, where changes are considered to be “non-substantial” (i.e. if the site is not expanded by more than 25 percent and if there is no increase in emissions into the atmosphere), the existing simplified procedure (or single authorization) will only need to be supplemented by a notification to the competent authority.

4 Hydrogen: NRRP (Articles 13 and 14) and electrolyzers (Article 38)

The Decree anticipates that further ministerial decrees will set out the procedures to support the construction of plants that generate—as well as those that consume—hydrogen, as well as the criteria according to which hydrogen can be qualified as “green” (i.e. produced with renewable energy sources).

Important news also concerns the simplification of the authorization process for the construction and operation of electrolyzers for hydrogen production.

• For electrolyzers with a capacity less than or equal to 10 MW, wherever installed and linked to existing renewables plants, authorized or in the process of being authorized, their construction represents a building-free activity (attività di edilizia libera); therefore, they need only to inform the municipality without the need to obtain a specific authorization.
• For electrolyzers and connected infrastructures located in industrial areas, or in areas where industrial facilities are present (including those for the production of energy from renewable sources, even if no longer operational), their construction is subject to the simplified authorization procedure (Procedura Abilitativa Semplificata), as long as the construction does not involve extending the area or increasing the height of the construction compared with the existing situation, and that construction of the electrolyzer requires no change to the adopted town planning destination.
• Stand-alone electrolyzers and related infrastructures are authorized by (i) the Ministry of Economic Transition by means of a Single Environmental Measure (Provvedimento Unico Ambientale) if the projects are subject to a National Environmental Impact Assessment and (ii) by the region or the autonomous province in any other case.
• Electrolyzers and related infrastructure not falling under the above categories that are associated with renewable energy plants are authorized by (i) the Ministry of Ecological Transition, if they are connected to plants of more than 300 MW thermal power, or to offshore power plants (ii) by the region or the autonomous provinces in any other case.