EU Approves €1.7 Billion Italian Agrivoltaic Scheme

Key Takeaways

1. EU Approval: The European Commission has approved a €1.7 billion scheme under EU State aid rules for Italy to support agrivoltaic installations, aligning with the EU Green Deal objectives.
2. Funding and Capacity: The scheme, partially funded by the Recovery and Resilience Facility (RRF), aims to construct agrivoltaic systems with a total capacity of 1.04 GW, producing at least 1300 GWh/year.
3. Dual Land Use: Agrivoltaics combine photovoltaic energy production and agricultural activities, promoting efficient land use.
4. Support Mechanism: The aid includes €1.1 billion in investment grants and €560 million in incentive tariffs, awarded through competitive bidding.
5. EU Compliance: The Commission’s approval is based on the scheme’s alignment with EU State aid rules and its contribution to environmental and renewable energy targets.

The Italian Scheme

The recently approved Italian scheme, set to run until December 31, 2024, is a strategic move to bolster Italy’s commitment to reducing greenhouse gas emissions and increasing renewable energy share. Funded in part through the Recovery and Resilience Facility (RRF), the scheme aligns with the broader objectives of the European Union’s Green Deal.

Agrivoltaic installations, the centerpiece of this scheme, represent a revolutionary approach to renewable energy. These systems generate photovoltaic energy and allow for simultaneous agricultural activities, thereby optimizing land use. The scheme supports constructing and operating new agrivoltaic plants across Italy, targeting a total capacity of 1.04 GW and an annual electricity production of over 1300 GWh.

Financial Aspects and Operational Mechanism

The financial structure of the scheme is twofold:

• Investment Grants: €1.1 billion is allocated as investment grants, covering up to 40% of the eligible investment costs.
• Incentive Tariffs: An additional €560 million is estimated for incentive tariffs, to be paid during a 20-year operational phase of the projects. These tariffs will be determined via competitive bidding and operate as two-way contracts for difference, adjusting for energy price fluctuations.

A transparent and non-discriminatory competitive bidding process will be implemented to select the projects, ensuring the most efficient use of resources and minimizing the required incentive tariff.

EU Commission’s Evaluation and Compliance

The European Commission’s assessment of the scheme under EU State aid rules, notably Article 107 (3)(c) of the Treaty on the Functioning of the European Union, was pivotal in its approval. The scheme was found to be necessary, appropriate, and proportionate for Italy to meet its environmental targets. It was also deemed to have a positive environmental impact, outweighing potential competition distortions.

Background and Context

The scheme’s approval is against the EU’s intensifying efforts to meet its ambitious Green Deal objectives. The Renewable Energy Directive of 2018 and the European Climate Law form part of these efforts, emphasizing the EU’s commitment to a sustainable and environmentally responsible future.

In summary, this €1.7 billion scheme represents a significant step towards integrating renewable energy production with agricultural practices, marking a vital stride in Italy’s journey towards environmental sustainability and compliance with EU directives.

Image provided by the European Commission