Redefinition of the guaranteed minimum prices for electricity production plants up to 1MW powered by renewables sources

The Italian Electricity and Gas Authority (AEEG) issued on 31 October 2013 the new consultation document No. 486/2013/R/efr1 containing guidelines and proposals for the redefinition of the guaranteed minimum prices for electricity production plants up to 1MW powered by renewables sources.

The guaranteed minimum prices were introduced by AEEG with resolution No. 34/05 with the purpose of ensuring coverage of the production costs of the power plants up to 1MW powered by renewable sources, within the limits of the first two million kilowatt-hours annually produced by each plant and injected into the grid. It was deemed essential, in encouraging the production of electricity from renewable sources, to provide an additional incentive for small plants, whose production costs are particularly high, in order to ensure their economic survival even in case the market prices were to fall significantly.

Such guaranteed minimum prices are actually recognised and paid by the GSE (an Italian energy services operator) only to those power plants that have chosen the dedicated withdrawal (‘ritiro dedicato’). The dedicated withdrawal is the simplified instrument for the sale of electricity as an alternative to bilateral agreements or direct sale on the market that consists in transferring the electricity to the GSE, which remunerates the producers by paying a price for each produced kilowatt-hour. The GSE values the electricity fed into the grid by the producers in the context of the dedicated withdrawal system at the average hourly market price for the zone in which the plant is connected to the grid. The guaranteed minimum prices are, in the context of the dedicated withdrawal, an additional incentive for the small plants up to 1MW powered by renewables sources, without prejudice to the possibility of being paid more if the remuneration at hourly local prices is higher…

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