The use of corporate renewable power purchase agreements (PPAs) looks set to increase in Italy. Corporate PPAs are contracts between buyers and power producers to purchase electricity at a pre-agreed price for a pre-agreed period. As the market for the development of subsidy-free renewable energy projects grows, corporate PPAs are expected to become a common part of the energy and sustainability strategies of Italian corporates.
The Regional Administrative Court of Sardinia recently annulled the regional authority's decision to revoke authorisation for the construction and operation of a photovoltaic (PV) plant on the rooftops of agricultural greenhouses following its alleged loss of status as an agricultural company. The decision confirms that the lack of qualification as a professional agricultural entrepreneur should not jeopardise the right to operate PV plants and receive incentive tariffs on the production of renewable energy.
Repowering is the process of replacing an energy plant's original components with new ones and reconfiguring the layout in order to boost the plant's yield. Given that the regulatory framework in this regard is ambiguous, repowering works are innovative and the case law on such matters contains gaps, energy producers seeking to repower their plants are advised not to start the simplified deemed-consent procedure without obtaining prior clearance from the competent authorities.
Even after the retrospective cut in renewable energy incentives in Italy, the acquisition of operating solar photovoltaic (PV) plants under the right conditions still provides strong financial returns to investors. Nonetheless, irrespective of a project's financing structure or size, there are risks associated with such transactions which buyers should be aware of during the due diligence process.
In spite of the overall economic climate, the renewable energy sector shows promising signs of improvement. Long-awaited national guidelines on authorisation for renewable energy plants, as well as new classifications for photovoltaic plants, will be crucial to the future development of the sector.
The Ministry of Economic Development and the Ministry of Environment have prepared a draft decree to amend the system of incentives for photovoltaic solar power generation. The main concern for entities working in the sector is the overall reduction in incentive tariffs. However, the framework for investment is still advantageous.
In addition to the general liberalization of electricity generation in Italy over the past decade, further liberalizing incentives apply to generation from renewable sources. A streamlined application system applies for authorization to establish and manage new renewable energy plants.
From January 1 2003 all gas producers, importers, distributors and wholesalers will be free to execute supply agreements with end consumers, as long as they meet certain specified criteria. The step is intended to further the liberalization of Italy's gas market.
Until recently, the construction of new power plants and the repowering of existing plants were subject to a lengthy and complicated bureaucratic process. However, a new law enables power projects to progress swiftly through a simplified authorization process.