As widely known by now, a draft of the so-called “Energy Decree” (“Decree”) has been circulating for several weeks. Among other provisions, the Decree contains urgent measures aimed at resolving the issue of virtual saturation in electricity grids.
Based on currently available information, the Decree is expected to be presented to the Council of Ministers at the end of August, following the summer break.
The Current Draft of the Decree
For the purposes relevant, the Decree propose the introduction of Article 10-bis into Legislative Decree No. 190/2024 (the so-called TU FER), which aims to regulate grid connection solutions for: (i) renewable energy plants (excluding offshore wind farms); and (ii) storage systems (BESS and pumped hydro storage).
According to the current draft:
ARERA is required to issue, within 180 days from the Decree’s entry into force, the technical and economic terms and conditions for the connection of the aforementioned types of plants. Specifically, Terna on one hand, and local distribution system operators on the other, must allocate both available and surplus grid capacity through transparent and non-discriminatory procedures;
As of the date ARERA issues the above regulations, connection solutions for unauthorized renewable energy and storage projects (again, excluding offshore wind) will lose their validity, unless the final design of the grid works has already been approved by Terna or the relevant DSO;
The loss of effectiveness of a connection solution cannot be used as grounds to suspend ongoing environmental or permitting procedures related to the project;
By way of derogation, connection solutions remain valid for projects that have already obtained an EIA screening determination (so-called “VIA Screening”) or a full Environmental Impact Assessment (EIA) approval, provided such approvals also cover the associated grid works;
Even if a connection solution remains valid under the above derogation, definitive grid capacity allocation still requires the project to obtain full authorization for construction and operation.
Preliminary Observations
The draft Decree—excluding offshore installations—appears to introduce a fundamentally revised regulatory framework for grid connection to the National Transmission Network (RTN), likely to have significant short-term impacts on both ongoing and soon-to-be-launched initiatives.
Should the current provisions remain unchanged, it is reasonable to expect a rush in the coming months among more advanced projects to obtain VIA Screening, full EIA approval, or final grid work validations, in order to avoid the expiration of their STMG.
Notably, the Decree’s derogation provision may prove discriminatory, as it allows certain projects - subject to environmental procedures due to their characteristics - to “preserve” their STMG despite lacking validation of their final grid design.
Additional uncertainties pertain to the nature and implementation of the aforementioned “transparent and non-discriminatory” procedures. In principle, and in line with the obligation to grant third-party access to the RTN, such procedures should not be “competitive” in the traditional sense. Doubts also arise regarding how permitting authorities will handle projects whose STMGs have expired, given that both the simplified procedure (PAS) and the single authorization process typically cover both generation plants and associated grid infrastructure.
It is also clear that it will become even more crucial to speed up and streamline the authorisation procedures related to the development of renewables, given that the projects that obtain the authorisation more quickly will be the ones that will be the first to obtain definitive network capacity, to the detriment of unauthorised projects.
Even projects nearing the end of their permitting process face increased risks of losing allocated capacity due to potential saturation of the relevant micro-zone. This could result in higher connection costs—for example, if the previously identified substation becomes fully saturated and a more distant, costlier alternative must be considered.
This scenario will likely lead to numerous legal litigations from affected operators, who may contest the sudden loss of their previously secured grid capacity rights.
In any case, a complete and conclusive understanding of the new regulatory framework - and market reactions - will only be possible once the Decree enters into force and ARERA issues its implementing measures (expected by February 2026, assuming the Decree is enacted by the end of this month).
This article, written by Piero Viganò, Giovanni Battista De Luca, Lorenzo Piscitelli and Ernesto Rossi Scarpa Gregorj, is the third in a series of articles published on the topic of virtual grid saturation. The previous ones are:
Italy, electricity grid under pressure: the challenge of saturation between input and output
