BUSINESS GUIDE

Ground Photovoltaic investments on marginal areas

PVs in BLOOM project a new challenge for land valorisation within a strategic eco-sustainable approach to local development

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PVS in BLOOM

BUSINESS GUIDE Ground Photovoltaic investments

on marginal areas

Venice, August 2011

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This publication has been developed in the framework of the Project PVs in Bloom -Farming photovoltaic flowers: a new challenge for land valorisation within a strategic eco-sustainable approach to local

development, Contract number IEE/07/762/SI2.499457, financed within the Intelligent Energy Europe Programme (CIP Framework Programme) of

the European Commission.

The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European

Communities. The European Commission is not responsible for any use that may be made of the information contained therein.

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The realization of this Business Guide was made thanks to the direct contribution of:

Donato ing. Prof. Bedin Unioncamere del Veneto

Erica dr. Holland - Unioncamere del Veneto

Alessandro ing. Chies Structura Engineering & Innovation

Vincenzo Annunziata - EnergyQuote JHA

Andrea Virdis - EnergyQuote JHA

Best practices and description of authorization processes at the regional level have been provided by the project partners:

Coordinator: Unioncamere del Veneto ( Italy)

Energy Agency of Sassari Province (Italy)

Development Company of Municipality of Milies (Greece)

University of Jan ( Spain )

Chamber of Commerce, Industry and Shipping of Valencia (Spain)

Institute of Physics of the Lublin University of Technology (Poland)

Innovation Region Styria (Austria)

Italian-Slovak Chamber of Commerce (Slovakia).

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Index

Donato ing. Prof. Bedin Unioncamere del Veneto .....................................................4 Erica dr. Holland - Unioncamere del Veneto...............................................................4 Alessandro ing. Chies Structura Engineering & Innovation .....................................4 Best practices and description of authorization processes at the regional level have been provided by the project partners: .............................................4 Coordinator: Unioncamere del Veneto ( Italy).............................................................4 Energy Agency of Sassari Province (Italy) ....................................................................4 Development Company of Municipality of Milies (Greece) ............................................4 University of Jan ( Spain ) .........................................................................................4 Chamber of Commerce, Industry and Shipping of Valencia (Spain)..............................4 Institute of Physics of the Lublin University of Technology (Poland) ..............................4 Innovation Region Styria (Austria)..............................................................................4 Italian-Slovak Chamber of Commerce (Slovakia). .......................................................4 Index.........................................................................................................................5 Introduction and aim of the publication .............................................................8 PVPP investments ................................................................................................10

Characteristics overview of PVPPs ...............................................................10 Main stakeholders involved ............................................................................12 Conditions and obstacles ................................................................................14

Legal and administrative requirements.....................................................14 Difficulties in getting the PV power plant connected to the grid ........15 Landscape impact & geographical location .............................................16 Lack of financial resources (public sector and private sector) ..............17

Incentives ..........................................................................................................19 Support to cover the generating cost through revenues........................19 Support to reduce capital costs..................................................................20

How to build an investment proposal for 1 mw pvpp in a marginal area by an owner classified as public ...............................................................................22

Initial Investigation ..........................................................................................22 Feasibility study ................................................................................................23

Business Plan................................................................................................25 Authorization process at a regional EU level...............................................31

Italian authorization process ......................................................................31 Greek authorization process ......................................................................33 Polish authorization process ......................................................................35 Spanish Authorization process ..................................................................39 Slovak Authorization process ....................................................................41 Austrian Authorization process.................................................................42

Legal considerations on content of the public tender ................................44 Call publication and evaluation ......................................................................45 The decommissioning of the PV plant as foreseen in the public tender.46

Main differences in case of a private owner .....................................................48 General interest ................................................................................................48 Financial instruments.......................................................................................49 Authorization processes ..................................................................................50

Examples of Business Models referring to different PVPP realizations ......52 Campardo landfill Conegliano, Veneto Region, Italy..............................53

Description of the project ..........................................................................53 Quick facts....................................................................................................53

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Marginal terrain re-use model.................................................................... 53 PVPV design and construction ................................................................. 54 Feed in tariff and additional benefits........................................................ 54 Sustainability principles and socio-environmental aspects.................... 56 Business plan main topics and investment indicators............................ 56 Lessons learnt .............................................................................................. 60

Thematic park - Municipality of Gavardo, Valle Sabbia, Brescia, Italy ... 61 Description of the project.......................................................................... 61 Quick facts ................................................................................................... 62 Marginal terrain reuse model ..................................................................... 62 PVPP design and construction.................................................................. 64 FIT and additional benefits........................................................................ 65 Sustainability principles and socio-environmental aspects.................... 65 Business plan main topics .......................................................................... 66 Potential other investments ....................................................................... 66 Lessons learnt .............................................................................................. 66

Cavriglia quarry, Arezzo, Tuscany Region, Italy ......................................... 67 Description of the project.......................................................................... 67 Quick Facts .................................................................................................. 68 Marginal area reuse model ......................................................................... 68 Marginal area reuse model ......................................................................... 69 PVPP Design and construction ................................................................ 70 Feed in tariff and additional benefits........................................................ 70 Sustainability principles and socio-environmental aspects.................... 71 Business plan main topics and investment indicators............................ 71 Potential other investments ....................................................................... 74 Lesson Learnt............................................................................................... 74

Tessmann Landfill, San Antonio, State of Texas, U.S.A. .......................... 75 Description of the project.......................................................................... 75 Quick facts ................................................................................................... 75 Marginal terrain reuse model ..................................................................... 75 PVPP design and construction.................................................................. 76 FIT and additional benefits........................................................................ 77 Sustainability principles and environmental aspects .............................. 77 Potential other investments ....................................................................... 79 Lesson learnt ................................................................................................ 79

Thiva landfill, Viotia prefecture, Greece ...................................................... 81 Description of the project.......................................................................... 81 Quick facts ................................................................................................... 81 Marginal terrain reuse model ..................................................................... 81 Marginal terrain reuse model ..................................................................... 82 PVPP design and construction.................................................................. 82 FIT and additional benefits........................................................................ 83 Business plan main topics and investment indicators............................ 84 Lessons learnt .............................................................................................. 86

Ronneburg mining area, Austria .................................................................... 87 Description of the project.......................................................................... 87 Quick facts ................................................................................................... 87 Marginal terrain reuse model ..................................................................... 88 PVPP design and construction.................................................................. 88 FIT and additional benefits........................................................................ 90 Business plan main items ........................................................................... 90

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Lessons learnt...............................................................................................90 Eberstalzell buffer zone, Austria....................................................................91

Description of the project ..........................................................................91 Quick facts....................................................................................................92 Marginal terrain reuse model .....................................................................92 Marginal terrain reuse model .....................................................................93 PVPP design and construction..................................................................93 FIT and additional benefits ........................................................................95 Business plan main topics and investment indicators ............................95 Potential other investments........................................................................95

Power Park with citizen participation ...........................................................98 Murek Graz Region - Austria......................................................................98

Project description.......................................................................................98 Feed-in tariff and other benefits..............................................................101 Sustainability principles and socio-environmental aspects ..................101 Business Plan main topics and investment indicators..........................101 Potential other investments......................................................................102 Lessons learnt.............................................................................................103

Final recommendations for triggering investments by overriding barriers and avoiding dangerous risks ............................................................................104

Investments made by a public body............................................................104 Investments made by a private organization/individual on its property...........................................................................................................................107

Appendix..............................................................................................................109 Contacts ...............................................................................................................110

