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On shore wind farm – Eventually published the Decree providing for incentives in favor of renewables other than photovoltaic

On 29th June 2016, the Decree 23rd June 2016 providing for incentives in favor of renewables other than photovoltaic was eventually published in the Official Gazette of the Italian Republic (GU Serie Generale n.150 del 29-6-2016). The Decree is in force starting from the 30th of June 2016. It is possible to download the text of the Decree at the following URL. Below you could find a brief summary on the Decree, with focus on wind farms with a nominal capacity greater than 5 MW.

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Access to incentives.

Pursuant to the Decree, access to incentives varies depending on technology and capacity of plants.

The Decree foresees three different mechanisms to access incentives depending on the size of the plant:

  1. direct access;
  2. enrolment in ranking list;
  3. online rebate auction.

Plants with a capacity greater than 5 MW access incentives by participating to the online rebate auction.

The incentive budget for onshore wind farms is equal to 800 MW (available both for ranking list and rebate auction).

Requirements to participate to the online rebate auction.

Producers which hold the authorization license or, alternatively, the connection estimate provided by the grid operator and definitively approved, can duly participate to the online rebate auction.

In order to participate to the online rebate auction, bidders need to demonstrate a certain financial and economic capacity, by providing:

  • a declaration of a banking institution attesting the financial and economic capacity of the bidder in relation to the size of the project, taking into account the expected profitability of the project; or the commitment of the banking institution to finance the project; or
  • a capitalization (share capital fully paid and/or payments for future capital increase) the minimum value of which shall be established with respect to the investment, conventionally foreseen as equal to:
  1. the 10% of the planned investment for investments up to 100 million Euro;
  2. the 5% of the planned investment for investments exceeding 100 million and up to 200 million Euro;
  3. the 2% of the planned investment for investments exceeding the 200 million Euro.

The above specified requirements are alternative.

The value of the investment costs shall be calculated pursuant to the following rules.

Nominal Capacity (kW) Investment Costs (EUR/kW)
1<P≤20 3.300
20<P≤200 2.700
200<P≤1000 1.600
1000<P≤5000 1.350
p>5000 1.225

 

Bidders are also required to submit a temporary deposit in the process of registration for the online rebate auction and a definitive deposit in case of successful auction.

Procedure to participate to the online rebate auction.

The online rebate auction, organized in the form of a lowest bid auction, requires bids to be formulated on a percentage basis. The bidding is equal to the tariff in place for the lowest base value at the date on which the wind farm enters into operation, as identified pursuant to the following rules.

Nominal Capacity (kW) Tariff €/MWh
1<P≤20 250
20<P≤60 190
60<P≤200 160
200<P≤1000 140
1000<P≤5000 130
P>5000 110

 

Bids lower than 2% of the bidding and greater than 40% of the bidding are unacceptable.

The lowest tariff anyway granted in case of successful auction is equal to a percentage reduction equal to 40% of the bidding.

In case of equal bids submitted by bidders, the following additional criteria will apply in order of priority:

  1. possession of a legality rating of at least two stars (pursuant to Article 5-ter of Law Decree No. 1 2012 as converted into law no. 27/2012);
  2. anteriority of the authorization license/building permit.

Calculation of the Feed-in-Tariffs.

Feed-in-Tariffs are calculated as follows:

T = base values (as reduced in case of online rebate auction) – electricity hourly zone-price

The GSE pays the incentives on a monthly basis in accordance with the meter readings carried out by the grid operators.

The energy incentivized corresponds to that injected into the grid by the wind farm, net of the energy consumed by the auxiliary services (as calculated pursuant to article 22, paragraph 3, of the Decree 6 July 2012).

The incentives will not be subject to any indexation adjustment.

Period of incentivization.

Incentives will be granted for a period of 20 years to be counted from the date of entry into operation of the wind farm communicated to the GSE.

The 20 years will be extended in case of:

  • any stops due to safety reasons imposed by the competent authorities pursuant to applicable legislation;
  • any suspension of the payment of the incentives due to the price of electricity (prezzo zonale orario) being equal to (or below, when applicable) Euro “0” for more than 6 consecutive hours.

Timing to participate to the online rebate auction.

The GSE will publish the GSE tender by 20th August, 2016.

Producers will have a period of 90 days for filling the request for participation.

The GSE is expected to publish the auction ranking 30 days after the end of the period of 90 days to file the requests of participation.

In case of successful auction, the wind farm shall enter into operation within 31 months from the date of auction award.

For more information you can contact the author.

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