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Italy: Grid parity renewable energy projects

  • United Kingdom
  • Energy and infrastructure

31-07-2018

Italy has signed up to the 2030 binding EU targets which require that 32% of each EU member state’s gross energy consumption comes from renewable sources. In order to meet this target, Italy will need to deploy circa 40 gigawatts of new renewable energy capacity. Solar PV accounts for the vast majority of the current renewable energy capacity installed in Italy. There is circa 21GW of solar PV installed capacity. This would need to grow to 43GW to achieve the EU target.

PPAs in Italy

Limited incentives are available to investors or developers looking to develop new projects in Italy. The use of PPAs to finance new projects is being considered and there have been a handful of solar PV projects which have been built or are being built using this model. Currently the offtaker is either an energy trader or a utility. The development of pure corporate PPAs has yet to gain momentum. There is no doubt that there is appetite amongst stakeholders for the PPA model as seen in Nordic countries and the UK to be applied to Italy. The exact form the PPA model will take in Italy is uncertain for now – the clean energy decree coming into force refers to a public consultation but there is no detail on how this will take place.

Against the backdrop of the lift on the ban on new solar PV projects in Sicily, the new clean energy decree expected to be coming into force imminently and renewed investor appetite for solar PV in Italy, the next few months will no doubt see some interesting developments in the Italian clean energy market.

What is clear is that both public and private stakeholders in the Italian energy market need to work together to manage the transition towards an energy market where renewables are expected to become the dominant part in the energy mix.

Eversheds Sutherland has had first-hand experience of developments in this area. Charlie Wright, Senior Associate in the Clean Energy and Sustainability Team, recently spoke at an Energy Day event in Sicily, Italy, sponsored by the European Sustainable Energy Week (EUSEW), an EU Commission initiative which helps small to medium-sized enterprises and the Directorate-General for Energy to promote the sustainable use of energy. The event covered a number of topics. The main area of focus was on grid parity utility scale solar PV projects and how to implement them in Sicily and Southern Italy.

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