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Introduction and aim of the publication

Diversification of Energy sources and Environmental issues are becoming day by day one of the most important points of discussion in Europe. Renewables could help us to overtake these problems and Photovoltaic power production is surely the most promising technology now available. This technology has a large numbers of advantages, such as no emission during electricity production, but it still remains, in 2011, a costly technology and need to be stimulated by governors and institution. During last years, each country has developed several incentive frameworks that, among the other things, are pushing photovoltaics to develop a lot, making it an affordable technology for a wide range of stakeholders. Due to technical limits, Photovoltaic power plant usually require large amount of surface and land to be installed and being productive, and this character could be an obstacle in development of Photovoltaic in case the need of land would not be managed correctly. Land is surely a high cost resource, especially in the most economically developed regions across Europe. In this environment, marginal areas could become a resource. These types of areas are usually considered at zero value and re-conversions or reclamations are often hard to justify on financial and economical terms. Expired landfill and abandoned quarries are examples of marginal areas those could be exploited for installing PVPPs. This strategy represents a good opportunity for private and public investors because unexploited lands can really became income generating investments for many stakeholders. What are marginal areas exactly? In Europe, intensive land utilization for agriculture, industry and commercial usage, has given an irreversible land foot-print and marginal areas are a huge part of these lands. Landfill, quarries, former industrial sites (dangerous or not), former military areas, closed airport are examples of marginal areas. More generally, a marginal area is an unexploited land resource that is not convenient or not possible to convert to any profitable use or cannot be used anyway (such dangerous or polluted sites). The PVs in BLOOM Project is funded under the Intelligent Energy Europe Programme of the European Commission, managed by EACI (The Executive Agency for Competitiveness and Innovation). The PVs in BLOOM Project has identified European Best Practices and models for recovering low/zero value terrains through ground PV Power Plants (PVPPs) ranging from 50 kWp to 2-3 MWp; involved 60 local public administrations across Europe in its activities and produced pilot pre-feasibility studies for spurring the start-up of new PVPPs on landfills and quarries. The aim of this guide is to give references and easy-to-use indications to main stakeholders for starting a small and medium size PVPP in marginal areas. Complexity of matters and regulation changes still are troubles that need to be overtaken with knowledge and information. Furthermore, different rules in each country are often an obstacle for approaching joint projects across Europe. For these reasons, this guide turns to investors with the spirit to give the basic information for approaching the fulfillment of Photovoltaic power plants and, as we would like to refer in particular to PV systems constructed on marginal areas, municipalities and public companies are main targets of this publication. This guide deals with the following points:

PVPP investments: a description of main characteristics of PVPP investment giving a brief view about stakeholders role, main obstacles and conditions, type of investments

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How to build an investment proposal for 1 MWp PVPP in marginal areas: a detailed analysis about all steps necessary to achieve the target to propose an investments in PVPP. Starting from the initial investigation necessary to set up the plan, the guide covers all aspects of feasibility study, business plan, authorization processes, public bids and project management. The focus is on investors classified as public, but main differences with private investor are dealt with as wel.

Examples of business models: taking into account particular and innovative projects, the guide shows the economic sustainability of the installation, applying the best practices

Recommendations: public and private investors can found in this guide a list of main recommendations for triggering investments by overriding barriers and avoiding dangerous risks

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PVPP investments

Characteristics overview of PVPPs

On a technical point of view, each PVPP investment must have a good balancing between area characteristics and technical characteristics in order to obtain the maximum efficiency in economic and technical terms. For this reason we would now like to give an overview about these aspects of PVPPs investments. Marginal Areas refers to areas where there are conditions, intrinsic, induced or latent, which result in delay or impossibility in their development compared to the normal context in which they are inserted. The condition for becoming marginal area can be either intrinsic (when coming from previous uses of the same area) or induced (when there are political and administrative constraints). We should bear in mind that the term marginal area is not a synonymous of remote area, as often marginal areas are closed to inhabited or commercial or productive areas. The main factors that determine the margins of an area are easily recognizable and can be divided into three categories:

The lack of features necessary for social-economic exploitation The previous intense exploitation of the area, which has resulted in

a depletion of the capacity for future utilization The previous use of the area, which introduced restrictions and

constraints The areas that we can select according to these criteria are:

o Landfills or waste dumps o Quarries and mines o Industrial areas o Contaminated or non-arable areas o Areas with limited access precluded or prevented o Areas or military airport, active or abandoned o Buffer zones

To be considered for a PV installation, these areas must be free from landscape, archaeological and environmental constraints, or, depending on the type of area, there must be an ad hoc authorization by the respective Competent Authority (Municipalities, Provinces, Regions, Ministries, etc.., and combination of them) for changing the destination of use. Each of these types of marginal areas must have certain characteristics for evaluating the possibility to build a PVPP. A lot of these characteristics are essential, while others can be considered preferential.

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The crucial characteristics are technical and are specifically related to the technique of PV installation:

Adequate surface area (about the range: 500 sqm - 30,000 sqm) Open exposure of the subject, open casted and not over shaded; Terrain should be flat, but maximum 35 to the horizontal are

permitted and in case of PV trackers terrain slope must not exceed 5

The prevailing orientation of the PV generator should be South and the tilt angle must be slightly lower than the local latitude;

Free and easy accessibility of the area, even for trucks proximity of the grid connections the absence of geological hazards, hydraulic and seismic the absence of powdery emission sources in proximity is highly

advisable Ownership of the area, or appropriate license to use, for the time

horizon necessary (20-30 years) Now we need to analyze additional characteristics because they express factors that may be preferable and favorable and can lead to have a lower initial investments or special guarantees for lower operating costs in the future. Landfills or waste dumps: The presence of biogas power plant (CHP) could be an advantage as determines the presence of electric delivery point. Then the systems of exploitation of biogas from landfill accelerate the process of terrain consolidation, therefore after 2 or 3 years after the ending of exploitation of landfill (post-operative management that could be longer than thirty years), we could be in the presence of contextual favorable elements:

Reduction of geological risks and no variation of surface inclination as a result of quicker terrain consolidation;

Power delivery point close to the area and therefore the investment necessary to build the PVPP could decrease;

In case of overcoming the peak of electricity production from biogas, it is possible to extend the life of the power point of delivery using the additional power produced by the PVPP.

Industrial wasteland: The presence of electrical substations could have favorably affected in the determination of the initial investment. It is also possible to exploit the possibility to reclaim the asbestos roofing of industrial building. In this case the eventual FIT could be higher and this is important to be considered into the feasibility study Contaminated or non-arable areas: These areas have the advantage of latent conditions of marginality, for which the purchase price of the surface before the assessment in key PV installation, is extremely low. If the purchase is expected as a function of the Minutes of the settlement, the condition element is to contain the initial disbursement. Restricted areas, precluded or prevented: These areas may offer the advantage of containing costs of the PV installation, in fact, the prohibition or the problematic nature of access, may result in lower premiums for insurance coverage to damage and theft.

