Rooftop plants with an installed capacity lower than 1 MW.

Transcription

1 Number June 2011 Client Alert Latham & Watkins Corporate Department The Fourth FiT Decree Provides for a New Incentive Scheme Relating to PV Plants Entering into Operation Between June 1, 2011 and December 31, 2016 The new Italian incentive scheme relating to PV Plants. Feed-in tariffs (FiT) for photovoltaic plants (PV Plants) entering into operation (so called entrata in esercizio) between June 1, 2011 and December 31, 2016 are regulated under Ministerial Decree No of May 5, 2011 (the Fourth FiT Decree ), published on May 12, 2011 in the Official Gazette of the Italian Republic No. 109 and entered into force on May 13, The new incentive scheme is based on: (i) targets relating to the installed power (cumulatively equal to 23,000 MW by the end of 2016) and (ii) an overall budgeted FiT cap (equal to ( 6 7 billion), subdivided into sixmonth budgeted FiT caps. If the subsidy spent in one period exceeds the FiT cap, the subsidy available in the following periods is decreased by the amount overspent. 1. PV Plants Classification The Fourth FiT Decree includes the distinction between PV Plants constructed on buildings and other PV Plants (e.g., ground PV Plants). In addition, the Fourth FiT Decree introduces a further classification between Small PV Plants and Large PV Plants as noted below: Small PV Plants Rooftop plants with an installed capacity lower than 1 MW. Different from PV Plants under point above (e.g., ground PV Plants) having an installed capacity lower than 200 KW and using net-metering (scambio sul posto) or located on land owned by the Public Administration (Pubblica Amministrazione) irrespective of the installed capacity. Large PV Plants PV Plants other than Small PV Plants. Latham & Watkins operates worldwide as a limited liability partnership organized under the laws of the State of Delaware (USA) with affiliated limited liability partnerships conducting the practice in the United Kingdom, France, Italy and Singapore and an affiliated partnership conducting the practice in Hong Kong and Japan. Latham & Watkins practices in Saudi Arabia in association with the Law Office of Mohammed A. Al-Sheikh. Under New York s Code of Professional Responsibility, portions of this communication contain attorney advertising. Prior results do not guarantee a similar outcome. Results depend upon a variety of factors unique to each representation. Please direct all inquiries regarding our conduct under New York s Disciplinary Rules to Latham & Watkins LLP, 885 Third Avenue, New York, NY , Phone: Copyright 2011 Latham & Watkins. All Rights Reserved.

2 2. Transitional Regime 2.1 FiT Cap and Capacity Target For years 2011 and 2012, the Fourth FiT Decree provides for a transitional regime relating to Large PV Plants, which is based on (i) an annual FiT cap and (ii) an installed capacity target (the Transitional Regime) as noted in the following table. Table A June 1, 2011 December 31, 2011 First semester 2012 Second semester 2012 Total FiT cap (ML ) Capacity target (MW) 1, ,690 Once the total FiT cap (i.e., 580 million) has been exceeded, further Large PV Plants will not be eligible for the feedin tariff provided under the Transitional Regime, being subject to the ordinary regime established for years (see paragraph 3 on page 4). The Transitional Regime can be divided into two periods based on the date of entry into operation of the Large PV Plants: June 1, 2011 August 31, 2011 and September 1, 2011 December 31, For years 2011 and 2012 for the purposes of the above-mentioned limits (i.e., FiT cap and installed capacity target) newly installed Small PV Plants will not be taken into account. 2.2 Eligibility conditions for feed-in tariff relating to Large PV Plants Entry into operation June 1, 2011 August 31, 2011 September 1, 2011 December 31, 2012 Feed-in tariff Directly granted under the Fourth FiT Decree for the relevant period 1 on condition that the responsible entity (soggetto responsabile) notifies the Gestore dei Servizi Energetici S.p.A. (the GSE) of the date of entry into operation of the Large PV Plant within 15 solar days from such date. Granted if two conditions are met: (I) The Large PV Plant is admitted to the register managed by the GSE, based on certain priority criteria (please refer to paragraph 2.3 below) and (II) A certificate of the completion of the works is received by the GSE within 7 months of the date of publication of the ranking; the above threshold is increased to 9 months for Large PV Plants with a capacity higher than 1 MW. Otherwise, the entry into the Register will no longer be valid (except for force majeure if recognized by the competent authorities). 2 Number June 2011

