Unsubsidized large-scale solar projects are proliferating across Italy

Italian renewable energy developer, Limes RE and Italy-based consultancy, Prothea Srl have jointly announced that they intend to deploy around 500 MW of large-scale solar projects across Italy at market parity.

According to the companies’ announcement, the plants will have a capacity ranging from 10 MW to 50 MW, and will be developed across several Italian regions over the next three years.

“These projects,” the CEO of Prothea, David Armanini told pv magazine, “are planned to sell power to local power traders under private PPAs that will have a minimum duration of 10 years.”

Although conditions for projects under market parity remain challenging in Italy, the two companies believe over the next 12 to 24 months market conditions will be favorable to help reach financial close for unsubsidized projects in the country, and for their bankability.

“Italian power traders have understood that signing a PPA with a solar power producer may be interesting,” Armanini said.

When asked if these projects may also be developed for the spot market, the Prothea CEO said that this option, which is technically already feasible, still presents challenges, particularly in terms of price stability, which is an important prerequisite to obtaining credit facilities. “With this option, we would rather opt for a PPA with 70% hedging, a formula that could be a balanced solution in terms of bankability and financial returns.”

Furthermore, Armanini has revealed that the projects will be developed without incentive benefits at both a national and international level.

“Certain investors, such as Octopus, benefit from investment structures that are optimized from a tax perspective and allow them to extract a more attractive profitability from the asset. On the other hand, LIMES does not currently plan to rely on fiscal incentive for the sustainability of the projects,” Armanini explained.

Octopus is the U.K.-based company that built five unsubsidized PV plants totaling 63 MW in Montalto di Castro, central Italy last year. The projects, which were recently refinanced, are part of a larger pipeline. The company, in fact, said that a further 110 MW of subsidy-free solar projects are currently being built across 12 additional sites in the country.

As for Limes RE, the company has been involved in the deployment of more than 1.6 GW of renewable energy power projects to date .