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Airport areas or military, active or abandoned: In areas active military we could have the same advantage that we had in the case of denied access areas. Areas of respect: they are areas located that do not overlap, but in the immediate closeness of roads, railways, high voltage power lines, pipelines, cemeteries, wastewater treatment plants, airports, telecommunications masts, landfills and treatment plants waste. "Unfavourable" elements for setting PVs On the other hand, a common problem of all "green" marginal areas (i.e. which have grassy vegetation that provides the accommodation capacity of rainfall), is that an installation may result in a decrease of PV capacity itself. Also high concentrations /conveyance of rainfalls in the area must be taken in consideration, for the adoption of preventive measures against landslides and mudslides. This effect is worst if marginal areas are " brown" (no herbaceous vegetation), as the carrying capacity of rainfall is limited in advance. Regarding PV technologies we can split them in two main categories:

Crystalline silicon solar cells (poly-crystalline or mono-crystalline) Thin film solar cells

Both these categories have advantages and disadvantages and their utilization could be various. The crystalline silicon solar cells have high conversion efficiency and save their performance for long time. For this reason these type of cells could be used when the surface is not big and it is necessary a high efficiency to produce enough energy. Unfortunately crystalline silicon solar cells work very well with direct irradiation, and have a sensible decreasing of their performances in case of shadow and low solar radiation. This means that the area exposure became crucial in order to not compromise the investment profit. Thin film solar cells have medium/low conversion efficiency for direct irradiation, but they preserve a high efficiency with diffuse and low radiation. Furthermore they perform better at high temperatures than crystalline cells do. These aspects are crucial in case marginal area selected is in a slope or it is over showed. There is a considerable lack of experience when compared to crystalline silicon- regarding their on-field mid and long term performance: in fact the thin film degradation process is not fully predictable yet.

Main stakeholders involved

The construction of a PVPP is a long process that involves a large numbers of stakeholders with different roles and level of interest. Authorizations required, technical aspects, project financing and building of PVPP are aspects that involve private companies, authorities and public institutions therefore a brief analysis about the value chain is necessary to perform, in accordance with the spirit of this guide.

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It could be easier to classify stakeholders in five different groups:

Entrepreneurs Institutions (authorization process) Energy authorities and/or grid manager Banks Technical Partners

Of course some stakeholders could change at partnership level and for this reason, even if they couldnt be the most important, we would analyze firstly the two groups Banks and Technical Partners. Photovoltaic, even if the power plant is located in a marginal area, is a capital intensive technology and, considering our Guide target, the building investments could be up to several million of Euros. For this reason banks and/or financiers (such as private equity funds) are strictly necessary for obtaining the necessary venture capital to finance such type of projects. PVPPs building and maintenance operations are technical aspects that need to be managed by specialized companies that become technical partner. PVPPs owner needs often to involve consultancy firms for managing the authorizations, bureaucratic paperwork and engineering processes. After these activities, construction of PVPPs requires high specialized construction companies with the role to build and connect to the power grid the photovoltaic installation. Furthermore additional partners are necessary for maintenance, insurance and accounting. These partners listed above are chosen by the owner in different ways that will be analyzed in the following chapters of this guide. Main stakeholders are surely entrepreneurs and taking into account that our focus is on marginal areas and assuming that marginal areas are property of municipalities and more in general public institution; these subjects represent mainly this type of stakeholder. Independently from the country, we could have three different categories of stakeholder:

Public institution that wants build and manage PvPP in marginal area

Joint venture between public institution and private companies Public institution that wants give land grant for exploiting marginal

areas Ways of operating of these three categories will be analyzed in the following chapters, but it is important to note that in all partner countries, Public institution that have some right on marginal areas are very often local municipalities. This because marginal areas are often lands at zero value granted to private companies. These municipalities are sometimes (it depends on countries and PV installation size) involved in authorization processes as well, and this conflict of interests make them a stakeholder also when we speak about the institutional group of stakeholders. Institutions are important stakeholders because they are main actors in the authorization process. Municipalities, Provinces, Regions and Ministries (with some departments) are the institutions that an entrepreneur needs to involve for building a PV installation in a marginal area. The number of institutions involved change

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at partnership level and level of involvement could depend of size of installation. This means that time to have all authorizations for going ahead with installation could changes a lot at partnership level. The last stakeholder group we are about to consider is Energy Authorities and/or grid managers. Grid manager and in particular distributors are responsible for connecting to the grid PV installations. It is crucial that they give appropriate assistance in this because marginal areas could be often located in regions that are hard to reach. In countries where there are incentives, Energy Authorities are usually in charge of verifying that all authoritative and installation process is correctly done in order to recognize a Feed in Tariff incentive. With exception of Poland this point is common to all partners.

Conditions and obstacles

Environmental Agencies urge public sector organizations to consider using their land and property to generate renewable energy and - as already pointed out above in this handbook the development of photovoltaic investments on marginal areas can potentially represent a big opportunity. However, PV energy is a relatively new field and sometimes some obstacles slow down its development. The main objective of the following paragraphs is to describe the main barriers with a specific focus on the development of PVPPs on marginal areas.

Legal and administrative requirements

By studying the legal and administrative procedures defined in the countries involved in the PVS in Bloom project a set of obstacles can be observed. The main criticalities can be split into the following categories:

complexity of the procedures which are necessary to obtain authorizations;

The non-uniform rules at national level. One of the possible reasons of the procedures complexity is that frequently to obtain an authorization it is required to deal with several public offices. The Italian situation epitomizes this problem as - in the case of installing a new power line to connect a new facility - the number of bodies involved in the authorization process can be up to 13. Nonetheless, the authorization processes are frequently composed of a significant number of steps. In this area Spain represents the most extreme case since the existence of the Registration in the Retribution Pre-Assignment Register may differ the construction for years. Conversely, there are cases in which barriers are determined by a lack of regulation. For instance, in Poland there are few installations and the system can be defined as not fully regulated. As mentioned above, legal and administrative procedures are rarely unique at national level as differences can be observed in every regional territory. This is due to the fact that often Regions can play a legislative role - may be

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in conjunction with the national government in the field of environmental protection. This entails that the preliminary investigation to be carried out by a private investor should include an analysis of the existing environmental procedures which have been established at regional and local level as well as possible limitations as to the installation of power plants or limits to the classification of land that might affect PVPPs. Moreover, additional remarkable aspects to take into account are the further differences which can exist at the municipal level as consequence of a different interpretation of the same rules.

Difficulties in getting the PV power plant connected to the grid

In most of the EU Member States the electricity grid has been under public control over decades and this is probably one reason for which the access to the grid is often problematic for renewable energy producers. Criticalities in this area can be split once again into two different categories:

Administrative barriers Technical barriers.

Concerning administrative barriers, a first aspect to consider is that the procedures defined to connect a new facility to the grid requires in some cases a high number of documents to be submitted and these documents are often imposed by both the regulations and the utilities. Further, there are countries such as Spain where the documentation is the same regardless of what the size of the PVPPs is. Nonetheless, it is not rare to see remarkable differences in the procedures defined by different utilities as well as situations in which small decentralized renewable energy sources are blocked by local authorities or by the local utilities. Of course, in the case of PVPPs in marginal areas this aspect can be even more important. This situation shows clearly that European legislation has not been uniformly implemented in the regulatory frameworks of the EU member States. In this field Spain represents a positive example as a priority access to the grid is always given to renewable energy source (including, of course, photovoltaic power). On average the renewable energy source lead times for the grid connection are very high. In the photovoltaic sector the lead time can account for almost a half of the lead time for the overall procedure. Administrative barriers are generally recognized to be caused by two main aspects:

a lack of knowledge of the European and national regulatory frameworks

and A lack of understanding of renewable energy technologies

In effect, besides the administrative barriers and bottlenecks, there are a series of technical barriers that project developers and product manufacturers continuously bear, such as the lack of standardization and

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testing procedures. Requirements, which often vary from utility to utility, are not always transparent enough, and not uniformly applied. Consequently, there are additional costs for manufacturers and project developers to comply with these requirements. Many European wide activities (e.g. EC projects) have underlined the urgency need for a novel to standardize procedures and technical requirements.

