Italy – Italy’s so-called clawback measures have been criticized by a group of renewable energy organizations as a threat to the country’s energy transition.
Clawback measures against photovoltaic plants under Feed-in-Premium tariffs, as well as geothermal, hydro, photovoltaic, and wind merchant power plants with capacity greater than 20 kW, were introduced by Article 16 of Law Decree 04/2022, which was published in the Italian Official Journal. Based on historical average zonal electricity prices in Italy, the vast majority of such plants will receive a fixed reference price until December 31, 2022.
Market distortions
Article 16’s provisions will cause significant wholesale energy market distortions and have a significant impact on market buyers and sellers’ behavior. It may have an impact on the free formation of prices as required by the Electricity Regulation (2019/943) by imposing a de facto unavoidable and administratively determined strike price for any future Power Purchase Agreements (PPAs), which is in direct opposition to the Government’s stated goal of promoting the conclusion of such contracts in the Italian power market.
Fit-for-55 targets
These complex and discriminatory measures will jeopardize the Fit-for-55 targets by eroding investor confidence, resulting in significant reductions in RES investments and undermining the EU’s Internal Electricity Market’s proper functioning. Furthermore, Article 16 of the “DL Sostegni ter” contradicts proposals in the “European Commission toolbox for action and support” that the EU and its Member States can use to address the immediate impact of current price increases while also strengthening resilience against future shocks.
To meet the Fit-for-55 targets, Italy needs to speed up and simplify permitting procedures in order to install at least 8 GW of new renewable capacity every year until 2030. However, in recent years, less than 1 GW/year has been installed, owing to lengthy and complex permitting processes. If the current version of Article 16 of Law Decree 04/2022 is implemented, the energy transition in Italy and Europe will be slowed even more, putting vital investments in the economy at risk.
Similar interventions in other Member States (Spain and Romania) have been proposed for 2021, resulting in significant regulatory instability and far-reaching changes in contract dynamics. As a result, the original measures’ scope has been drastically reduced or eliminated.
Balanced solutions
For the reasons stated above, the Italian and European electricity sectors are urging the Italian government to revoke Article 16 of Law Decree 04/2022 and to engage in a constructive dialogue to develop effective and balanced solutions to the rising energy prices.
A well-functioning electricity market is one of the most effective tools for protecting consumers from price volatility and facilitating a cost-effective transition to a carbon-free economy in Italy and Europe.
