The European Commission has approved, under EU State aid rules, a €1.7 billion Italian scheme made available in part through the Recovery and Resilience Facility ('RRF') to support agrivoltaic installations. The measure is part of Italy's strategy to reduce greenhouse gas emissions and to increase its share of renewable energies, in line with the EU's strategic objectives relating to the EU Green Deal.
The Italian scheme
The scheme, which will run until 31 December 2024, will be partially funded through the RRF, following the Commission's positive assessment of Italy's Recovery and Resilience Plan and its adoption by the Council.
The scheme supports the construction and operation in Italy of new agrivoltaic plants for a total capacity of 1.04 GW and an electricity production of at least 1300 GWh/year. Agrivoltaic systems allow for the simultaneous use of land both to produce photovoltaic energy through the installation of solar panels and to carry out agricultural activities.
Under the scheme, the aid will be granted to agricultural producers, cumulatively, in the form of:
- Investment grants, with a total budget of €1.1 billion, covering up to 40% of the eligible investment costs; and
- Incentive tariffs, with an estimated budget of €560 million, to be paid during the operational phase of the projects, for a 20-year period. These tariffs will be determined through a competitive bidding process on a pay-as-bid rule and will take the form of two-way contracts for difference. The support will cover the difference between the incentive tariffs and the energy prices. In case of high energy prices, a claw-back mechanism is in place so that any amount exceeding the incentive tariffs will be paid back.
The projects will be selected through a transparent and non-discriminatory competitive bidding process, where beneficiaries will compete for the lowest amount of the incentive tariff needed for an individual project to go ahead. In order to benefit from the scheme, beneficiaries must become operational before 30 June 2026.
The Commission's assessment
The Commission assessed the scheme under EU State aid rules, in particular Article 107 (3)(c) of the Treaty on the Functioning of the European Union, which enables Member States to support the development of certain economic activities subject to certain conditions, and the 2022 Guidelines on State aid for climate, environmental protection and energy ('CEEAG').
In particular, the Commission found that:
- The scheme facilitates the development of an economic activity, in particular the production of renewable electricity from agrivoltaic installations.
- The measure is necessary and appropriate for Italy to meet the European and national environmental targets. Moreover, it is proportionate as the aid is limited to the minimum necessary to trigger the investments. In addition, necessary safeguards are in place, including a competitive bidding process for awarding the aid and a claw-back mechanism in case of energy price increases.
- The measure has an incentive effect, as the beneficiaries would not carry out the relevant investments without the aid.
The aid brings about positive effects, in particular on the environment, in line with the European Green Deal, that outweigh any possible negative effects in terms of distortions to competition. On this basis, the Commission approved the Italian scheme under EU State aid rules.
Background
All investments and reforms entailing State aid, also those included in national resilience and recovery plans presented in the context of the RRF, must be notified to the Commission for prior approval, unless covered by one of the State aid block-exemption rules.
The Commission assesses measures entailing State aid contained in national recovery plans presented in the context of the RRF as a matter of priority and has provided guidance and support to Member States in the preparatory phases of the national plans, to facilitate the rapid deployment of the RRF. At the same time, the Commission makes sure in its decision that the applicable State aid rules are complied with, in order to preserve the level playing field in the Single Market and ensure that the RRF funds are used in a way that minimizes competition distortions and do not crowd out private investments.
The Commission's 2022 Guidelines on State aid for climate, environmental protection and energy provide guidance on how the Commission will assess the compatibility of environmental protection, including climate protection, and energy aid measures which are subject to the notification requirement under Article 107(3)(c) TFEU. The new guidelines, applicable as of January 2022, create a flexible, fir-for-purpose enabling framework to help Member States provide the necessary support to reach the Green Deal objectives in a targeted and cost-effective manner. The rules involve an alignment with the important EU's objectives and targets set out in the European Green Deal and with other recent regulatory changes in the energy and environmental areas and will cater for the increased importance of climate protection.
The Renewable Energy Directive of 2018 established an EU-wide binding renewable energy target of at least 32% by 2030. With the European Green Deal Communication in 2019, the Commission reinforced its climate ambitions, setting an objective of no net emissions of greenhouse gases in 2050. The recently adopted European Climate Law, which enshrines the 2050 climate neutrality objective and introduces the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, set the ground for the 'fit for 55' legislative proposals adopted by the Commission on 14 July 2021. Among these proposals, the Commission has presented amendments of the Renewable Energy Directive and the Energy Efficiency Directive with more ambitious binding annual targets to increase the production of energy from renewable sources and reduce energy use at EU level.
The non-confidential version of the decision will be made available under the case number SA.107161 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