Landscape impact & geographical location

Generally speaking, the installation and operations of a system that exploit solar energy through the photovoltaic conversion brings about an important form of landscape transformation. In fact, in presence of a given level of solar radiation, the existing technologies offer a low level of conversion efficiency of the photovoltaic cells and thus a remarkable physical dimension of such systems is usually required (to give an idea a PV installation of 1MW that uses static structures might require up to 2 hectares of land depending on several factors such as the latitude of the area where the system is installed, the module tilt and so forth). This required area must be highly enlarged if tracking techniques are used. Consequently, in approaching an investment in a PV system an investor should also analyze the strict requirements requested by the local authorities on the assessment of the environmental impact especially in the case of historic sites and rural or mountain villages and areas. The main landscape impacts of photovoltaic system are as follows:

Land use Reduction of cultivable land Fragmentation of the countryside Plant degradation Visual impact on the landscape Interference between fauna and flora Microclimate change Glare Electromagnetic fields Construction phase impacts.

In this document a marginal area is defined as a land whose productivity is scarce regardless of the fact that it is either rural or non-rural. Investments in a photovoltaic system to be built in marginal areas can benefit from a simplified system of rules set by the local government and authorities unless these areas are located in areas environmentally protected by the law. For instance, there are regional governments that have issued a special regulation for reconciling the production of energy from renewable sources with the safeguard of its regional territory encouraging the diffusion of renewable energy sources plants. Some examples have been observed - although with some differences- in some countries such as Italy and Spain. By contrast, the marginality in merely geographic terms may represent a factor of additional complexity for instance when a marginal area is located far away from the nearest power line and may be divided by a private land in the between.

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Lack of financial resources (public sector and private sector)

Financing is frequently a critical issue for investors especially in those cases where the investments are made to install a small-sized PV system. In fact, although for the investors they are considerable with a comparatively long payback period for financial intermediaries such as banks the investment volume is very small-scale and often not very interesting to finance. Further, if the investor is a public body (i.e. a municipality) another constraint may be represented by the internal stability pact. This section is aimed to describe the main financial tools that public and private investors might be interested to use. Preliminary, the two hypotheses to consider are the following:

The marginal area is owned by a municipality Marginal area is owned by an individual or a private organization.

The local government such as the municipality can follow at least two different models. On one hand, the municipalities can invest and operates the facilities under its own responsibility (with equity capital or financial debt). A municipality operating company is founded or may be the municipalities utilities provide the work. On the other hand, a contractor could build and operate the photovoltaic system. In this case the contractor takes charge of planning, construction and operations and makes profit on the sales of the electricity. Below are described a couple of examples as to the investing models that can be chosen in the case of the marginal area is owned by a municipality. The type of investment depends on the role that a given municipality wants to play in the project. A first example refers to a public tender procedure. A municipality gives a public notice for a new PVPP to be constructed on marginal lands under public ownership and applicants propose to construct, operate and maintain the new power system with a commitment regarding the decommissioning. In such simple case, the winning applicant generates revenues by reselling the electricity produced by the new system and obtaining the incentives guaranteed by the law and/or local regulations. If economically possible, a fraction of these revenues could go to the municipality which however will continue not to play any role in the project development. Likewise, a possible alternative is a cooperative venture between the public and private sectors, built on the expertise of each partner, which best meets clearly defined public needs. For instance, the municipality and project developer may set up a joint venture in the project development phase. After achieving all permits for the project, the public body may either sell its shares in the project or continue its participation. In this case the municipality plays a more active role within the project.

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When the auto financing is not possible or convenient, the main financial tools are as follows:

Mortgage Leasing Public Project financing Third party financier model

A mortgage is a loan secured by a property and paid in installments over a set period of the time. This is a traditional way by which municipalities have financed investments in PV though its use is often limited by the internal stability pacts. The leasing contract is an agreement by which an organization can obtain the use of a certain fixed asset paying a series of contractual periodic instalments. Depending on the type of leasing contract, in a given moment in the future, the same organization may decide to buy it with a final bigger payment. Although the leasing contract is relatively new in the public sector, local government can use it to finance investments in PV. The main advantage for a public body is that the leasing is less-capital than purchasing and thus this option can help to overcome budgetary constraints imposed by the internal stability pact. In fact, in the financial year in which the work is assigned local government does not have to write in their balance sheet the entire value of the contract but only the amount corresponding to the overall annual installment. Project financing (project finance) consists of a financial transaction through which governments implement public works whose financial burden is partially or wholly borne by a private organization. To develop the project it uses debt and it is repaid from the funds generated by the activity (based on a financial plan that can ensure self-financing). Very often, a company conducting the project finance (sponsoring company) set up a different corporation or other entity for the project to shield the company from liabilities. The three main important features of the project finance solution are the following:

The project is developed to perform a specific operation An independent unit is set up and it is separated from the

sponsoring company The debt that rose for the project is usually non-recourse,

sometimes limited recourse, with regards to the sponsoring company. This means the project itself is responsible for the debt

Project financing is often very complex and thus it is usually applied to medium-big sized photovoltaic installation. By the third party financier (TPF) model, the public body does not:

Make the upfront capital investment Bear the installation and ongoing maintenance costs

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In fact, all the above costs are borne by a third party in return for regular periodic fee payments. The third party might also be an energy service company (ESCO), like a utility providing energy services in return for fees. In this way, the risks of PV and maintenance are efficiently allocated to a party with greater PV expertise and which has greater financial resources. The TPF model can be described as a combination of at least two elements:

A guarantee of the necessary finance; Professional technical assistance.

Incentives

In all industry, investment requires capital expenditure to generate revenues to cover costs. The renewable energy sector has much lower operating costs but in proportion has higher capital costs to take into account. Therefore, state and local governments usually try to take advantage of the various incentives which exist in the marketplace to reduce the up-front capital investment which is necessary to construct and install PVPPs. This section explores the mechanisms that governments and municipalities use to provide subsidizes and structure financing for PVPPs projects that they own. To expand renewable energy deployment and meet the investment gap direct or indirect supports are necessary. Different instruments are available ranging among those which can help to lower the cost of capital and construction costs.

Support to cover the generating cost through revenues

Regulated prices The term regulated prices is typically used to describe the Feed-in Tariff mechanism (also known as FIT). These subsidies are payments to energy producers for the renewable electricity they generate. They usually are represented by a fixed financial payment per unit of electricity or heat produced by a renewable energy source. The energy producers obtain the payments for a long period (i.e. 20 years). In Italy the new legal framework recently issued (Conto IV) confirms an additional reward for those photovoltaic systems installed in marginal lands. Similar examples are present in Spain although they are limited to regional development policies. Unfortunately, in this country the FIT for on-ground PV installations have recently been noticeably trimmed. Regulated Premiums Regulated premiums or feed-in premiums give to energy producers a fixed financial payment per unit of electricity or heat produced by renewable energy sources for the green value (in this scheme the producer receives the market price for the physical energy produced). A combination of Feed-In Tariffs and Feed-in Premiums is possible. Quota obligations/certificates Another possibility is that a given government may decide to impose a minimum quota of renewable energy in the overall electricity generation.

