Italy leaves detail out of FIT legislation

ITALY: The Italian government has approved a new renewable energy law designed to reduce incentive prices for wind and other renewable energy sources, but has left many details to be decided by follow-up legislation.

GE Energy 1.5 MW turbines at Enel Green Power's 7.5 MW Collarmele wind farm in the Italian region of Abruzzo
GE Energy 1.5 MW turbines at Enel Green Power's 7.5 MW Collarmele wind farm in the Italian region of Abruzzo

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According to the law, wind farms starting operations after 2012 will enjoy a feed-in tariff (FIT) rather than the green certificates that currently make up Italy’s incentive scheme. Details on just how much incentive levels should fall are still unknown.

Larger  projects must participate in a competitive auction process, one of the law’s  most controversial elements,  to receive the FIT.

While projects seeking a lower incentive payment will be favoured, the law clarifies a minimum incentive price will be established to guarantee a certain return for investors. 

The threshold at which the competitive auction for incentives will be required is a minimum 5MW although the exact level chosen will vary by renewable energy source

Wind farms operational by 2012 will continue to receive green certificates in a transitory period running through 2015 before being absorbed into the FIT. 

The government said state energy management agency GSE will buy back excess green certificates in this period, at a level equivalent to 78% of the green certificate reference price.  This is a partial victory for the wind industry, since a draft version of the law had set the percentage at 70%.

Nonetheless, the initial reaction to the new law from industry associations has been negative.   Italian renewable energy association APER said the government’s decision to leave key details on incentive prices and other issues to follow-up legislation means that investors’ uncertainty has actually increased.  

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