Energy Community Incentive: Italy as a Pioneer in the Energy Transition

Rome, 22 November – The approval by the European Commission of the Italian decree focused on encouraging energy communities marks a historic era in Italy’s energy transition. With enthusiasm, the Minister of the Environment and Energy Security, Gilberto Pichetto, celebrates this event as a real turning point in the relationship between citizens and renewable energy.

Renewable Energy Communities (CERs), now supported by the energy communities incentive, represent a crucial element in the national strategy for a sustainable energy future. The decree provides for an incentive tariff for renewable energy produced and shared and a non-repayable contribution, with a financial capacity of five Gigawatts and a deadline of 2027.

According to the document “CER – Presentation of the Decree”, the energy community incentive facilitates the formation of groups of citizens, local authorities, SMEs, condominiums, cooperatives and associations, which collaborate to generate renewable energy. In addition to the environmental benefits, this strategy promotes economic and social advantages, essential for Italy’s decarbonization goal.

The non-repayable contribution, an integral part of the energy community incentive, is especially aimed at communities in smaller municipalities, with under 5,000 inhabitants. With a budget of 2.2 billion euros from the PNRR, the decree aims to create an overall capacity of at least 2 Gigawatts. Furthermore, this contribution can be cumulated with the incentive rate within certain limits.

Tariff incentive

Non-repayable contribution

I identify an area where the system and other users to associate with are connected to the same primary substation.
I create the CER with a Statute or a deed of incorporation, which has environmental, economic and social benefits as its prevailing social object.
I optionally check in advance with the Energy Services Manager (GSE) whether the project can be admitted to the incentive.
Obtain authorization to install and connect my system to the network, to make it operational.
I request the incentive from the GSE;

Legislative decree no. 199 of 2021 establishes that the incentive for electricity produced by RES plants and inserted in self-consumption configurations for energy sharing can be recognized to:

  • Renewable energy communities
  • Collective self-consumption systems from renewable sources
  • Individual remote renewable energy self-consumption systems that use the electricity distribution network

➢ Maximum power of the single system, or of the upgrading intervention, not exceeding 1 MW

➢ Renewable energy communities are established on the date of submission of the application for access to incentives

➢ The production plants and sampling points that are part of the CERs are connected to the distribution network via connection points that are part of the area beneath the same primary substation

➢ CERs or other energy sharing configurations ensure:

o complete, adequate and preventive information to all end consumers on the benefits deriving from access to the tariff

o an annual reporting of the benefits resulting from the application of the premium tariff optionally in advance with the Energy Services Manager (GSE) if the project can be admitted to the incentive

➢ in case of exceeding certain energy sharing thresholds, allocation of the resulting economic benefits to members or partners of the CERs other than companies and/or use of the same for social purposes having an impact on the territories where the plants are located

Fixed incentive tariff for 20 years recognized on the share of shared electricity

➢ Incentive rate = Fixed part + Variable part. The fixed part varies according to the size of the system, the variable part according to the energy market price (Pz).

➢ The incentive tariff increases as the power of the systems decreases and as the market price of energy (Pz) decreases.

➢ A tariff increase is also foreseen for plants located in the regions of Central and Northern Italy.

➢ Access procedure: submission of the incentive application to the GSE within 120 days following the date of entry into operation of the plants

➢ Cumulability of incentive tariff: incentives in the form of tariffs can be cumulated with capital contributions up to a maximum of 40%, in compliance with the principle of prohibition of double financing pursuant to art. 9 of Reg. (EU) 241/2021.

The renewable energy communities are established on the date of submission of the application for access to the capital contribution.

Maximum power of the single system, or of the upgrading intervention, not exceeding 1 MW

Start of work following the date of submission of the grant application

Possession of the qualification for the construction and operation of the plant, where applicable

Possession of the definitively accepted estimate for connection to the electricity grid, where applicable

Connection of the production plants and sampling points belonging to the CERs connected to the distribution network underlying the same primary substation

Recognition of the contribution by 31 December 2025 (PNRR milestone)

Entry into operation within eighteen months from the date of admission to the contribution and in any case no later than 30 June 2026 (PNRR target)

The following expenses are eligible:

▪ construction of renewable energy systems

▪ supply and installation of storage systems

▪ purchase and installation of machinery, systems and hardware and software equipment

▪ building works strictly necessary for the implementation of the intervention

▪ connection to the national electricity grid

▪ pre-feasibility studies and expenses necessary for preliminary activities

▪ planning, geological and geotechnical investigations

▪ works management and safety

▪ technical and/or technical-administrative testing, consultancy and/or technical-administrative support essential for the implementation of the project

The last four items of expenses above can be financed to an extent not exceeding 10% of the amount admitted to financing.

▪ €1,500/kW, for systems up to 20 kW;

▪ €1,200/kW, for systems with a power exceeding 20 kW and up to 200 kW;

▪ €1,100/kW for power above 200 kW and up to 600 kW;

▪ €1,050/kW, for systems with power exceeding 600 kW and up to 1,000 kW.