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This target can be met either through physical production or by purchasing the so called green certificates. The quota obligation system can be combined with tradable green certificates and in this case the producer of green energy is paid for the green certificates by those organizations that face the obligation. Fiscal incentives Although fiscal incentives are typically secondary instruments to support the other instruments (such as feed-in tariffs) they play an important role in the promotion of renewable energy sources. Possible examples of fiscal incentives are tax credits and/or tax exemptions for investments in renewable energy projects, investment subsidies, low interest loans and further kinds of tax measures. The shortcoming of this type of support is the instability. In fact, it is usually influenced by the governments budgets. Tendering scheme The tendering scheme refers to a possible government call for a renewable energy project. A call can be issued by other institutions as well. When running a tender, the public body selects a project developer which is usually offered a long term power purchasing agreement (PPA) at a competitive price.

Support to reduce capital costs

Grants, R&D Grants, and Capital Grants A grant is a funded aid often given for innovative projects. Likewise, R&D grants are provided to research organizations and laboratories in order to fund their research programmes in renewable energy technologies. The purpose of these grants is to encourage research. Yet, capital grants helps mainly small and medium sized enterprises which usually cannot bear additional cost with the internal R&D budget - in proving the potential of R&D innovations. Contingent grants or loans The main characteristic of a contingent grant is that it can be defined as a subsidy which is converted into loans when a project turns out to be successful. By contrast, it is treated as a grant in case of financial difficulties. Contingent grants are more likely to be used once prototypes have proved the technology to be profitable in real-market conditions. Public Loans By a public loan investor can have a cheaper access to capital thanks to the fact that public funds are used to bear greater risk. Private Equity funds Private equity funds usually invest in the renewable energy sector for a long term financial return. They can be defined as medium risk investors and usually expect a relatively high return and focus on the later stages of projects and mature technologies. Private equity funds also play an important role in providing equity to project companies. Venture capital Venture can be considered a specific sub-segment of private equity investment and play an important role in financing technology innovation, with active involvement of the fund managers in the project. By definition, venture capital targets high returns and for this reasons it is ready to bear a high risk.

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Mezzanine funding Generally speaking, mezzanine funding is a means to gain funding for a company which in the most of cases can come in the form of stand-alone subordinate debt. It is frequently used to finance the expansion of existing companies. Guarantees Guarantees can be seen as form of compensation to lenders and/or investors in case of project developers default.

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How to build an investment proposal for 1 mw pvpp in a marginal area by an owner classified as public

This section covers the analysis of the most significant legal and administrative issues concerning the implementation of 1 MW PVPP in a marginal area by a public body. With reference to the focused countries, its purpose is to suggest an analysis of the issues as well as possible solutions, while illustrating, where appropriate, the details of the existing regulations or those soon to be introduced.

Initial Investigation

A public body (mainly Municipalities), which intend to develop a PVPP Project (hereinafter the Project), prior to any other decision, has to evaluate the existence of the necessary assumptions for the implementation of the Project First of all, as we are speaking about public bodies, it is necessary that the implementation of the Project is of public interest, even locally intended. Among all, the above evaluation may concern the relevant following issues:

Investments and financial resources Legal implications regarding the structure of the Project Technical investigation

Often public institutions (particularly at a local level) do not have all the necessary financial resources to directly implement such investments. Their main asset is mainly constituted by the ownership of the lands which could be interested by the realization of the Project. Therefore the lack of suitable financial resources affects the decision on the legal modalities through which the Project has to be implemented. Being the owner of the lands, a public body could decide to involve private investors into the Project by means of a public tender. The involvement of private investors could bring to efficiency level, while the presence of a public body assures the safeguard of the public interest. As a consequence, public body is completely relieved from charges related to financing infrastructural works and to the operation of the Project with their activities focusing on control-related aspects. Regarding technical aspects, it is necessary to verify the characteristics of available areas in order to understand how much could be the profit generated by the PV installation.

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Feasibility study

In order to have a preliminary investigation about the feasibility of a PVPP we should also take into account some technical aspects. One could surely find better working conditions (and therefore an improvement of production of electricity), but before all one should know that the yield of a PVPP is closely dependent on the type of PV system chosen. It is intuitive that, in case the area for installing the PVPP is not coplanar to the horizon, it is able to capture more light radiation when it is facing South (in the direction that, at each latitude and longitude, represents the direction of highest incidence of the sun). Reasonably good results are achieved with deviations from the East to West (azimuth = angle () between the normal to the surface of the PV panel and the direction South) within 45 , both East, and West.

Similarly, the slope of the PV panel (array) surface with respect to the horizontal line (tilt = angle () between the horizontal and the surface of the PV panel (array) ) influences the production of electricity. The table below shows the percentage of yield compared to the strong situation of maximum yield (optimum orientation and inclination), a PV installation has at various tilt and azimuth. Of course these tables are calculated for different longitudes corresponding to as many sites provided for ground photovoltaic plants. It is clear that the most efficient PV systems have an azimuth angle () contained in -45 ans + 45 degrees , and tilt between 20 and 40 (30 very good). To obtain the right tilt azimuth and orientation, we cannot be confident only in general orientation of the available area with respect to the orbit of the sun, but photovoltaic module must be fixed to the terrain (or roof) in proper way .

Figure 1: Slope and orientation of a PV generator (source: IDAE, 2002. Instalaciones de Energa Solar Fotovoltaica. Pliego de Condiciones Tcnicas de Instalaciones Conectadas a Red. IDAE, Madrid, p.53)

Table 2: Change in efficiency with respect to Azimuth and Tilt angles

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The most common types of ground fixings are:

Fixed or semi-fixed anchorage to the support structure anchored in turn to the ground

Fixed or semi-fixed anchorage to the support structure anchored in turn to concrete foundations

Solar tracking system (1 or 2 rotation axes) Anchor the support structure only resting on the terrain soil with

concrete blocks fixing it to the ground Adhesion to the surface (flexible)

The above mentioned characteristic could be more or less suitable in different cases and different solution should be preliminary evaluated. As anticipated, for the marginal areas it is usually possible to recommend a specific combinations of PV panels, types of PV installation and anchorage Landfills and waste dumps Crystalline panels (poli-/mono-) or thin film (hard frame mounted) modules are preferred anchored to support structures resting on the surface involved, with particular attention to the characteristics of direction and strength of the prevailing winds. Alternatively, it can be used thin film PV modules on flexible support that lays on the areas surface. Quarries and mines It is important to not use support structures resting on the surface in the frequent cases where surface is irregular and in case there are still working activities inducing vibrations. In this case it is crucial that PV modules would be strictly anchored to the ground. Type of anchorage depends on the inclination and exposition of the area Industrial wasteland Various solutions could be possible. It is also possible to use structures equipped with solar tracking system in order to increase the electricity production up to 30% (this figure increases up to 40% in southern Europe countries). Eventually using tracking techniques requires much more land than static structures, so given the same area, fewer kWp could eventually be installed with suntracking. In case PV modules would be installed in a roof, it is possible to use flexible module glued on a plastic sheet. This system has the advantage that in same condition could became a good weatherproofing system that preserves the roof longer. Contaminated areas In some cases, it is necessary to prevent the percolation of rainfall into the ground, with the primary aim not to transfer contaminants to the groundwater below. In such cases, after appropriate preparation of works and facilities for collecting and managing rainfall, may be functional to lay flexible thin film modules, to plastic and flexible support that could become a good watherproofing system. Other areas There are no specific indication for areas with limited access, denied, unable, areas or military/civil airport, (either active or abandoned), and other areas of respect. The basic parameters for an appropriate choice of technology and type of installation are to be found in the types analyzed above. Should be noted that in the empty airport areas or on surfaces of former military areas most commonly installed PV systems are generally those fixed polysilicon or thin film

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Business Plan

The feasibility study for a photovoltaic system does not generally contain an important part of study on economic sustainability as in a business plan. As for every investment it is necessary to analyze costs and revenues, cash flows and check the cost of the necessary funding for the construction of the plant and assess the key financial indexes. In particular these are the NPV, IRR and ROI. First, we define briefly these financial indexes as follows:

NPV: Net Present Value, is the methodology by which one can calculate the value of a series of discounted cash flows at a rate of return defined so that these are consistent and comparable. In practical terms it represents the cost-opportunity of the investment. The rate of return is an important parameter to be defined for photovoltaic systems. Since they represents a major investment, but with low risk, we could use in our analysis the rate of 6% per year

IRR: It is the internal rate of return for which the NPV is zero. Higher this index is, the better our investment gets, in economic terms. For a given project, this index equals the actual interest rate at which the project initial investment should be lent during its useful life to achieve the same profitability. From an economic point of view, the PV system should be accepted if the IRR exceeds a profitability threshold fixed by the future owner. It is widely agreed that this is one of the most easily understandable and straightforward profitability index for investors

ROI: it represents the profitability of the investments regardless of the source of capital used for its implementation.

