EU approves Italy’s auction scheme for renewables

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A new auction and incentive scheme for renewable energy in Italy was today approved by the European Commission following several months of review. Approval of the scheme was apparently delayed by issues related to the provision of hydropower.

The commission said, under the proposed €5.4 billion program, renewable energy projects will receive a premium tariff on top of the market price of electricity, as long as the clean power is the more expensive of the two. “This premium cannot be higher than the difference between the average production cost for each renewable technology and the market price,” said the EU’s legislative body.

The auction scheme – which will provide additional incentives to electric vehicle charging linked projects across all segments – will include a clawback mechanism entitling the Italian authorities to halt premium top-up tariffs in the event of renewable energy generation becoming cheaper than the market price. “This ensures that the state support is limited to the minimum necessary,” said the commission.

The first technology neutral 500 MW auction for renewable energy projects was originally planned between the end of last year and January.

A revival of large scale solar

Around 4.8 GW of renewable energy capacity will be contracted through auctions planned during the next 30 months. The first two procurement rounds will each see around 500 MW of capacity allocated. In rounds three to five, each tender will assign 700 MW. For the final two exercises, the contracted capacity will reach 800 MW.

The program approved by the commission also includes a series of tenders for renewable energy projects with a capacity of between 20 kW and 1 MW. A first series of tenders will be devoted to solar and wind projects (A Group) and will have a combined capacity of 650 MW. The Italian plan also includes incentives for rooftop PV projects totaling 600 MW of capacity and linked to the removal of asbestos covers.

It is expected the new auction scheme will revive Italian large scale solar, a market segment which has experienced a minor resurgence in recent months thanks to private power purchase agreements.

Most of Italy’s 20 GW of installed PV capacity is represented by megawatt sized projects developed under the five rounds of the Conto Energia feed-in tariff scheme. Italy wants around 50 GW of installed solar generation capacity by 2030.