evernews - eversheds sutherland · the long awaited fifth energy bill (“eb 5”) shall come into...

1

EverNewsClean Energy and Sustainability Group

August 2012

Fifth energy bill - ItalyRenewable energy newsletter

2 EverNews • Renewable energy newsletter 2

• Timing: In force as of 27 August 2012

• Available budget: €500m over 5 semesters

• Technology promoted: Small (1 - 20kW) roof mounted solar PV plants are encouraged as opposed to larger solar PV plants which are subject to central registration (GSE)

• Threshold for registration: Requirement to register with the central GSE register for plants >20kW; plants between 12kW and 20kW do not have to register if a 20% tariff reduction is accepted

• Registration priority criteria: Roof mounted on energy efficient buildings treated preferentially; for ground mounted, brownfield sites preferred; registers open every six months

• Tariffs: Reduction of tariff levels for all sizes of plant (32%-36%) to bring in line with other European member states

• Premium: Innovative technology and Concentrated Solar Power (CSP) to receive a premium

The long awaited Fifth Energy Bill (“EB 5”) shall come into force on 27 August 2012, as long as the €6bln threshold has been reached. Latest figures confirm that the threshold has already been surpassed. The overall budget set aside under the EB 5 is €6.7bln. Once this target is reached, EB 5 will fall away.

It is expected that grid parity (i.e. the cost of solar PV electricity is the same as traditional energy source electricity such as fossil fuels) will be achieved before or by the time the budget threshold is reached.

Italy’s renewable electrical energy target has been raised to between 32% and 35%. This is good news but the reduced budget available for solar PV, whilst it has not come as a surprise, will limit the number of projects which will be economically viable. The Italian Government has announced that it does not want to be spending more than €12bln per year on renewable subsidies in the year 2020. The current spend for this year is €9bln.

The message is clear: the Italian Government is moving from a finance/investment based approach to an energy infrastructure based approach. Solar PV will have an ever decreasing entitlement to state incentives.

There is still room for solar PV in the renewable energy mix. Micro PV plants are clearly the focus of EB 5 meaning that the reduced budget will go further. Whilst this may mean a shift in business model for many larger and smaller solar developers, the tariffs available still make the smaller plant projects viable. As to whether post grid parity projects will sustain investor IRR expectations no one can tell at this time.

IntroductionEB 5 will come into force on 27 August 2012. No key changes proposed by industry have been made to the draft that was submitted to the State-Regions in July, with the exception of the non-requirement to register up to 20kW. However, the 20% reduction in tariff for plants between 12kW and 20kW will clearly impact and restrict the viability of not registering.

Italian Fifth Energy Bill - Headlines

EB 5 in detail

Comment

33EverNews • Renewable energy newsletter

Eligible technologyThree types of solar technology are covered by EB 5:

• Traditional solar PV plants

• Innovative technology

• Concentrated Solar Power (CSP)

Subject to the threshold limit and the 30 day period being complied with, EB 5 applies to those plants entering into operation from 27 August 2012.

Tariff levelsTariff levels vary according to the size of the plant and the technology used. Tariffs are still guaranteed for 20 years and are not indexed, as is in the older EB’s. The tariffs are split into semesters from when EB 5 enters into force and are set out below. It is worth noting by way of example, under EB 4, 3kW received a tariff of 352 €MW/h, 200kW 313 €/MWh and 1MW 236 €MW/h. Under EB 5 the corresponding figures are 237 €/MWh, 199 €/MWh and 161 €/MWh:

Traditional solar PV plantsFirst semester

Roof mounted plants Other plants

Generating capacity All comprehensive tariff

Premium tarifffor onsite use

All comprehensivetariff


[kW] [€/MWh] [€/MWh] [€/MWh] [€/MWh]

1≤P≤3 237 155 229 147

3<P≤20 222 140 214 132

20<P≤200 199 117 191 109

200<P≤1000 161 79 153 71

1000<P≤5000 144 62 137 55

P>5000 135 53 128 46

Second semester






[kW] [€/MWh] [€/MWh] [€/MWh] [€/MWh]

1≤P≤3 207 125 200 118

3<P≤20 195 113 188 106

20<P≤200 178 96 172 90

200<P≤1000 148 66 141 59

1000<P≤5000 135 53 129 47

P>5000 127 45 121 39

Third semester






[kW] [€/MWh] [€/MWh] [€/MWh] [€/MWh]

1≤P≤3 178 96 173 91

3<P≤20 169 87 163 81

20<P≤200 160 78 154 72

200<P≤1000 135 53 129 47

1000<P≤5000 125 43 120 38

P>5000 118 36 113 31


Fourth semester






[kW] [€/MWh] [€/MWh] [€/MWh] [€/MWh]

1≤P≤3 164 82 159 77

3<P≤20 156 74 151 69

20<P≤200 148 66 143 61

200<P≤1000 127 45 122 40

1000<P≤5000 119 37 115 33

P>5000 113 31 108 26

Fifth semester






[kW] [€/MWh] [€/MWh] [€/MWh] [€/MWh]

1≤P≤3 152 70 147 65

3<P≤20 145 63 141 59

20<P≤200 138 56 134 52

200<P≤1000 120 38 116 34

1000<P≤5000 113 31 110 28

P>5000 108 26 104 22

Innovative technologyFirst semester

Generatingcapacity

All comp.vetariff

Premium tariff for onsite use

[kW] [€/MWh] [€/MWh]

1≤P≤20 255 173

20<P≤200 232 150

P>200 216 134

Second semester

Generatingcapacity

All comp.vetariff



1≤P≤20 223 141

20<P≤200 207 125

P>200 195 113

CSPFirst semester

Generatingcapacity

All comp.vetariff



1≤P≤200 242 160

200<P≤1000 220 138

P>1000 185 103

Second semester

Generatingcapacity

All comp.vetariff



1≤P≤200 208 126

200<P≤1000 192 110

P>1000 162 80

55EverNews • Renewable energy newsletter

Eligibility criteriaThe number of plants which can be installed in a given semester are limited as follows:

• for traditional solar PV plants, those which have a annual indicative cost within a given semester of €80m;

• for innovative technology plants, those which have a annual indicative cost within a given semester of €10m; and

• for CSP, those which have a annual indicative cost within a given semester of €10m.

For those plants to be entered on the Central Register (ie >20kW) the tariffs will be granted according to certain priority criteria. The key criteria (in order of priority) are: (i) buildings with an EPC certificate (D class), (ii) installations on roofings containing asbestos, (iii) agricultural installations with a generating capacity less than 200kW, (iv) plants commissioned by local councils with a population of 5,000 or less, and (v) installations on greenhouses, pergolas and canopies/sheds.

Net meteringFrom 27 August 2012 the feed in tariff regime will change from a premium tariff regime to an all-comprehensive tariff regime, meaning that there will no longer be minimum guaranteed prices for the indirect sale of electricity to the grid through GSE.

Other points to noteThe GSE registration may not be assigned to third parties.

If an installation is moved from one site to another, it will lead to the loss of the original tariff level.

For further information:

Guido GaleottiPartner, Head of Clean Energy and SustainabilityTel: +39 02 89 287 [email protected]

Riccardo BianchiniSenior Partner, Clean Energy and SustainabilityTel: +39 02 89 287 [email protected]

Charlie WrightClean Energy AssociateTel: +39 02 89 287 [email protected]


Eversheds Bianchini Studio Legale

www.eversheds.it DT01059

E versheds Bianchini is a member of Eversheds International Limited

www.eversheds.com

evernews - eversheds sutherland · the long awaited fifth energy bill (“eb 5”) shall come into...

Documents