ROE: It is the profitability index that represents the profitability of the investment compared with the shareholders equity

PAYBACK PERIOD: It is the minimum payback period calculated regardless the adjustment with the rate of return

For the evaluation of the investment many other financial ratios can be used, but surely these are good indicators for an economic evaluation in a feasibility study. For the evaluation of an investment, cash flows are needed in order to calculate such indexes. Now we shall explain briefly what are the costs and revenues of a photovoltaic system. Costs We distinguish first of all costs into two main categories:

1. Construction costs to be incurred only at the time of the project 2. Operating costs to be incurred with constant frequency throughout

the operating life of the project that normally reaches 20 years and over

The construction of a photovoltaic system requires a high initial investment cost but very low operating costs. The cost of building the plant depends mainly on the size and type of installation. With the increasing of the plant

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size the cost per unit of installed capacity decreases, both for the purchasing of components and for the construction costs. The main cost items related to the implementation are the following: In the case of participation in the construction of a public body, the cost of the public call must be considered as cost of construction even if it is not influent in economic terms. Another cost to support, comparable to the cost of implementation, is the cost of decommissioning. At the end of its life cycle, the plant must be dismantled, and the decommissioning costs must be taken into account. The estimation of these costs is not always accurate for the following reasons:

The operation will take place after at least 20 years and to date has not yet visibility' of the unit cost of disposing of the modules

The unit cost depends strongly on the anchoring structure of the modules

However, we estimate a value ranging from 80 / kWp to 150 / kWp. Operating costs are much lower than the cost of the project and can be invariable or variable with the production of electricity even if the last case is very rare. Among the other things, the operating costs must include insurances against damage or theft, routine maintenance and repairs, consulting and administrative management, financial charges, and the periodic cleaning of the modules. As a final note, we remember that the taxes becomes a factor in the budget that reduces the net income received from the PV system, in case it is applicable. Operating costs, because they are incurred throughout the life of the installation, must be adjusted for inflation, and for countries within the European Community we currently could estimate an inflation at around 2% per annum. We analyze below the individual cost items in the income statement:

Charges for use of third party assets: are the locations and / or cost on the surface rights. The incidence is generally very low and in the case of marginal areas, the value tends to be nil

Costs for maintenance can be generally estimated to 1% of the investment cost for each year. They are divided in both ordinary and extraordinary maintenance (usually the replacement of inverters)

Cost for Cleaning: The panels must be cleaned for ensuring the maximum efficiency ' as possible. The incidence is estimated at

Table 2

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0.1% per annum of the investment cost with a minimum of 1,000 per year

Administrative and consultancies: are due to management of active and passive invoices for payments of electricity flows and feed in tariff if it is present. The estimated cost is 0.1% of investment with a minimum of 3,000 per year

Cost of Insurance: this cost can be estimated between 0.1% and 0.2% of initial investment with a minimum of 2,000 for each year of insurance. There are several forms of insurance. Given the phrase "full risk", which covers mainly:

o Direct damage to the system as a result of events such as the

house fire, hail, vandalism and theft of the panels of the plant.

o Damage to third parties, when an accidental breakage of components causes injury or damage to property of others.

o Indirect damage to the system following discontinuation or decrease in production of electrical energy: in these cases there is a daily allowance for reimbursement of lost profits

Financial charges: represents the interest portion of mortgage

payment Depreciation: depending on the choice of the financial structure Lease: leasing instalments if you have chosen this form of supply of

capital

Revenues Revenues in the case of construction of a photovoltaic system can be direct or indirect. Direct revenues are normally as following:

1. Incentives such feed in tariffs (if any): they are recognized by the competent authority on electricity produced by the photovoltaic system. Prices are generally differentiated according to the size, the type of installation and there is often the possibility of using further increases in price in case of promoting remediation of asbestos roofs or increased energy efficiency of buildings

2. Enhancement from the electricity produced by the plant: the sale to the market in various forms given by the various national regulations create a direct revenue to be included in the financial statements of the photovoltaic system

Indirect revenues are rather the absence of the costs for the supply of electricity that is consumed in the same site of the project, in the manner permitted by the different national regulations in the various partner countries. Consequently, the revenue generated by the photovoltaic system are differentiated depending on many variables and factors linked with the technical characteristics of the PVPP.

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Therefore, further important parameters in order to correctly estimate the revenues may be as follows:

Decay of the performance of photovoltaic modules: between 0.8 and 1.2% per year

Geographical position is required to estimate the average radiation and annual power producibility

Estimated increase in annual energy costs in order to properly assess both the direct revenue from the sale of energy, and the indirect revenue benefit resulting from the lack of spending on electricity supply

Income Statement Now the simulation of the income statement is the main tool for the calculation of financial indexes and assessment of annual cash flows. The income necessary to our analysis should not be compiled as an element of the budget, but is intended to analyze the principal cash flows and reclassify them, as noted above, in order to understand easily the factors that influence the profitability and sustainability of an investment. Financial indexes will then be calculated and the payback period must be verified. Below we summarize a pattern that a body classified as public could use. Given the constraints to own investments when dealing with these subjects as also indicated in this guide, the assumption is to fully finance the investment through financial leasing. Therefore, the leasing fee will be treated as the other costs as if it was a normal rent. We will see therefore that in this case, the depreciation and interest are zero because the system created will be 'owned' by the leasing company until the end of the leasing instalments. For our analysis we will consider also, as often happens, that the final redemption fee is zero.

Table 3: Incomes and costs

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In order to address this analysis it will be necessary to make assumptions valid for the duration of the investment. Here are the main ones: With this background, in Table 5 we can analyse the flows using the method shown above. We note that for each year there will be net profit, which confirms the fact that flows are always positive and sufficient to hang up the investment as shown in the chart below:

Table 5

Table 4: * This is a typical figure for well-designed static PPVPPs in Central Europe countries. Higher yields (up to 1500 ) can be reached in southern Europe countries. ** assuming crystalline silicon

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-3'000

-2'000

-1'000

0

1'000

2'000

3'000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Net Financial Position

The payback period is 10 years, calculated as the point at which the sum of annual cash flows offset the initial investment. We also note that the period 21 there is a decrease in net financial position. This is due to the decommissioning of the plant that will have necessarily be performed at the end of the life of the investment. We summarize below the other financial indexes useful in the overall evaluation: The ROI, which in the table above is for the first year of activities, is certainly satisfactory. ROE is also very satisfactory, so the first impression is that the investment is positive. This impression is also confirmed by NPV that shows the generation of a surplus of 517'000 over a possible return of equivalent investment and an IRR which shows very high values. We repeat the analysis increasing and decreasing by 10% the incentive rates and checking what the change leads to in terms of the same financial rates: We notice immediately that the change of 10% causes an increase or decrease of change scores; increasing or decreasing, amplified, create a leverage effect. We repeat the same analysis by changing only the cost of the plant.

