How to access the FER Decree's renewable energy incentives
What it covers, how it works and how to access the FER Decree's renewable energy concessions
Published on 27 February 2020
Increase the production of energy from renewable sources in Italy to meet the 2030 decarbonisation targets set by the Integrated National Energy and Climate Plan (Piano Nazionale Integrato per l’Energia e il Clima - PNIEC). It was with this objective in mind that the FER Decree was introduced last year to offer renewable energy incentives for the three-year period 2019-2021. In particular, the FER 1 Decree, which entered into force in August 2019, is aimed at facilitating the increased use of small photovoltaic installations, on-shore wind turbines, hydroelectric plants and systems for utilising residual gases from wastewater treatment processes. The FER 2 Decree, which is currently being finalised, will be dedicated to incentives aimed at modernising existing and building new biogas, thermodynamic solar and geothermal installations.
With respect to photovoltaic systems, for example, the FER 1 Decree incentivises the installation of both rooftop and ground-based systems. Priority is given to systems installed on closed landfill sites and other areas where the certification for the completed land remediation has been issued, including Sites of National Interest (Siti di Interesse Nazionale - SIN, areas classified by the Italian government as in need of remediation due to the quantity of pollutants present at the site and the risks they pose), to those systems that replace asbestos roofs on schools, hospitals and public buildings, and to those connected in “parallel” to the electricity network and to electric car charging stations whose power is no lower than 15 kW and with total power that is greater than or equal to 15% of the system's power.
The incentive tariffs are for the entire useful life of the system and are dependent on its power: up to €105 per MWh for photovoltaic systems for a period of 20 years. Following acceptance, the producer shall sign a “two way” contract with GSE, the Energy Services Manager (Gestore dei Servizi Energetici): that is, they will sell the system's energy on the market at the regional hourly price and will pay or receive from GSE the difference between the tariff and the price paid. For systems with power up to 250 kW it is possible to choose the all-inclusive tariff, thus selling all the energy fed back into the network to GSE at the determined tariff.
The system of incentives benefits both the prosumers as well as the plants selling all or almost all of the energy produced: producers with rooftop photovoltaic systems of up to 100 kW are allocated a premium of €10 per MWh on the quantity of net production consumed in-situ, on the condition that the amount of energy self-consumed annually exceeds 40% of the system's net production. The premium can be cumulated with the €12 per MWh premium on all the energy produced by photovoltaic systems that replace asbestos roofs.
Four types of system are eligible for the incentives: on-shore wind and photovoltaic (Group A); with photovoltaic modules installed on rooftops to replace asbestos (Group A2); hydroelectric and systems for utilising residual gases produced by new wastewater treatment plants (Group B); renovated facilities, but only on-shore wind, hydroelectric or residual gas (Group C). The systems must be manufactured using newly built components.
How to access the incentives
There are two ways to access the incentives. Systems with power greater than 1 kW (20 kW for photovoltaic systems) and less than 1 MW should follow the procedures for applications to the appropriate registers. Whereas installations with power greater than or equal to 1 MW belonging to Groups A, B and C must apply by participating in the auctions.
Aggregates of systems can also be submitted for inclusion on the registers if they are from the same incentive Group and have a unit power of no less than 20 kW (photovoltaic systems only), as long as the overall power of the aggregate does not exceed 1 MW. They can be submitted to participate in the auctions if the photovoltaic systems have a unit power of between 20 and 500 kW, provided the overall power of the aggregate is greater than or equal to 1 MW.
Calls for applications: an initial assessment
The FER 1 Decree includes a total of 7 calls covering the period up to September 2021 with an estimated investment of approximately 10 billion euros for the creation of new installations totalling approximately 8,000 MW, with a forecast increase in the production of energy from renewable sources of around 12 billion KWh. Requests must be submitted within 30 days of the date of publication of each call for applications. The ranking of eligible systems is compiled by GSE within the following 90 days. In order to participate it is necessary to submit all the requisite documentation, that is: the connection request to the Distribution Organisation and the acceptance of the related quote, all the authorisations necessary for setting up the system, the registration on Gaudì, the payment of the provisional guarantee for Groups A, A2 and B, payment of the application costs, the design certification for hydroelectric plants. Aside from certain exceptions, the works must, under penalty of exclusion, be started after classification in the concession list and in accordance with the work commencement notice sent to the competent authority.
It is precisely the non fulfilment of some of these requirements that has been the principal cause of exclusion from the concessions offered by the first FER 1 call for applications (30 September 2019), with there being, on average, two causes of each exclusion. Of the 888 requests made, 335 were classified in the ranking. The vast majority of incentives assigned via auction went to wind turbines, the rest to hydroelectric and solar. For those assigned via the registers, in Group A 76% went to wind turbines with the rest being for photovoltaic, in Group A2 [nn1] (photovoltaic with the removal of asbestos) only 8% of the available incentives were assigned, whilst the entirety of the Group B incentives and 30% of those for Group C went to hydroelectric.
The FER 2 Decree is expected soon and it will aim to strengthen the strategic orientation towards economic and environmental sustainability that formed the basis of the FER 1 Decree, by incentivising the production of energy from the renewable sources that weren't included in FER 1, such as geothermal energy and biogas. This objective will be achieved by promoting the construction of new installations and modernising existing ones to improve their environmental performance.