With this note, we intend to summarize and comment the main provisions of article 5 of the Law Decree no. 63 of 15 May 2024, published in Official Gazette no. 112 of 15 May 2024
By Piero Viganò, Giovanni Battista De Luca, Paola Putignano e Pietro Canale.
With this note, we intend to summarize and comment the main provisions of article 5 of the Law Decree no. 63 of 15 May 2024, published in Official Gazette no. 112 of 15 May 2024 (“Agricultural Law Decree”), which came into force on 16 May. Article 5 introduced some restrictions on the installation of ground-mounted photovoltaic plants on agricultural areas, amending the Article 20 of Legislative Decree 199/2021 by introducing a new comma 1-bis which provides that the installation of ground-mounted PV plants in agricultural areas is limited to “suitable areas”.
On 12 July 2024, the Law Decree has been converted into Law no. 101 and published in Official Gazette no. 163 of 13 July 2024.
Firstly, the installation of photovoltaic plants with ground-mounted modules in areas classified as agricultural is still permitted:
a) if limited to repowering and revamping pre-existing PV plants that do not entail an increase of the area occupied (letter a of paragraph 8 Legislative Decree No. 199/2021);
b) on non-productive agricultural lands such as quarries and mines that have been closed, not recovered or abandoned or in an environmentally degraded condition, or the portions of quarries and mines that are not susceptible to further exploitation (letter c-bis of paragraph 8);
c) on areas under concession to Ferrovie dello Stato group, railway infrastructure operators, motorway concession companies or airport management companies on airport premises (letter c-bis1 of paragraph 8);
d) on areas inside factories and industrial plants, as well as in areas enclosed within a perimeter whose points are no more than 500 meters from the factory or plant itself (provided that such areas are not constrained pursuant to the second part of the Cultural Heritage and Landscape Code). In this regard, it should be noted that the Ministry of the Environment and Energy Security (MASE), in its opinion no. 130318 of 8 August 2023 - rendered following an environmental query by the Municipality of Villalba on the possibility of considering an existing photovoltaic plant as a unitary and stable complex or industrial plant - has clarified that are to be considered eligible, pursuant to Art. 20, lett. c-ter no. 2, Legislative Decree no. 199/2021, also the areas classified as agricultural enclosed within a perimeter whose points are no more than 500 meters away from a pre-existing ground-mounted photovoltaic plant with a power exceeding 20 kW (even if the latter is not built in an area zoned for industrial, artisan or commercial use) (letter c-ter no. 2 of paragraph 8);
e) on areas adjacent to the motorway network within a distance not exceeding 300 meters (letter c-ter no. 3 of paragraph 8).
The text converted into Law includes the possibility of installing ground-mounted photovoltaics also in quarries that have already been restored and those with a completed cultivation plan and not yet restored, as well as landfills or landfill lots that have been closed or can be restored.
The installation of photovoltaic plants with ground-mounted modules is not allowed:
i) on sites subject to remediation (letter b) of subsection 8);
ii) on areas classified as agricultural, enclosed within a perimeter whose points are no more than 500 meters away from areas of industrial, artisanal and commercial use, including sites of national interest, as well as from quarries and mines (letter c-ter) no. 1) of paragraph 8);
iii) on areas that are not restricted pursuant to the Cultural Heritage Code and are at least 500 meters away from cultural assets restricted pursuant to the second part of Article 136 of the Cultural Heritage Code (letter c-quater) of paragraph 8).
Such areas, although agricultural, were until now classified as suitable by article 20, paragraph 8 of Legislative Decree 199/2021 under letters b), c-ter no. 1 and c-quater.
Secondly, the prohibition of photovoltaic installations with ground-mounted modules does not extend to projects:
aimed at the establishment of a Renewable Energy Community (REC);
carried out in implementation of the investment measures of the PNRR or PNC or necessary for the achievement of the objectives of the PNRR.
Therefore, the installation of agrivoltaic systems with modules elevated from the ground (so-called advanced agrivoltaic systems), as defined by Article 65, paragraphs 1-quater and 1-quinquies of Decree-Law No. 1/2012, i.e. which adopt innovative integrative solutions with the assembly of the modules elevated from the ground, exploit advanced technologies, also envisaging the rotation of the modules themselves, so as not to compromise the continuity of agricultural and pastoral cultivation activities of the farmland on which they insist, continues to be allowed in all agricultural areas, without the limitations provided for by the Agricultural Law Decree.
Till now, it’s not been clarified whether, in order to be exempted from the ban, additional subjective requirements must also be met by the developers of the advanced agrivoltaic project (e.g. agricultural entrepreneurs, temporary associations of enterprises - ATI), in line with the Ministerial Decree no. 436 of 22 December 2023 (“Agrivoltaic Ministerial Decree”) or whether these must be met only for the purposes of access to the incentives provided for therein, and therefore irrelevant for the purposes of the Agricultural Law Decree.
It is doubtful whether the prohibition should be extended to simple agrivoltaic systems, i.e. to systems that, while providing for the installation of modules on the ground, are constructed in such a way as to allow the integration of agricultural activity and electricity production and to enhance the production potential of both subsystems, without compromising the continuity of agricultural activity. In this hypothesis, the degree of integration between the two subsystems is less because the agricultural activity is carried out exclusively between the rows of panels.
On this point, however, it is necessary to recall a now consolidated jurisprudential orientation on the need not to assimilate agrivoltaic systems to ‘classic’ photovoltaic systems with modules located on the ground, since they are phenomena that are largely different from each other, despite their common starting point (the production of electricity from a clean source). And as a situation that does not overlap, they cannot be assimilated quoad effectum (see, inter alia, TAR Lecce Sez. II, Sentenza n. 1583/2022 and Consiglio di Stato Sez. IV, Sentenza n. 8029/2023).