Figure 2

Table 6

Table 7

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Even in this case the leverage is present and bit more pronounced. We see now the impact on NPV and IRR of the decommissioning costs to be incurred at the end of the project. We estimate the cost of decommissioning in 100 / kWp installed, to be discounted back at the present value (2% per year) at the end of the PVPP life. The differences in the NPV and IRR are negligible. This makes us conclude that the decommissioning is not a parameter discriminating the sustainability of investment.

Authorization process at a regional EU level

This paragraph contains a brief description of the authorization process provided by the applicable laws of the EC Nations interested by the Project. It will summarize also the differences among the national legislations. These authorization procedures are updated at May 2011.

Italian authorization process

Since its adoption on 29 December 2003, Legislative Decree no. 387 has provided the fundamental rules on authorization process for renewable energy plants. The above Decree has been adopted pursuant to the Directive no. 2001/77/EC and it provides the following procedures:

Single Authorization =>Legislative Decree no. 387/2003 provides under art. 12 that the construction and operation of electricity generating plants fuelled by renewable energy sources (RESs) is subject to a Single Authorization, which is issued by the competent Regional Government or the corresponding Provincial Government with delegated powers, in compliance with the applicable legislation on the protection of the environment, the national landscape and the historic and artistic heritage. When required, it offers an alternative to spatial planning instruments. The issue of such Authorization will entitle the person to which it is issued to build and operate a plant in accordance with the approved project

Start-Up Declaration (DIA) => The DIA is under the responsibility of the competent municipality and is a document to be filed to the

Table 8

Table 9

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Sportello Unico dellEdilizia (a one-stop shop for the construction sector) together with the prescribed technical annexes and any further authorizations or permits. Legislative Decree no. 387/2003 (under Art. 12) provides for the opportunity to proceed with a DIA for plants up to 20 kW

Terms and content of the above procedures have been modified few times. Recently, the National Guidelines (Ministerial Decree 10.08.2010), adopted by the Italian Government, aims to coordinate national legislation related to the authorization procedures and to ensure a correct installment of the plants on the territory. Based on its provisions, Regions had to adapt their regulations with the Guidelines within 90 days from its publication. In particular, the Guidelines specify that the DIA shall be required for the following photovoltaic plants:

Mini photovoltaic plants with a generation capacity lower than 20 kW

Photovoltaic plants on the building coverings with panel surface not higher than the surface of the relevant building coverings

The Decree no. 28/2011 implemented the Directive 2009/28/EC of the European Parliament and Council dated 23 April 2009, on the promotion of the use of energy generated from renewable sources, setting forth the amendment and subsequent abrogation of Directives 2001/77/EC and 2003/30/EC, published on the Official Gazette on 28 March 2011, and entered into force the day following its publication. The Decree was enacted by the Government in order to implement law no. 96 of 4 June 2010 (EC Law for 2009). Under Article 17 of EC Law, implementing the Directive, the Italian legislator has set forth the principles and the guidelines which the Government should have followed enacting the relative Legislative Decree. Under Legislative Decree no. 28/2011, the installation of and operation of photovoltaic power plants has been facilitated including a series of administrative measures:

The DIA has been replaced by the simplified authorization process which follows similar lines but allows the applicant to start the works immediately after having filed to the relevant public body the documents requested by the applicable law

Though non-integrated plants may only use the Simplified Procedure, if their capacity does not exceed 20 KWp (as provided by National Guidelines), the Regions and the autonomous Provinces can extend this threshold from a minimum of 50 KWp to a maximum of 1 MW

The above means that the authorization process applicable to the Project depends on the legislation of the Region where it will be located. For example, in case the Project will be done by a Municipality in the Region of Abruzzo, the simplified authorization procedure will be applicable, having

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the Region of Abruzzo extended to 1 MW the threshold provided for PVPP projects. Legislative Decree no. 28/2011 also states that public bodies which intend to lease a public area to a third subject in order to develop a PV project have to respect the rules set for by the Legislative Decree 3 April 2006, no. 163 which implemented into the national legislation the EC Directives on public procurement. Regarding regulatory issues, the recent Fourth ContoEnergia (Ministerial Decree 5 May 2011) providing, for each of the three semesters in 2011 and 2012, a budget of cost, exclusively referred to large PV plants, introduces a complex system of ranking and access restrictions for Large PV plants which will start operations after 31 August 2011.

a. With reference to the Project, it may be important to underline that Large PV plants are defined as all those that do not fall in any of the categories of small plants, which include also: Ground-mounted PV plants not exceeding 200 kWp using the net-metering system

b. PV plants realized on buildings or areas owned by the public administration as a consequence, PVPP projects which will be implemented on areas owned by public body wont entitle any duty concerning Large PV plants, even if the project would exceed 1 MW

Furthermore, the Fourth Conto Energia includes special increases in the tariff for certain typologies of PV plants. Among the all, it has been established a 5% premium for PV plants managed by municipalities with fewer than 5 thousand inhabitants or ground-mounted plants on brown field sites, landfills, exhausted quarries, generally speaking, areas classified as marginal. With reference to the connection to the grid process, with Deliberation ARG/elt 125/10, the Authority for Electric Energy and GAS have published a revised Unified Text for Active Connections (so called TICA - All. A to the Deliberation). The modifications aim to introduce swifter connection procedures, more transparency in the communications between the grid operators and project developers and introducing provisions concerning the requests of connection in areas (or lines) where the capacity of the grid is critical. The latter point was supposedly aimed at fighting speculative connection request. In fact, it has been established that applicants ha to pay guarantees for systems falling into the so called critical areas or critical lines. Finally note that as from December 1st, 2010 the procedure for the request of the incentives is done exclusively through the GSE web portal. The new procedure aims at speeding-up the procedures for the admission to the Conto Energia incentives and improves the efficiency of the service.

Greek authorization process

The first Greek legislation for PV plants has been introduced in 2006 (Law no. 3468/06) providing feed-in-tariffs regime and setting the details for authorization of PV plants. In mid-2010, a new RES Law (no. 3851/2010) has been set in force aimed to remedy some of the drawbacks of the previous authorization processes for PV deployment.

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A series of Ministerial Decisions followed in autumn 2010, which further simplify the authorization procedures for PV. More specifically:

new applications for large PV systems can now be filed to the Regulatory Authority for Energy (such applications were frozen in 2008)

production (electricity generation) license is not needed for PV plants smaller than 1 MW

installation of PV systems on prime agricultural land is now allowed with certain limitations

150 /kWp bank guarantee is needed for ground-mounted systems up to 1 MWp before the signing of a grid connection contract

Following the above changes, there was a new wave of applications and a grid connection bottleneck has been created. Most of the improvements are expected in practice, being necessary to adopt the actuative Decrees. Actually, according to the provision of the new RES Law, it can be summarized the following authorization scheme:

PV Plants > 1 MW: Electricity Generation License; PV Plants < 1 MW: Formal Exemption thereof; PV Plants > 500 kW: Environmental Terms Approval; PV Plants < 500 kW: Exempted from ETA but verified; PV Plants exempted from Generation License also exempted from

Installation and Operation License; PV Plants with Generation License require also Installation and

Operation License following trial operation and inspections.

