Italy: Reintroduction of Spalma-Incentivi and Continued Operation of Legacy Plants – What the New Draft Decree Really Means for Photovoltaics

At the center of the currently circulating but quite concrete draft is an action that is economically significant for investors, politically sensitive, and legally complex: the temporary reduction and subsequent extension of support payments for photovoltaic systems that still benefit from the comparatively generous fixed feed-in tariffs of the Conto Energia regimes I through IV. At the same time, a structured, voluntary exit from these historical support mechanisms is being linked for the first time with a comprehensive repowering approach.

The Temporal Extension of Support Premiums

The starting point of the draft is the provision whereby operators of photovoltaic systems with a capacity exceeding 20 kW will receive only 50% of their entitled support premiums in 2026 and 2027. Unlike previous, heavily contested interventions, however, this does not constitute a permanent reduction of support entitlements, but rather a temporal deferral.

The withheld support amounts are to be fully repaid starting in 2028 over ten years in equal annual installments, supplemented by interest. The interest rate will be determined by GSE and is capped at a maximum of 6%. The applicable rate is the lower value between this ceiling and the average financing costs that would arise from a possible assignment of claims to financial institutions.

For commercial, but not energy-intensive, electricity consumers, this action has an immediate effect: in 2026 and 2027, the ASOS component of electricity bills decreases by a total of approximately five billion euros. For the state, this represents significant relief during a phase when energy prices are increasingly becoming a competitive and location factor.

Liquidity Security for Operators: Banks as a Stabilizing Element

The halved support payments lead to a real liquidity withdrawal, which can particularly burden debt service capacity for projects still financed by debt. To mitigate this risk, the draft requires GSE to conduct a public, transparent, and competitive procedure by mid-2026 to select financial institutions that will enable operators to sell their future repayment claims and thus generate short-term liquidity. Competition among financial institutions is intended to ensure that financing costs remain as low as possible.

The Voluntary Exit from Conto Energia: Departure in Exchange for Consideration

Far more profound than the temporal extension of support payments, but not necessarily negative, is the second pillar of the draft: a voluntary, competitively organized exit from the Conto Energia system, linked to comprehensive renewal of existing plants. Overall, this instrument is limited to an installed capacity of ten gigawatts.

Operators of photovoltaic systems affected by the extension of support payments can choose to terminate their existing support contracts early. In return, they receive compensation, the amount of which is determined through an auction procedure scheduled to take place by June 2027. The starting point is a base value calculated by GSE, corresponding to 90% of the discounted value of remaining support entitlements for the period from 2028 onward. The amount for 2026 and 2027, which is being extended and still to be paid out, is therefore added.

Repowering as a Mandatory Prerequisite

However, the exit from support is tied to certain obligations. The selected plants must be completely renewed by December 31, 2030 at the latest, with significant productivity increases: expected electricity generation must in some cases at least double, but must increase by at least 40% (open-field on agricultural land).

Only photovoltaic modules that meet technical quality and EU criteria are permitted. It is worth noting positively that the draft provides that no permits need to be obtained for repowering.

New Market Logic After Renewal

After completion of repowering, new economic framework conditions apply to the plants. Only the additionally created capacity is eligible for support, which can be offered within existing or future auction mechanisms for renewable energy. The remaining electricity production, however, must compete in the market, for example through long-term Power Purchase Agreements.

Legal Considerations

Given past experiences, the European legal framework of the draft is of particular importance. The EU law requirements for protection of legitimate expectations and property rights could be satisfied through the merely temporal extension of support payments, preservation of the overall economic value of support, avoidance of retroactive interventions, and market-based interest rates.

The voluntary exit and repowering mechanism, however, is likely to qualify as new state aid. Due to its competitive design, its limitation to the necessary minimum amount, and its clear climate and energy policy objectives, it appears fundamentally well-suited for approval under the applicable EU Guidelines on State Aid for Climate, Environmental Protection and Energy. It is to be hoped that the EU Commission will be involved in this decree in a timely manner, and that it will not, as with Energy Release 2.0, require amendments after the mechanism is already in force.

Conclusion

Short-Term Relief, Long-Term Transformation: The draft represents a fundamental paradigm shift; it is more than a short-term savings instrument: it constitutes an attempt to transform the legacy burdens of a cost-intensive support policy into an instrument for the next phase of the energy transition. According to the explanatory notes accompanying the draft, relief is only short-term; in the medium and long term, costs for the general public are not avoided, thereby promoting the integration of renewable energy into the market.

The timelines mentioned in the draft should be treated with caution, as adoption is not imminent and various bureaucratic hurdles still need to be overcome.

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