The European Commission has approved a €5.4bn support scheme for renewable power generation in Italy, considering that the measure was in line with EU State aid rules and did not unduly distort competition. Italy has approved a €5.4bn scheme to support electricity production from renewable sources (onshore wind, solar PV, hydropower and sewage gases) until 2021, through a premium on top of the market price that can not be higher than the difference between the average production cost per technology and the market price. The scheme includes a clawback mechanism: if market prices are higher than the average production cost for each renewable technology, renewable producers will not receive any premium and will have to give back the additional revenues to the state. For projects above 1 MW, the premium will be set through a technology-neutral competitive bidding process open. Smaller projects will be selected depending on a combination of economic and environmental criteria. The Italian policy should contribute to reaching the EU-wide binding renewable energy target of 32% by 2030.
In addition, the European Commission has approved the introduction of stringent CO2 emission limits in the Italian power capacity mechanism to be implemented later in 2019: only capacity providers complying with stringent CO2 emission limits will be allowed to participate in the auction. This criterion will prevent coal-fired power plants and other high-emission power plants from participating in the Italian capacity mechanism.
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