The European Commission has approved an Italian scheme to support several GWs of new renewable energy capacity via competitive auctions under the European Union (EU) State Aid rules. This 4.59 GW capacity will be supported with 2-way contracts for difference (CfD) for each kWh of electricity fed into the grid.
It will support the construction of new plants based on 'innovative and not yet mature technologies.' These are floating solar, geothermal energy, offshore wind power (floating or fixed), thermodynamic solar, tidal, wave, and other marine energy as well as biogas and biomass.
Under the scheme, winning projects will be paid for a duration equal to their useful life. Beneficiaries will bid on the incentive tariff or the strike price for each individual project. The reference price will be calculated as the hourly zonal price. This refers to the electricity price at the time the energy is fed into the grid and the market area where the plant is located.
Winners will get payments equal to the difference between the 2 prices when the reference price is below the strike price under the CfD arrangement. In the reverse case, they will have to pay the different to the authorities.
According to the commission, "The scheme will ensure long-term price stability for the renewable energy producers by guaranteeing a minimum level of return, while at the same time ensuring that the beneficiaries will not be overcompensated for periods when the reference price is higher than the strike price."
Winning projects will be required to start commercial operations within 31 months to 60 months. The scheme will run until December 31, 2028.
Italy's idea to finance this capacity through a levy included in the electricity bills of final consumers was approved by the EU, which says it aligns with the European Green Deal objectives and will help end dependence on Russian fossil fuels.
"This scheme enables Italy to support the production of renewable electricity from various technologies, including innovative ones. The measure helps Italy meet its emission reduction and electricity production targets," said the EU's Executive Vice-President in charge of the Competition Policy, Margrethe Vestager.
Earlier this year, the commission approved €1.7 billion to support a minimum of 1.04 GW agrivoltaic capacity in Italy. In May 2024, the Italian Energy Ministry issued a decree to introduce a ban on the installation of new ground-mounted PV systems and the extension of existing ones on agricultural land (see Italian Solar Industry Concerned At Blocking Agricultural Land Use).
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