ITALY - Amendments to the incentive applicable to PV plants introduced by Law Decree no.91.

Published 01 July 2014 by Chiomenti Studio Legale

ITALY - Amendments to the incentive applicable to PV plants introduced by Law Decree no.91.

On 24 June 2014 Law Decree No. 91, which provides for urgent measures on, inter alia, the reduction of the costs affecting the electricity tariffs (the “Decree No. 91”), has been published in the Italian Official Gazette. Decree No. 91 entered into force on 25 June 2014 but, according to Italian legislation, it shall be converted into law within 60 days after its publication, and the conversion law may partially amend its provisions.

Decree No. 91 intervenes on various sectors. With specific reference to the incentive tariff awarded to PV plants pursuant to Article 7 of Legislative Decree No. 387/2003 and Article 25, paragraph 10 of Legislative Decree No. 28/2011, Decree No. 91 introduces the following amendments:

- as from the second semester of 2014, the GSE will pay the incentive tariff for an amount equal to 90% of the average estimated production of the relevant plant on a monthly basis and with a settlement based on the actual production within 30 June of the subsequent year; and

- in case of plants having an installed capacity higher than 200 kW the beneficiaries of the incentive tariff may opt for two alternatives:

(i) they may opt for an immediate reduction in the tariff (applicable as of 1st January 2015), in which case they would have to deliver a notice to the GSE within 30 November 2014. The reduction would be for 8% of the tariff in place at the date of entry into force of Decree No. 91; or

(ii) in case they have not elected for the immediate reduction mentioned in (i) above, Decree No. 91 provides for an automatic extension of the incentivised period to 24 years (starting from the entry into operation of the relevant plant), whereby starting from 1st January 2015, the incentive tariff would be revised according to the table attached to Decree No. 91 (and copied herein below).

The above mentioned reductions apply to the plants benefitting from the so-called comprehensive tariff pursuant to Ministerial Decree 5 July 2012 only with regard to the incentive component (as identified in said Ministerial Decree).

Furthermore on all PV plants starting from the second semester of 2014, the GSE will pay the incentive tariff on a monthly basis, for an amount equal to 90% of the average estimated production of the relevant plant and with a settlement based on the actual production within 30 June of the subsequent year.

Decree No. 91 also provides for subsidised loans available to the beneficiaries affected by the new provisions of law, in a maximum amount equal to the difference between the incentive tariff applicable on 31 December 2014 and the revised (and reduced) incentive tariff. Such subsidised loans - which should compensate the cash shortfall arising from the reduction - may benefit from either (i) dedicated loans or (ii) guarantees granted by Cassa Depositi e Prestiti S.p.A., on the basis of ad hoc agreements to be entered into with the banking system. The exposure of Cassa Depositi e Prestiti S.p.A. is guaranteed by the State, according to criteria and modalities to be established by the Ministry of Economy and Finance.

No further provisions are included in Decree No. 91, aimed at better clarifying the nature and mechanics of the subsidised loans, and therefore a complete and comprehensive description of the relevant instrument will be possible only once the decree by the Ministry of Economy and Finance will have been adopted.

Finally, please note that Decree No. 91 provides that the Regions and the other local authorities shall extend the authorisations and permits of their respective competence issued in favor of the beneficiaries affected by the new provisions, in order to align them to the prolonged incentive period.

Prepared by Chiomenti Studio Legale.

Contact your IR Contact at Chiomenti Studio Legale for further information or queries.

 

 

 

 

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|      Residual Duration (years)      Reduction of the incentive (%)

|

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|               12               |                 25%              |

|--------------------------------|----------------------------------|

|               13               |                 24%              |

|--------------------------------|----------------------------------|

|               14               |                 22%              |

|--------------------------------|----------------------------------|

|               15               |                 21%              |

|--------------------------------|----------------------------------|

|               16               |                 20%              |

|--------------------------------|----------------------------------|

|               17               |                 19%              |

|--------------------------------|----------------------------------|

|               18               |                 18%              |

|--------------------------------|----------------------------------|

|         beyond 19              |                 17%              |

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