On 27 February 2025, the so-called Transitional FER X decree (“Transitional FER X”) prepared by Italy’s Ministry of the Environmental and Energy Security and already signed by Minister Gilberto Pichetto Fratin on 30 December 2024, was officially published on the institutional website of the same ministry with the number 457 and came into force on 28 February 2025.
The Transitional FER X promotes the construction of production plants powered by renewable sources, with an estimated available capacity of 17.65 GW.
As stated in article 1 of the Transitional FER X, the measure at issue aims to support electricity production from renewables plants with generation costs close to market competitiveness pursuant to articles 6 and 7 of the Legislative Decree n. 199/2021. To this end, it includes a support mechanism for their effectiveness, efficiency, and sustainability in line with 2030 decarbonisation objectives and consistent with the security and capacity of the electricity system.
Transitional FER X will cease to apply as of 31 December 2025, as opposed to the so-called FER X decree, whose applicability will cease on 31 December 2028. An exception is for plants with a nominal capacity of up to 1 MW, with reference to which the Transitional FER X will cease on the earlier of (i) the aforementioned date (i.e. 31 December 2025) or (ii) 60 days following a financed power quota of 3 GW is reached.
OBJECTIVE AND SUBJECTIVE SCOPE OF APPLICATION
Renewable energy plants eligible for Transitional FER X support mechanism are:
a) photovoltaic solar plants;
b) wind farms;
c) hydroelectric plants; and
d) treatment plants for residual gases from purification processes.
The categories of interventions falling within the scope of Transitional FER X include (i) the construction of new plants; (ii) partial and complete refurbishment (rifacimenti); and (iii) the upgrading (potenziamenti) of existing plants, it being understood that for the latter only the newly upgraded part of the plan can access the support mechanism.
Access to the Transitional FER X support scheme is not permitted to (among others):
a) companies in financial distress or against whom a recovery order is pending;
b) prohibited persons or applicants who are excluded from participation in a tender or concession procedure pursuant to the Legislative Decree no. 36/2023 applies; and
c) plants with a nominal capacity of 1+ MW that began construction works prior to applying for competitive procedures under the Transitional FER X.
APPLICABLE PROCEDURES
Direct Access
Direct access to the support mechanism is granted to plants with a nominal capacity of up to 1 MW that began construction works after Transitional FER X’s entry into force. With reference to said plants, the right to have access to the mechanism set forth in the Transitional FER X is acquired following the issuance of the communication relating to the start of the construction works.
For these plants, the award price corresponds to the prices defined by the Authority for Energy, Networks and Environment (Autorità di Regolazione per Energia Reti e Ambiente) (“ARERA”) are as follows:
- within 90 days following Transitional FER X’s entry into force, the award prices are defined by ARERA in accordance with the following criteria:
a) the proportion of the award prices to the cost of the intervention;
b) the distinction of award prices according to the plant’s size and any relevant technology;
c) the possibility of annual award price updates; - adjustments set out in annex 1 of the Transitional FER X will be applied to the award prices, where applicable.
Competitive Procedures
Plants with a nominal capacity of more than 1 MW are eligible to apply for the support mechanism through national competitive procedures – within the limits of allocated power quotas – if they comply with the following requirements:
- possession of a permit for the construction and operation of the plant, including concessions where applicable, or, alternatively, upon request by the applicant, a favourable environmental impact assessment decree, where applicable;
- an accepted quotation for connection to the national electricity grid and registration of the plant on the ‘GAUDI’ system managed by Terna S.p.A. as validated by the grid operator;
- compliance with the performance requirements as well as with national and EU legislation on environmental protection, including compliance with the DNSH principle;
- possession of certain standards of financial and economic capacity of the participating entity; and
- duty to participate in the “Market for Balancing and Redispatching”.
Access to the support mechanism can be limited to a portion of the plant’s nominal capacity.
Accelerated Access
Plants with a nominal capacity of 10+ MW undergoing a single authorisation procedure are offered an alternative route. They may opt for an accelerated assessment procedure by submitting a specific application to the Gestore dei Servizi Energetici – GSE S.p.A. (“GSE”), Italy’s state-owned energy service system operator, alongside their single authorisation application. GSE will issue a qualification of eligibility within 30 days of the issuance of the single authorisation.
COMPETITIVE PROCEDURES MECHANISM
Application
In order to participate in the competitive procedure, applicants must apply through the GSE website and submit (amongst other materials):
- an offer with a reduction in the operating price regarding the superior operating price indicated in Transitional FER X;
- a provisional guarantee, valid for at least 120 days from receiving confirmation of the result of the procedure, to guarantee the quality of the project, equal to 50% of the final guarantee; and
- a commitment to provide the final guarantee for the plants’ construction and deliver the same guarantee within 90 days of the publication of the GSE’s ranking list, which shall be equal to 10% of the investment cost envisaged for the construction of the relevant plant as per the following table:
| Type of plant | Investment Cost (Euro /kW) |
|---|---|
| Photovoltaic solar | 900 |
| Wind | 1,420 |
| Hydroelectric | 3,160 |
| Treatment plants for residual gases from purification processes | 3,500 |
Operating prices put up for auction are provided in the Transitional FER X and described below. As of the end of that year, the value of operating prices will be updated at upcoming single calls for tenders to take inflation into account.