3 It is also worth noting that with respect to PV Plants with modules located on land in agricultural areas, pursuant to Article 10, paragraph 4 of Legislative Decree No. 28 of 3 March 2011 (Legislative Decree No. 28/2011), such PV Plants will be eligible for the feed-in tariff provided for under the Fourth FiT Decree on condition that they: Have a nominal capacity (potenza nominale) not exceeding 1 MW Are located at a distance not lower than 2 kilometers, if the concerned land belongs to the same landowner Do not cover more than 10 percent of the agricultural plot of land leased to (or owned by) the plant owner. 2.3 Register for Large PV Plants During the Transitional Regime, the responsible entity (soggetto responsabile) for the Large PV Plant must require the GSE to be admitted to a specific register (the Register), in accordance with Table B. On the basis of the applications received, the GSE shall establish a ranking relating to the Large PV Plants which will (i) not operate on a revolving basis (a scorrimento), except for the cancellation from the list of those PV Plants not entering into operation within August 31, and (ii) be based on certain priority criteria, to be applied in a hierarchical order. In particular, Table B Reference period First application period Reopened application period 3 Year 2011 May 20 June 30, 2011 September 15 30, 2011 First semester 2012 November 1 30, 2011 January 1 31, 2012 Second semester 2012 February 1 28, 2011 May 1 31, 2012 However, it should be specified that pursuant to Article 10, paragraphs 5 and 6 of Legislative Decree No. 28/2011, the above-mentioned limits do not apply to: (a) land that has been abandoned for more than five years and (b) PV Plants authorized before the date of entry into force of Legislative Decree No. 28/2011 (i.e., March 29, 2011) or in respect of which the application for an authorization (e.g., a Single Authorization (Autorizzazione Unica) or a DIA (Denuncia di Inizio Attività)) 2 was submitted before January 1, 2011, in each case provided that the PV Plant enters into operation within one year from the date of entry into force of Legislative Decree No. 28/2011 (i.e., March 29, 2012). priority is granted to Large PV Plants which, upon the application for the entry (iscrizione) in the Register, have already: Entered into operation; Been completed; Been authorized (e.g., by means of a Single Authorization or a DIA) and awarded an estimate for the connection (preventivo di connessione) issued by a grid operator (e.g., Enel) with the following acceptance by the owner of the PV Plant. Additional criteria grant priority to Large PV Plants that have: An earlier date relating to the issuance of the permit (e.g., a Single Authorization or a DIA) A lower installed capacity An earlier date of application for admission to the Register Finally, it is worth noting that the entry (iscrizione) in the Register cannot be transferred to third parties. 3 Number June 2011

4 2.4 Certificate of completion of the works for Large PV Plants During the Transitional Regime, the responsible entity (soggetto responsabile) of a Large PV Plant entered in the Register shall file with the GSE a communication relating to the completion of the works, attaching a sworn assessment (perizia asseverata). Both the communication and the sworn assessment (perizia asseverata) shall be transmitted to the grid operator (e.g., Enel), which verifies the compliance and notifies the outcome to the GSE. If as a result of the ranking drawn up by the GSE, (i) a Large PV Plant is eligible for the feed-in tariff provided for the Transitional Regime and (ii) the certificate for the completion of the works is not notified to the GSE within the established term (i.e., within seven or nine months of the publication of the ranking), its entry (iscrizione) in the Register will no longer be valid for the relevant subsidized period. In the event that such a PV Plant is completed and becomes eligible for the feed-in tariff for a later period, it will be entitled to receive the feed-in tariff applicable at the time the PV Plant enters into operation, reduced however by 20 percent. 3. Ordinary Regime Following conclusion of the Transitional Regime, as from 2013 the feed-in tariffs will be granted based on a different mechanism: the feed-in tariff will consist in an all-inclusive tariff for the energy injected into the electricity grid (i.e., including both the value of the energy and the value of the incentive), plus a bonus tariff on the quota of energy consumed by the producer. For years from 2013 to 2016, if the subsidy spent in one period exceeds the approximate FiT cap established for the relevant period, a PV Plant may be still eligible for the feed-in tariff; however the subsidy available in the following periods is decreased by the amount overspent. 3.1 Cumulative effect / Requalification also applicable during the Transitional Regime For the purposes of granting the feed-in tariff, more than one PV Plant (i) constructed by, or referable to, the same responsible entity (soggetto responsabile) and (ii) located on the same cadastral parcels of land, or on contiguous cadastral parcels of land, are considered as a single PV Plant whose power is equal to the sum of the powers relating to each single PV Plant. The GSE is expected to issue further technical guidelines on the matter. 3.2 Indemnification remedies also applicable during the Transitional Regime If the PV Plant is not eligible for the expected feed-in tariff as a consequence of the grid operator (e.g., Enel) failing to (i) complete the works relating to the connection or (ii) activate the connection, the indemnifications remedies (misure di indennizzo) provided under AEEG Resolution No. 181/2010 (and subsequent amendments) will apply. In this respect AEEG Resolution No. 51/ provides that the grid operator shall activate the connection of the PV Plant within 10 working days as of the date of completion of the connection Feed-In Tariffs The Fourth FiT Decree sets out that the feed-in tariff to be granted to the PV Plant is the tariff in place upon its entry into operation. However, in a way that is partially different from the Fourth FiT Decree, the technical guidelines issued by the GSE provides for an exception in respect of Large PV Plants (i) which enter into operation between August 31, 2011 and December 31, 2012; (ii) that are admitted to the Register in a location that does not fall under the relevant FiT cap; and (iii) for which the responsible entity (soggetto responsabile) has requested the GSE to be granted the feed-in tariff starting from year In such a case, 4 Number June 2011

