Italy: ARERA introduces minimum guaranteed prices for biogas plants after support ends

The Italian regulator ARERA adopted Resolution 132/2024/R/eel on 9 April 2024, which implements a mechanism of minimum guaranteed prices (Prezzi Minimi Garantiti, PMG) for electricity from biogas and solid biomass. As a result, Italian agricultural biogas plants whose support period is ending can continue to operate on the basis of operating cost coverage, and not solely on the market price.

Where the mechanism comes from

The basis is Article 3-ter of Decree-Law No. 57/2023, adopted as part of the so-called "DL Rigassificatori". It amended Article 24(8) of Legislative Decree 28/2011 and introduced criteria for determining the PMG, that is a supplement to revenue from participation in the energy market, for biogas and biomass installations that benefit from support mechanisms expiring by 31 December 2027 or that give them up by that date. The statutory provision, however, required an implementing resolution of the regulator: it was for ARERA to determine how to calculate the remuneration, and according to CIB the mechanism was fully implemented only thanks to this resolution; the details of the calculations were still to go through consultation.

What the resolution provides

According to the Consorzio Italiano Biogas (CIB), the resolution obliges GSE to pay producers remuneration covering operating costs. It is calculated monthly on the basis of ARERA's indications and a report prepared by RSE (Ricerca sul Sistema Energetico), with effect from 28 July 2023. The aim is narrowly formulated: the PMG are to cover operating costs, in order to ensure continuity of operation and efficient running of the installations. They do not, however, cover investment costs. The mechanism is open to installations that are unable to convert to biomethane and whose support ends by 31 December 2027.

Consultation and settlements

After publishing the resolution, ARERA opened a consultation which is to end on 24 May 2024. GSE announced the payment of amounts due, allowing for a possible later adjustment if the consultation led to changes in the calculation method. In its statement the Italian industry stressed that it expects a quick payout of funds and announced its participation in the consultation, to check whether the cost model matches the working conditions of farms.

Significance for generators

In many countries support for biogas plants ends after 15–20 years, and the market price of energy can be lower than the cost of fuel, that is substrates, and of operation. Italy chose a variant in which the regulator calculates reference costs on the basis of an RSE study, and GSE settles them monthly. See also how Poland sets support for small biogas plants: reference prices for renewable energy auctions from the regulation of 8/11/2023.