A new policy in Italy that claws back the profits of solar PV projects will undermine investor confidence and jeopardise the European Union’s (EU) clean energy transition, a group of trade associations, including SolarPower Europe, has warned.
Renewables plants that are currently benefiting from high electricity prices will be required to pay back a resulting increase in profits to the government until the end of 2022, as part of the measures announced last month.
The profit clawback applies to solar projects with a capacity above 20kW that receive feed-in tariffs through the country’s Conto Energia scheme as well as merchant solar, wind, hydro and geothermal power plants with an output of more than 20kW.
The measures “will lead to significant wholesale energy markets distortions”, said a joint statement today from associations including Italia Solare, WindEurope and utilities trade body Eurelectric, among others.
They said the “complex and discriminatory measures” will jeopardise the EU’s Fit for 55 climate plan while also having “huge impacts” on renewables investments.
To determine if solar projects have benefited from extra profits, there will be a calculation of the average market price that they received up until the current energy crisis began. If prices go above a certain level, project owners need to pay the “extra profit” to Italy’s energy management agency GSE.
These profits will then be used to help finance a €1.7 billion (US$1.9 million) energy package announced by Italy’s government last month that is aimed at curbing soaring energy bills.
The associations’ statement said that going forward with the current version of the law “risks further slowing down the energy transition process in Italy and Europe, putting at risk vital investments for the entire economy”.
Pointing to a similar intervention in Spain last year – when the government introduced a measure limiting the windfall profits of some renewables plants – the associations have called on Italy’s government to withdraw the policy and instead initiate a dialogue to define effective solutions to tackle high energy prices.
While Italy currently has the European Union’s second-largest solar fleet – at 22GW – the country only deployed 800MW last year, with permitting issues delaying project development.
Research published earlier this week by think tank Ember said that Italian solar growth has plateaued, with much of the stagnation due to delays in securing planning rights. The country is aiming to reach at least 51GW of deployed solar PV by 2030.