At the end of each procedure, the GSE will verify that bids with a lower price than the operating price correspond at least to the target power quota increased by 5%. Should this condition not be met, a power quota equal to 5% of the total power submitted will be excluded from the ranking list. Such exclusion does not apply, to projects that have submitted offers with prices below the lower operating price.
At the end of the evaluation, the GSE, within the limits of the available quotas, will establish a ranking list including the percentage reduction offered with respect to the operating price. A good rankings demonstrates a commitment to the recognition of the award price, to which the adjustments provided for in Annex 1 of the Transitional FER X are applied where applicable.
The expected total capacity – sorted by technology – to be allocated through competitive processes tendered up to 31 December 2025 is subject to possible changes and is outlined below:
| Technology | Estimated available quota (GW) |
|---|---|
| Photovoltaic solar | 10 |
| Wind | 4 |
| Hydroelectric | 0.63 |
| Treatment plants for residual gases from purification processes | 0.02 |
| Total | 14.65 |
Time limits for the realisation and entry into operation of plants
Construction works may start only after the relevant plant has been ranked. Their entry into operation shall happen within 36 months following the date of publication of the relevant ranking list, it being understood that said deadlines cover any delay in the construction of the relevant plant due to force majeure causes:
Failure to meet the above deadlines will result in a reduction to the price awarded by 0.2% per month of delay for the first nine months and of 0.5% for the following six months, up to a maximum of 15 months.
If these deadlines are not met, the GSE will remove the plant from the ranking list and enforce the final guarantee. If the plant is subsequently readmitted to a support mechanism, it will be subject to a 5% reduction in the price awarded.
If, within six months of the publication of the ranking list, the applicant notifies the GSE of its intention to withdraw from said ranking list, the latter will enforce 30% of the final guarantee. If the applicant doesn’t notify the GSE of the decision within six to twelve months of the ranking list being published, it will enforce the 50% of the final guarantee.
Notification of entry into operation
Plants that directly access the support mechanism, which shall enter into operation within 36 months following the issuance of the communication relating to the start of the construction works, will be entitled to receive the award from the date they start operating, provided they duly notify the GSE within 90 days.
In case of late communication, the applicant will lose its right to receive the tariff theoretically due for the period comprised between the date of entry into operation of the plant and the date of receipt of the late communication. In any case, such communication must be submitted within 180 days following the date of entry into operation recorded in Terna’s GAUDI system, under penalty of non-recognition of the award.
Payments
From a plant’s entry into operation to the end of its average conventional useful life (set at 20 years), GSE will manage the payment of the award prices according to the following:
a) for plants with a nominal capacity lower than 200 kW, the GSE will directly provide for the withdrawal and sale of electricity, disbursing the award price in the form of an all-inclusive tariff on the net production fed into the grid. Entitled entities may alternatively request the application of the regime set forth below; and
b) in the case of plants with a nominal capacity equal to or exceeding 200 kW, the electricity produced will remain at the disposal of the producer, who shall be responsible for its market valorisation. GSE will calculate the difference between the award price and the higher value between zero and the reference price, identified in the “Day-Ahead Market” price determined during the relevant period of transactions and the plant’s local market. Subsequently:
i. if this difference is positive, GSE will pay a price equal to the aforementioned difference for the net production fed into the grid;
ii. if this difference is negative, GSE will adjust or claim a price equal to the aforementioned difference for the net production fed into the grid.
The provisions on rights and obligations relating to the execution of standard contracts to be signed by the applicants for the purpose of recognizing the award price will apply only to 95% of the energy produced by plants with a capacity of +1 MW placed in a useful position in the reference ranking list.
The award price is updated by the GSE based on the annual rate of change of consumer prices for blue and white-collar households surveyed by the Italian National Statistics Institute (“Istat”).
Exceptions are provided in specific cases, as set forth in Transitional FER X.
CONDITIONS OF CUMULATION
Access to Transitional FER X support mechanism can only be cumulated with one of the following measures:
a) capital grants not exceeding 40% of the investment cost for new build plants only;
b) guarantee funds and revolving funds;
c) tax benefits in the form of tax credits or tax relief from business income on investments in machinery and equipment.
Save for the above, access to the support mechanism provided for in the Transitional FER X is an alternative to the on-site trading mechanism and the dedicated withdrawal referred to in article 13, paragraph 3 of Legislative Decree no. 387/2003.
OPERATING PRICES
| Type of plant | Power Capacity (MW) | Operating Price proposed (Euro / MWh) | Superior Operating Price proposed (Euro / MWh) | Inferior Operating Price proposed (Euro / MWh) |
|---|---|---|---|---|
| Photovoltaic | >1 | 80 | 95 | 65 |
| Wind | >1 | 85 | 95 | 70 |
| Hydroelectric | >1 | 90 | 105 | 80 |
| Treatment plants for residual gases from purification processes | >1 | 85 | 100 | 75 |
Exceptions are provided by Transitional FER X in specific cases defined in the decree. Specific adjustments to the award are provided for photovoltaic technology: +€4/MWh in the Center, +€10/MWh in the North; +€27/MWh for asbestos replacement, and +€5/MWh for surface water plants.
