Italy: Renewable energy initiative approved under state aid rules

The European Commission has ruled that a €5.4 billion (US$6.1 billion) Italian renewable energy initiative is permissible under the EU’s rules governing state aid.

The aid scheme proposed by the Italian government, which is set to run until 2021, will extend financial support to the generation of electricity from renewable sources, including wind, solar, and hydroelectricity. Firms producing renewable energy will receive a premium in addition to the market cost of the energy they produce, to be no higher than the difference between the average cost of generating the energy and its market price.

Italy notified to the Commission of its plans to introduce certain changes to the approved capacity mechanism. These changes will be applied to the first auction under the Italian capacity mechanism, scheduled to take place later this year.

In particular, Italy will only allow capacity providers that comply with stringent CO2 emission limits to participate in the auction. These limits are defined in the recently adopted Electricity Regulation, but are not yet compulsory.