5 for the purposes of establishing which feed-in tariff will be granted to the Large PV Plant, a specific date (data convenzionale), relating to its entry into operation, will be agreed. In particular, this date will be coincident with the first day of the semester in which the request has been filed with the GSE (request which shall be filed after January 1, 2013). Within 15 solar days as of the date of entry into operation of the PV Plant, the responsible entity (soggetto responsabile) is required to submit to the GSE the application for the granting of the relevant feed-in tariff. Failure to comply with the aforesaid provision will imply the ineligibility for the feed-in tariff with respect to the period between the date of entry into operation and the date of the application submitted to GSE. However, the PV Plant may benefit from the relevant feed-in tariff as of its effective date of entry into operation. The Fourth FiT Decree envisages that PV Plants whose modules consist in building elements of greenhouses are eligible to benefit from a feed-in tariff equal to the arithmetical average of the feed-in tariff provided for PV Plants constructed on buildings and the other PV Plants (e.g., ground PV Plants). The energy produced from PV Plants constructed under the Fourth FiT Decree and entered into operation during 2011 will be eligible for a feed-in tariff reducing each month from June 2011 to December 2011, while during 2012 the feed-in tariffs will be reduced on January 1, 2012 and July 1, With respect to PV Plants entering into operation as from 2013, feed-in tariffs will be reduced each semester up to the second semester of year In this semester the reduction is expected to be 30 percent in comparison with the feedin tariff applicable to the first semester Endnotes 1 Please note that under Article 25, paragraph 9 of Legislative Decree No. 28 of March 3, 2011, PV Plants entering into operation no later than May 31, 2011 are still eligible for the feed-in tariff provided under the previous Ministerial Decree No of August 6, 2010 (the Third FiT Decree). 2 As provided for under Legislative Decree No. 387 of 29 December The period for the entry in the Register will be reopened in the event that further economical resources are available on the basis of the relevant established FiT cap. 4 The economical resources, if any, released following the waiver or lapse of rights will be allocated in the first useful subsequent period. 5 which modifies AEEG Resolution No. 99/2008 and AEEG Resolution No. 181/ The sending date of the document attesting the completion of the works, declaring the availability for the PV Plant to enter into operation. If you have any questions about this Client Alert, please contact one of the authors listed below or the Latham attorney with whom you normally consult: Simone Monesi simone.monesi@lw.com Daniela Frascella daniela.frascella@lw.com Davide Murru davide.murru@lw.com 5 Number June 2011

6 Client Alert is published by Latham & Watkins as a news reporting service to clients and other friends. The information contained in this publication should not be construed as legal advice. Should further analysis or explanation of the subject matter be required, please contact the attorney with whom you normally consult. A complete list of our Client Alerts can be found on our website at If you wish to update your contact details or customise the information you receive from Latham & Watkins, please visit to subscribe to our global client mailings program. Abu Dhabi Barcelona Beijing Boston Brussels Chicago Doha Dubai Frankfurt Hamburg Hong Kong Houston London Los Angeles Madrid Moscow Munich New Jersey New York Orange County Paris Riyadh* Rome San Diego San Francisco Shanghai Silicon Valley Singapore Tokyo Washington, D.C. * In association with the Law Office of Mohammed A. Al-Sheikh 6 Number June 2011