Energy Release 2.0 – Changes for plant operators

published on October 27, 2025

On July 23, 2024, the Italian Ministry of Environmental and Energy Security (MASE) signed Decree No. 268 to promote energy-intensive companies (EIUs) and the installation of renewable energies (we have already reported on this). However, the measure was not approved by the Commission, which is why the Commission's competition authority submitted an ex officio request for information in September 2024 based on press reports. As the Commission saw a risk of market distortions, several meetings took place between representatives of the Commission and the Italian authorities in the following months, during which changes to Energy Release 2.0 were agreed upon.

The decree containing the changes to the mechanism was signed by the competent minister on July 29, 2025, and is now awaiting approval by the Corte dei Conti and subsequent publication in the Official Journal. The GSE will then adapt the implementing provisions and contract documents for the mechanism (processing time of approximately one month is expected), and we will only have a complete picture of the changes at that point.

The Commission's concerns did not relate to the nature of the EIUs' participation, whose expressions of interest already submitted remain valid and will be approved once the adaptation of the legal framework has been completed (as the interest exceeds the available electricity quantities, each individual company will only be allocated a portion of the quantity requested, at a price of EUR 65/MWh for three years). The changes mainly relate to the manner of participation of the producers and ensuring that the economic advantages granted are also returned.

Bidding process for producers

There will be a bidding process to select producers. Producers who build the plants that will return the advanced electricity can be EIUs, aggregators, independent producers, or other third parties (CfD at EUR 65/MWh for 20 years). As things stand at present, only those producers who have concluded a corresponding bilateral contract either directly with an EIU or with an aggregator (possibly without contact with the EIU) will participate in the mechanism. With the change, the GSE will conduct a tender procedure for the construction and operation of new renewable energy plants (solar, wind, hydro), whereby each plant must have sufficient capacity to generate twice the amount of electricity supplied to an EIU in the first three years. Participants can be EIUs, independent producers, or the other legal entities mentioned above. They bid on an advance premium (subsidy) that they need for the construction of the new plant; negative bids are permitted.

Independent producers can participate provided that:

they have the construction and operating permit for the plant and any necessary concessions,
they have a definitive grid connection solution and the plant has been registered in the GAUDI system,
they comply with the performance criteria for the plant, the national and EU regulations on environmental protection (DNSH), and the technical requirements set out in Annex 3 to FER X.

The following applies to EIUs:

If an EIU does not participate in the tender, it will be treated as if it had submitted the lowest eligible bid, meaning that the tender is automatically successful for the EIU (no operator will be assigned to the EIU and it will neither have to pay the construction cost subsidy nor receive one). The EIU has the plant built by the producer with whom it has already concluded a bilateral contract, and this producer then returns the electricity.
If an EIU is unsuccessful in the tender (because the bid is too high), it pays the construction cost subsidy to the GSE, which awards the construction to another producer and pays the construction cost advance to that producer. The producer then signs the return contract with the GSE and is not entitled to reduce the electricity volumes allocated to it.
If an EIU is successful in the tender, it must build the new renewable energy capacity itself and conclude a CfD for 20 years at EUR 65/MWh; it does not receive a construction cost subsidy.

Claw-back mechanism

The claw-back mechanism certainly applies to all producers who participate directly in the tender and/or are allocated an EIU or a quantity of electricity. It is not entirely ruled out that it may also apply in the event of non-participation by EIUs; clarification on this point is expected from the legislator.

In any case, the mechanism is intended to work as follows: after 20 years, the GSE will check whether the economic advantage from the first three years has been returned through the return agreement. If not, the CfD will be extended with the operator/aggregator/EIU (with a strike price not exceeding the O&M costs of PV systems at the beginning of the extension period; EUR 22/MWh is currently under discussion) until the originally calculated advantage has been fully recouped. The obligation or possible extension could therefore remain with the independent operator, without any recourse to the aggregator/EIU.

Calculation to determine the potential clawback:

Calculation of the initial advantage: ex post difference between EUR 65/MWh and the average forward prices (EEX, traded in May 2025 for 2025–2027), discounted to 2028 at an interest rate of 4.25 percent.
Calculation of the clawback during the return period: comparison of total revenues from electricity sales with a fixed LCOE for the plants. For the portion covered by CfD, the revenue corresponds to the strike price of EUR 65/MWh; for the remaining portion, the realized reference prices of the return contract are used. On the cost side, an initial LCOE of EUR 73/MWh is applied, which is adjusted upwards or downwards by 50 percent of the difference to EUR 65/MWh based on the results of the first FERX tariff auction (note: the first FER X auction was recently closed, with results expected in about 3 months). The resulting values are discounted to 2028 using the average capital costs of renewable energy producers in 2025.

Clawback: The initial advantage and any advantage already returned are offset against each other, and the return agreement is extended if the entire advantage has not yet been returned.

The claw-back mechanism is not expected to have any impact on the financial viability of projects, as it only takes effect after 20 years, i.e., at a time when financing has usually been repaid.

One issue that remains open is whether the guarantees provided for in the decree, which must be provided to guarantee the construction of the new capacity, will now have to be provided by independent producers.

It is currently assumed that the new legal framework will be complete by early 2026 and that the tender could take place in the first quarter of next year. There are some uncertainties that are likely to be clarified only with the GSE's implementing provisions, so the further success of the mechanism will depend crucially on how these details are clarified.