Provisional FER-X Decree: Launch of the First Award Procedure Imminent

Publication of the Implementing Provisions for Plants >1 MW

The implementing provisions for the provisional FER-X, which entered into force on February 28, 2025, set out the details of access to support for operators of electricity generation plants using photovoltaics, wind power, hydropower and residual gases from flue-gas cleaning, as well as the procedures for submitting expressions of interest to participate in the auctions.

ARERA Proposal on Tariffs for Plants< 1 MW

In addition to the implementing provisions, on June 6 the proposals of the Regulatory Authority for Energy, Networks and Environment (Autorità di regolazione per energia reti e ambiente – ARERA) on tariffs for plants below the megawatt threshold were published (Consultation Document No. 239/2025/R/EFR), as provided for in Article 4 of the transitional FER-X decree, to which market participants may respond until July 4, 2025.

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Procedure Timeline for Plants >1 MW

What is new about the decree, first of all, is that tariffs may also be applied for only part of a plant’s capacity, without the plant having to be physically split. Also of general interest is that, in the case of revamping, support is likewise available, although in that case it must be calculated how much electricity is subsidised.

In the implementing provisions, in addition to presenting the FER-X portal and defining the required documentation, it is now regulated that, for each auction and for each type of plant, the procedure is as follows:

1. There is an initial call for the submission of expressions of interest;
2. there is a second call in the form of an auction;
3. there is a minimum capacity quota in each case;
4. there is a target quota;
5. there is a maximum capacity quota; and
6. there is a ranking list of the plants that are awarded; this is published within 90 days after the auction is concluded.

Who Can Participate in the Auctions?

At the same time as the implementing provisions, the GSE published the calls for expressions of interest for each category of subsidised plants. Electronic submission of expressions of interest is possible from June 3 at 12:00 PM until June 24 at 12:00 PM, and shortly thereafter the actual calls for the auctions should also be opened.

Only plants for which an expression of interest has previously been submitted may participate in the auctions.

When submitting expressions of interest, a processing fee must be paid to the GSE, the amount of which depends on the plant’s capacity. This fee is: €100 for plants with a capacity of up to 50 kW, €180 for plants with a capacity of more than 50 kW and up to 200 kW, €600 for plants with a capacity of more than 200 kW and up to 1 MW, €1,420 for plants with a capacity of more than 1 MW and up to 5 MW, and €2,300 for plants with a capacity of more than 5 MW.

The expressions of interest to be submitted via the FER-X portal must include the following:

1. The CENSIMP code and application code assigned by TERNA when the plant was registered in the GAUDÌ system (each code may be used for a maximum of one expression of interest for the same auction);
2. the type of plant and the type of works to be carried out;
3. the plant’s capacity (rated capacity, cumulative rated capacity, the desired capacity share) and, for new builds, where applicable the capacity required to fulfil the obligation to use renewable energy to improve the energy efficiency of buildings pursuant to Article 26 of Legislative Decree 199/2021;
4. the data on the plant’s location.

As regards the subsequent auctions, to be carried out as the second step, the implementing provisions provide that the following information and documents must be submitted with the application:

1. With regard to the security deposit—to be provided in the form of a bank or insurance guarantee or an interest-free deposit—the details of the provisional security deposit and the willingness to provide the final security deposit must be stated. The provisional security deposit amounts to 5% of the investment costs envisaged for implementing the plant capacity (corresponding to the share of plant capacity for which participation in the auction is sought, multiplied by the specific investment costs for each plant type). The final security deposit, by contrast, amounts to 10% of the investment costs envisaged for implementing the admitted plant capacity;
2. the plant configuration must be stated in order to assess its compliance with the provisions of the decree;
3. any priority criteria applicable to the plant must be listed;
4. the percentage reduction of the reference tariff must be stated;
5. other project documentation.

Award Following the Auctions

Based on the experience with the last support decree, the auctions do not simply operate on the principle of the lowest bids. Rather, correction mechanisms are provided to prevent excessively high prices from being awarded in auctions with low participation, or to prevent the lowest possible tariff from always being awarded. At the outset, the GSE determines the available quota and, following the auction, evaluates the offered prices and the offered capacity, creating curves that are then used to award the contracts. For this purpose, the decree was structured with, among other things, an operating price or reference price (= price expected by the legislator) and a maximum and minimum operating price. Awarded tariffs cannot exceed the maximum price, but bids can also be below the minimum operating price.

PV Example:​

It is by no means the case that all plants receive an award until the tendered quota is exhausted. Rather, support is granted only for plants whose bid lies on the curve “to the left” of the intersection between the demand and supply curves. This mechanism keeps the award price as low as possible.

As provided for in the implementing provisions, the GSE checks how many plants offer a price below the operating price; if these exceed the quota by +5%, 5% of the plants are excluded. The exclusion does not apply to plants for which a tariff below the minimum operating price was offered.

Conclusion

In view of the delay in adopting the implementing provisions, it is likely that the auction starting in June/July will be the only auction before the provisional FER-X expires (as Alessandro Noce, Director General of MASE, already announced on May 12).

In this procedure, pursuant to MASE Decree No. 12 of April 1, 2025, the minimum quota amounts to 0.831 GW, the target quota to 1.462 GW, and the maximum available quota to 11.52 GW (out of the total 14.65 GW provided for auctions under the provisional FER-X). After the expressions of interest are submitted in June/July, however, the quotas for each plant type will be recalculated. In the (unlikely) event of a second auction, the remaining maximum quota under the FER-X decree would therefore total 3.13 GW.

Accordingly, for the upcoming auction, also in view of the high number of RTB plants for which construction has not started in recent months in order to wait and see whether a tariff can be obtained under FER-X, high participation and correspondingly low price bids are expected. However, the ranking lists are unlikely to be published before the end of 2025, and there will therefore also be no clarity as to which plants have been awarded (the deadline for submitting applications is 60 days, and the GSE then has 90 days to draw up the ranking lists).

The final FER-X, which has yet to be issued and unfortunately is not even available in draft form today, is intended to include, among other things, provisions for compliance with the so-called non-price criteria under the Net Zero Industry Act (EU Regulation No. 2024/1735) and the related rules of the European Commission, for the years through the end of 2029.

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From the Newsletter “E|News: Renewable Energy”