Moreover, if the government's objective is to protect agricultural activity and the land used for it, it would be illogical to ban ‘basic’ agrivoltaics; it would mean banning the combination of agricultural activity and renewable energy production.
The residual category of projects necessary to achieve the objectives of the PNRR could, at present, include, for example:
collective self-consumption (because it is the subject of a specific PNRR measure and together with energy communities is the recipient of a specific incentive scheme, but not also remote self-consumption);
innovative photovoltaic systems or photovoltaic systems combined with hydrogen.
photovoltaic plants for the production of biomethane and biogas.
The new provision will not apply to projects currently undergoing the approval process more precisely with reference to the PV plants that have already filed the authorisation application or for which the authorisation or the environmental procedure has already started at the date of entry into force of such Agricultural Law Decree (i.e., 16 May 2024).
The provisions do not apply to projects for which, on the date of entry into force of the Agricultural Law Decree, at least one of the administrative procedures, including environmental assessment procedures, necessary to obtain the qualifications has been commenced for the construction and operation of the plants and related works or at least one of the same authorizations has been issued.
The provision does not explain what is meant by procedures already ‘commenced’.
A. For a less restrictive interpretation of the rule, the mere submission of an application for a PAS, AU, PAUR, EIA Screening, EIA by the date of 16 May 2024 could be deemed sufficient to consider that the procedure has been formally commenced.
B. If a more restrictive interpretation were to be adhered to, procedures already commenced could be understood as follows:
PAS: if the documentation attached to the PAS is complete, the procedure may be deemed to have already commenced when the PAS is submitted to the Municipality, even if, as of 16 May 2024, the 30-day deadline for consolidating the PAS has not expired. On the other hand, in the hypothesis that, following the submission of the PAS application, it is necessary to acquire additional acts of consent required by law, the commencement of the procedure could coincide with the communication of the commencement of the procedure/convocation of the Services Conference by the Municipality;
AU: the procedure is deemed to be initiated when the competent Administration sends to the proponent the notice of commencement of proceedings pursuant to Articles 7 and 9 of Law No. 241/1990;
EIA Screening/ EIA /PAUR: the commencement of the procedure coincides with the publication of the environmental documentation on the website of the proceeding Authority and with the simultaneous communication of its publication to all potentially interested Authorities.
The interpretation to be given to the term ‘procedure already commenced’ appears to be another uncertain point of the text of the Agricultural Law Decree, which has not been clarified, neither during its conversion proceeding into law.
In addition to the above, Article 5, paragraph 2-bis of the Agricultural Law Decree provides that all surface right agreements, including those executed in the form of preliminary agreements, concerning land falling within the areas considered suitable for the installation of renewable energy plants, pursuant to Article 20, paragraph 1, lett. a, of Legislative Decree No. 199 of 8 November 2021, shall be entered into for a minimum term of 6 years. Should the parties agree on a shorter term or grant the surface right by omitting the indication of a specific term, the relevant agreement shall be deemed to be entered into for a term of 6 years.
It is further specified that at the end of the first 6-year term, the surface right agreement is automatically renewed for a further period of 6 years. At the end of this second period, the agreement is tacitly renewed under the same conditions, unless a party informs the other - by registered letter and at least six months before the relevant expiry date - of its intention to renew the agreement under new conditions or not to renew it at all. The party so notified has 60 days from receipt of such notice to reply. If no reply is received or if the parties fail to agree otherwise, the relevant surface right agreement shall be deemed terminated on the end of the second validity period.
The above-mentioned provisions also apply to the preliminary/final agreements already in place, unless one of the parties decides to withdraw from the relevant agreement within 60 days from the day of entry into force of Law no. 101/2024. Such right of withdrawal may be read as a way out granted to the landowners to avoid the new tax regime applied to surface right rents as of 1 January 2024. In fact, the landowners are now in the position to renegotiate these rents in order to offset the increase in their taxation.
Article 5, paragraph 2-bis of the Agricultural Law Decree appears to be quite unclear and open to different interpretations. In particular, it is not fully clear whether the 6-year term refers to the duration of the preliminary/final surface right agreements or to the duration of the surface right established by virtue of such agreements. Should this second interpretation prevail, the right of withdrawal from preliminary agreements having a duration of less than 6 years exercised by landowners in the time window of 60 days from the entry into force of Law no. 101/2024 would be deemed unlawful.
In light of the above, it is expected that, especially in a first phase after the entry into force of the Agricultural Law Decree, there will be uncertainty on how to manage the surface right agreements and this may delay or complicate the negotiations aimed at acquiring the availability of the land for the development of new renewable energy plants.
In conclusion, the impact of the Agricultural Law Decree on the solar energy market would be less dramatic than it seemed at first reading thanks to the above-mentioned exceptions to the ban, but it appears quite clear that uncertainties as to the interpretation of already commenced procedures could underpin an uncooperative approach by local authorities even with reference to projects started before May 16.
It also evident that agrivoltaic plants are envisaged by the Government as a new cooperation model between the PV generation industry and the agricultural activity
Investors will have to pay close attention their relationship with the farmer and to the relevant seriousness and professionalism in carrying its agricultural activities. The farmer will have to be considered as as an EPC contractor, O&M operator or electricity purchaser under the PPA and as such the relevant contractual documents shall be structured taking into a rigorous risk allocation also through substitution mechanisms. Title on lands shall also take into account the performance of agricultural activities.
