The Italian regulatory framework has undergone substantial changes in recent years with the aim of streamlining the authorization processes for renewable energy projects. However, Eugenio Tranchino, Head of Italy and Partner at Watson Farley & Williams, states that the slow granting of permits and administrative inefficiency remain obstacles that jeopardize the achievement of the 2030 climate goals.

“There is considerable pressure to develop new power generation plants, yet the process to obtain the necessary permits remains notoriously slow. An inefficient administration, coupled with outdated technologies, can delay energy projects crucial for meeting the 2030 climate targets,” says Tranchino in an interview with Strategic Energy Europe.

The Environmental Impact Assessment Commission has carried out a significant number of activities, granting pre-approvals for numerous renewable energy projects and providing essential guidelines for conducting pre-feasibility studies, which allow evaluating the positive and negative consequences of each project at an early stage. According to the expert, this measure helps reduce permit approval times by blocking non-viable projects in the early phases.

He adds: “This ensures that renewable energy plans and projects are carried out according to the principles of environmental protection, community quality of life, and sustainable development.”

New decrees. Are permits expedited?

In recent months, the Italian government has implemented several key reforms aimed at making the development of renewable projects more efficient. Some of the most relevant regulations include:

• Decree “Aree Idonee”: defines the criteria for identifying suitable and unsuitable areas for renewable projects, delegating to the Regions the task of establishing limitations within their territories.
• Decree “Agriculture”: Regulates the installation of renewable energy plants on agricultural land, establishing limits and criteria to ensure compatibility between energy production and agricultural activity protection.
• Decree “FER 2”: Regulates incentives for renewable energy plants and sets the operational rules for accessing them.
• Decree “FER X”: Proposes a transitional incentive regime for renewable projects that begin operations before December 31, 2025. It also establishes a new tariff scheme for projects approved between 2026 and 2028. One of the main concerns in the sector is the lack of a clear definition of what constitutes “completion of works,” which could lead to issues regarding project eligibility for incentives.
• Legislative Decree No. 190/2024 (“Testo Unico FER”): Unifies and simplifies administrative procedures and regulatory regimes for renewable projects.
• Decree “Macse”: Establishes electrical storage mechanisms, promoting the integration of batteries into the grid.
• Decree “D.L Ambiente”: Introduces environmental and regulatory measures to promote ecological transition in Italy. It includes provisions to accelerate environmental impact assessments for renewable projects and strengthens the role of the Environmental Evaluation Commission in expediting permits. It also incorporates sustainability criteria into energy planning, prioritizing low environmental footprint technologies.

“These decrees aim to reduce authorization times and improve clarity in administrative procedures,” explains Tranchino. However, he clarifies that the implementation of these changes still generates uncertainty within the industry.

One of the most significant issues is the lack of uniformity between regional and national authorities, which leads to delays in applying the regulations and concerns within the sector. For example, the Decree “Aree Idonee” allows regions to extend buffer zones around areas with cultural heritage by up to 7 km, which can further prolong administrative procedures.

“The Ministry of Environmental and Energy Security must monitor the achievement of objectives and, in case of non-compliance, adopt corrective measures. However, the regions have up to 15 months of autonomy to apply these regulations, which can generate uncertainty within the industry,” Tranchino points out.

Furthermore, although the Testo Unico FER establishes three main regulatory regimes (free works, PAS, and AU), the criteria for applying each are not fully defined, leading to confusion among developers, according to the Watson Farley & Williams representative.

“Operators will struggle to identify the applicable regulatory regime for each project or initiative, which may result in new delays in processing permits,” warns the expert.

Curtailment and storage: additional challenges for project viability

In addition to regulatory issues, developers face technical challenges such as curtailment, which refers to the restriction of the amount of electricity that can be injected into the grid due to capacity limitations.

“When there is an excess of electricity in the grid, a renewable project may experience connection restrictions, affecting its profitability,” explains Tranchino. To mitigate these effects, some strategies include diversifying buyers for excess electricity or including compensation clauses in Power Purchase Agreements (PPAs).

Energy storage is also key to addressing this issue and ensuring grid stability. In this regard, the Decree “Macse” aims to incentivize the development of batteries to integrate more renewable capacity into the electrical system.

“The development of storage systems is crucial for achieving the net-zero emissions goals by 2050. Modernizing the power grids could bring significant socio-economic benefits, including the electrification of remote communities and the boost of the green economy,” highlights Tranchino.

While lithium battery technology is the most commonly used option for hybridizing with photovoltaic plants, flow batteries are emerging as a viable solution for large-scale storage, with a lifespan of over 20 years without performance degradation.