Based on the above scheme, according to Law no. 3851/2010 on Accelerating the Development of Renewable Energy Sources to Deal with Climate Change, a license is still required for production of electricity from renewable energy sources. By amendment of the previous law, the license is no longer issued by the Minister for the Economy, but directly by the Regulatory Authority (hereinafter RAE). The license is still issued on the basis of the criteria set out in the law such as national security, public health, energy performance, project maturity, maturity of the technical installation, fulfilment of national laws provisions on spatial planning. The authorization process is characterized by the following legal steps:

a. Determination by RAE, in cooperation with the grid operator, or in cooperation with the operator for the islands not connected to the integrated system, having as object the connection point. The above determination must be issued within 20 days from the submission of the application

b. RAE examines whether the criteria are met, as well as the completeness of the file submitted, within 2 months from the

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submission of the application. The submitted file is deemed to be complete if no additional documentation is requested within 30 days

c. The final decision will be published on the RAEs website and it will be noticed to the Minister for Environment which has to express its consent within 20 days

d. The license is issued for a period of 25 years and its terms can be renewed once according to the above timing

e. After having obtained the license, the applicant has to request the so called installation permit, which has to be issued within 30 months from the grant of the production license, otherwise the production license expires

f. The entitlement of the production license allows the applicant to obtain the other permits such as the connection to the grid and the decision on environmental compatibility (known as EPO)

g. Finally, the grid operator (known as DESMIE) has to undertake all the necessary measures aimed to connect the plant

In conclusion, it can be assumed that by means of the new Law on RES (no. 3851/2010), the legislative framework on authorization process has been deeply amended by the described provisions. This has determined a reduction of the authorization timing from 36-60 months to 8-10 months.

Polish authorization process

The notion of renewable energy sources (RES) is gaining a clear recognition within Polands energy and environmental policies. The most important national act in the area of RES development is the Energy law dated the 10th of April 1997. The Energy law regulates the entire energy sector, however it also provides for rules applicable specifically to RES, including:

Special rules with regard to the connection to the power grid as well as transmission of electric energy generated by power plants using RES

Sale of electric energy generated by power plants using RES; The issuance and trade in the certificates of origin (so-called green

certificates) issued in respect of renewable energy

The system of the certificates of origin (so-called green certificates) has been provided for in detail in the Regulation of the Minister of Economy dated 14 August 2008, establishing detailed provisions on the obligation to acquire certificates of origin and submit them for collection, the obligation to pay a compensation fee, the obligation to purchase electric energy and heat generated from renewable energy sources and the obligation to prove that the amount of energy generated from the respective source of energy stated is accurate. Technical requirements regarding the connection to the grid and operation of power plants using RES are comprised in the Regulation of the Minister of Economy of 4 May 2007 on detailed conditions of functioning of the electric energy system.

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One of the mechanisms implemented by the Energy law in order to promote renewable energy generation is the trade of certificates of origin, which in other countries are often referred to as green certificates. According to Article 9e of the Energy law, the electric energy generated at renewable energy sources shall be certified to have originated there by means of the so-called certificate of origin. Energy enterprises producing or trading in electric energy, which deliver energy to end users, have a choice between:

Obtaining of such certificates and applying for their redemption at the Energy Regulatory Authority (ERA)

or Payment of a so-called substitution charge (buy-out price)

calculated in accordance with a formula provided for by the Energy law

The above obligation is fulfilled when the redeemed certificates, or the paid substitution charges, reach a pre-determined target share in a given energy enterprises yearly sales to end users. Certificates of origin are issued by the President of ERA to energy enterprises producing electric energy derived from RES, confirming inter alia the amount of renewable energy produced over a certain period of time. The certificates are issued by the President of ERA upon an application of the energy enterprise within 14 days of the date of receipt of the application. The application needs to be submitted via the local electricity system operator, within 45 days of the day ending the period when the electric energy, which the application concerns, was produced. The whole procedure is subject to the Administrative Procedure Code regarding the issue of certificates. Concerning the production of energy generated from RES, the Energy law requires an authorization issued by the President of ERA: The Authorization is granted to entities which:

Are incorporated (or have residence) in an EU member state or EFTA member state being a signatory of the agreement on the European Economic Area, or in Switzerland

Has sufficient financial funds or is able to document the capacity to obtain such funds, offering warranty of a regular carrying out of activity

Has technical capabilities offering warranty of a regular carrying out of activity

Ensures employment of personnel having adequate qualifications, as provided for by the Energy law

Has obtained a relevant zoning decision

Authorizations are granted for a definite time, between 10 and 50 years, unless an applicant moves for a shorter license. With reference to the authorization process of a PV plant, the following scheme summarizes the main steps:

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1 Stage (A) Localization of the investment right to the real property - Preliminary Master Plan Adopted by a municipality council it provides for general rules of commune spatial development, including in particular directions and outlines for development and use of the land. - Local Master Plan Adopted by a municipality council. Provides for the intended use of the real properties located on the municipalitys territory. Important point of reference while planning the localization of the investment. - Zoning Decision or Decision on Location of a Public Investment Zoning Decision is issued only in case of lack of the Local Master Plan. It defines types of facilities and detailed terms and conditions for the development of real property. The Zoning Decision should be applied for and obtained by the investor. Instead of Zoning Decision, the investor can apply for Decision on Location of a Public Investment, provided that the investment is publicly significant (e.g. construction of power transmission cables or installations). (B) Right to the real property

Ownership Perpetual Usufruct Lease Usufruct Real Estate Easement Transmission Easement

2 Stage (A) Environmental Procedure - Decision on Projects Environmental Conditions In order to obtain the Decision, the motion to the relevant local authority should be submitted. It is required to attach certain information, regarding in particular: (i) type, scale and location of the project, (ii) the real property, (iii) forecast quantity of water, fuels and energy used, (iv) technology used, (v) potential plants on the real property. The investor should also inform about measures of environmental protection to be applied while implementing the project. It includes:

Types and forecast quantity of substances or energy emitted to the environment

Possible cross-border environnemental impact Areas protected under the Nature Protection Act Areas located within the limits of the projects significant impact

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3Stage (A) Connection Conditions. Power Grid Agreement. - Obtaining the Connection Conditions

Key point for the investment; Essential for obtaining the building permit; Recently introduced changes to the Energy Law.

- Obligations of the distribution/transmission system operator (the Operator)

The Operator is obligated to conclude the power grid agreement, based on the equal treatment of the applicants, if there are technical and economic conditions for connection and the applying investor fulfils the terms and conditions for the connection to the grid,

The Operator is obligated to provide for implementation and financing of the entire construction and expansion of the grid, including the needs to connect the entities applying for connection,

The Operator is obligated to prepare and disclose in Internet (as well as in its seat) complete and monthly refreshed information about: I. entities applying for connection (voltage exceeding 1kV); II. localization of such connections, dates of issuing the

connection conditions, signing power grid agreements and commencement of providing energy,

III. Amounts of available connection power.

(B) Building Permit Determines terms and conditions for the construction works.

The investor presents a motion together with all required documentation, e.g. construction design project, decision on projects environmental conditions, zoning decision (if necessary), connection conditions;

Building permit expires if: I. The works have not been commenced before the end of 3

years since the decision became final II. The works stopped for more than 3 years

Amendment to the Polish Energy Law entered into force in March 2010. The main objective of the amendment of the previous law was to stop speculative reservation of connection capacities. Following measures are foreseen in the l