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noviembre 11, 2024

The FER X Decree: Expectations for the Renewable Sector in Italy and Its Regulatory Challenges

The FER X Decree, currently under discussion, aims to accelerate Italy's energy transition toward decarbonization by 2030, promoting financial incentives and administrative simplification in the renewable sector. Francesco Passafiume, Product Manager of PowerSolutions EMEA, points out that the regulation will reduce project processing times, but he warns that the success of the decree depends on its effective implementation and alignment with other regulatory frameworks, such as the Decree on Suitable Areas and the Environmental Law Decree.
By Emilia Lardizabal

By Emilia Lardizabal

noviembre 11, 2024
Italy FER X Italia FER X

The FER X Decree, which is currently under discussion and debate, aims primarily to boost electricity production from renewable sources, supporting the energy transition toward full decarbonization by 2030. However, it generates both expectations and uncertainty within the sector.

Francesco Passafiume, Product Manager at PowerSolutions EMEA, asserts that the decree will introduce significant changes to the renewable energy market, and that it «will improve the affordability of solar energy and promote the accelerated growth of the sector.»

«The regulation reduces the investment costs of a solar plant to incentivize the construction of new infrastructure. It also eliminates market coefficients but introduces differentiated tariffs for the geographical areas of Italy, which partly take into account the different solar radiation zones,» Passafiume explains.

Incentives and Simplification: The sector calls for agility in administration

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One of the critical points that generates high expectations within the industry is the simplification of administrative procedures and greater regulatory clarity.

According to Passafiume, with the FER X Decree, it is expected that project authorization times will be significantly reduced, allowing developers to move forward more quickly.

Bureaucratic delays are a major barrier for the sector. «This implies the adoption of several measures aimed at reducing regulatory obstacles and speeding up bureaucratic processes, thus facilitating the start of projects. This deep simplification is essential to support the rapid expansion of the market and meet the decarbonization targets set for 2030,» he emphasizes.

However, there are opposing views on this, as sector associations point out that the legislative decree could «complicate» rather than simplify the authorization process for renewable projects, primarily due to a lack of coordination between the authorization procedures and grid connection processes. It is important to remember that there are over 300 GW of connection requests still awaiting updates.

FER X Auctions: Negative Impacts Due to Delays

On the other hand, the proposed financial incentives are a key component of the FER X Decree, as it introduces subsidies and economic support mechanisms for renewable plants.

“The decree will generate more attractive and competitive financial incentives, making investments in the renewable energy sector more appealing to both companies and individuals,” says the Product Manager at PowerSolutions EMEA, adding that it is expected to reduce the cost of investments in solar plants and support the adoption of new innovative solutions. However, delays in these incentives could have detrimental consequences for the renewable industry. A strict auction schedule is essential to maintain the flow of investments.

Passafiume warns that if the auctions are not held on time, investors may lose interest or face uncertainties about the economic viability of their projects. «A delay in the auctions would affect the renewable industry, leading to higher costs, an inability to invest, market uncertainty, and a delay in decarbonization goals,» he states.

Regulatory Consistency with the Suitable Areas and Environmental Decrees

FER X is part of a broader regulatory framework that also includes the Decree on Suitable Areas and the Environmental Law Decree.

The Suitable Areas Decree defines the regions where renewable plants can be developed, simplifying the licensing process for plant installation.

Meanwhile, the Environmental Law Decree ensures that the development of clean energy is compatible with environmental protection.

Passafiume believes that this regulatory consistency is key to creating a favorable environment for renewables: “It must be applied in conjunction with the other decrees, ensuring the right balance. FER X is an important step in the development of renewables in Italy.”

«However, its implementation and enforcement will be crucial to its success: only by overcoming these challenges will it be possible to create a stable and favorable regulatory environment for investment,» he emphasizes.

MACSE Decree and the Boost to Energy Storage

Another regulation that is generating expectations in the sector is the MACSE (Energy Storage Capacity Acquisition Mechanism).

MACSE complements FER X by promoting the necessary infrastructure for a flexible and stable energy system, particularly relevant for integrating non-dispatchable renewable energy sources, such as solar and wind.

With the mechanism, significant growth in storage capacity is expected, helping balance supply and demand on the grid, according to Passafiume, who notes: «It will contribute to making the electrical system more flexible, facilitating its management. It is expected to open the energy storage sector to investment, providing a long-term incentive through competitive contracts.»

Among the incentives offered by MACSE are capital grants, feed-in tariffs, tax discounts, and long-term contracts for storage projects, ensuring competitive profitability in the sector. According to Passafiume, these benefits are key to attracting investments and enabling the introduction of new technologies: «Grants and tax discounts, combined with long-term contracts, will attract interest from many companies and small investors, fostering business growth and innovation.»

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