Pursuant to the provisions of Article 28, paragraphs 2 and 2-bis, of Legislative Decree No. 199/2021, the Ministry of the Environment and Energy Security, in agreement with the Ministry of Economy and Finance, with a view to completing the regulatory framework governing the negotiation of long-term power purchase agreements (“PPAs”), issued the Ministerial Decree No. 152 of 20 June 2025 (“Decree”), whereby it:
provided specific guidance to the Gestore dei Mercati Energetici S.p.A. (“GME”) for the establishment and launch of an organized market dedicated to the negotiation of PPAs (“MPPA”);
defined the criteria and conditions under which the Gestore dei Servizi Energetici S.p.A. (“GSE”) shall act as provider of last resort for PPAs negotiated on the MPPA.
The European and National Regulatory Context
The Decree is part of an evolving European regulatory framework aimed at fostering investment in renewable energy and ensuring price stability. Starting with Regulation (EU) 2024/1747, the European Union has encouraged Member States to remove existing constraints to the negotiation and execution of PPAs, promoting, among other measures, the use of security in support of market participants, with specific reference to the small and medium-sized enterprises and entities with limited access to energy markets.
At the national level, the Decree aligns with the objectives set out in the National Integrated Energy and Climate Plan (PNIEC) and Mission 7 of the REPowerEU initiative under Italy’s National Recovery and Resilience Plan (PNRR). These policies seek to reduce dependency on fossil fuels, accelerate the development of renewable energy sources and support the promotion of long-term agreements (5–10 year) between renewable energy producers and buyers.
More specifically, the primary objective of the MPPA and of GSE’s role as provider of last resort is to lower key barriers to the access and development of PPAs, and, more in details, the high financial cost of the security required to manage the risk associated with the relevant PPA’s position of each Party.
In recent weeks, GME and GSE have launched two public consultations concerning, respectively: (i) the proposed operational model for the MPPA; and (ii) the proposed operational rules governing the qualification of participants in the MPPA and the implementation of GSE’s last resort guarantee mechanism (the “Operational Rules”), as set forth in Article 8 of the Decree. The GME consultation closed on 24 July 2025, while the deadline for the GSE consultation is set for 4 August 2025.
The MPPA structure pursuant to the Decree and the GME consultation document
The MPPA will be a new trading platform forming part of the broader electricity market managed by GME (the “Electricity Market”), and will be functionally integrated with the forward market (the “MTE”)[1].
Accordingly, the Decree provides that the products eligible for trading on the MPPA must have “standardized characteristics that are similar to, or otherwise compatible with, those of the contracts traded on the MTE.”
Indeed, pursuant to the Decree and the consultation documents of GME and GSE, only agreements related to baseload and peakload profile will be eligible for trading on the MPPA, as actually provided on the MTE.
Furthermore, contracts eligible for trading on the MPPA must:
relate to volumes of energy that have not already been subject to previously executed contracts and that are not covered by other incentive schemes and/or services provided by GSE (including with reference to the corresponding share of the facility’s capacity);
have a duration of no less than 5 and no more than 10 years.
It is also envisaged that PPAs may be negotiated directly on the MPPA through an auction-based mechanism with a mutual acceptance process, or outside the market (“OTC Clearing”), provided that such OTC PPAs are compatible with the products tradable on the MPPA.
Participation in the MPPA will be on a voluntary basis; however, access and participation will be subject to both subjective and objective eligibility requirements.
In addition to the objective requirements related to the plants, subjective requirements are imposed both by GME, with reference to participation in the Electricity Market, and by GSE, concerning its role assumed within the MPPA.
Indeed, all participants in the MPPA, in addition to being companies registered with the competent Chamber of Commerce and having a credit rating not lower than the so-called investment grade, must:
qualify as market operators pursuant to the Electricity Market regulations (GME);
if sellers, be dispatching users of one or more renewable energy production plants that are in operation or authorized (GSE);
if buyers, be dispatching users of one or more withdrawal points as defined in the Integrated Text on Dispatching (GSE).
GME will act as the central counterparty for participants on the MPPA, while GSE will intervene in the event of default by one of the parties of the PPA to ensure the continuity of the relevant agreement, upon decision of the non-defaulting party, as further detailed below.
The role of GSE as provider of last resort pursuant to the Decree and the GSE consultation document
Any entity meeting the requirements set forth in the GSE Operational Rules shall enter into an adhesion contract with GSE in order to obtain the guarantee of last resort by the GSE.
In the event that a party is in breach of its obligations towards GME pursuant to the Electricity Market regulations or towards GSE pursuant to the adhesion contract[2], the non-defaulting party may decide either to continue with the PPA and benefit from GSE’s last resort service or to terminate the the PPA negotiated on the MPPA and withdraw from the adhesion contract signed with GSE.
Should the non-defaulting party decide to activate GSE’s guarantee, GSE shall step into the position of the defaulting party for the remaining duration of the PPA and in relation to the volumes are not already subject to delivery on the MCT.
Furthermore, in the event of seller default, GSE, by virtue of a mandate granted by the seller, shall assume the role of dispatching user for injection of the plant(s) subject to the PPA.
Upon GSE’s takeover, the contractual positions of the parties shall be settled by applying the so-called “reserve price” (Prezzo di riserva), as determined pursuant to the Operational Rules, rather than the contractual price previously agreed upon by the Parties in the PPA.
A strategic change?
The requirements and burdens (including professional and organizational obligations) associated with participation in the Electricity Market, and, consequently, in the MPPA, may represent a constraint for special purpose vehicles that typically own the production plants, as well as for energy-intensive companies that participate directly into the Market.
However, according to the GSE consultation document, it appears that both generators and the energy intensive companies may participate in the MPPA through their designated trader, to whom they have granted the mandate for dispatching.
This would allow such limitations to be overcome by enabling participation through qualified users to whom multiple producers or customers may confer dispatching mandates, similarly to what currently occurs in the dispatching services market managed by Terna and with reference to the Capacity Market. Nonetheless, in such a context, the potential risks arising from aggregation will need to be carefully assessed.
Similar considerations may apply with respect to the participation of energy intensive companies in the MPPA.
The Reserve Price has also raised a number of concerns, as it may not allow the parties to maintain the same cash flow originally envisaged at the time of PPA execution.
It will therefore be necessary to await the publication of the results of the GSE and GME consultations to determine whether the concerns and suggestions raised by market participants will be taken into account in the design of the MPPA and in the structuring of GSE’s role as provider of last resort.
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[1] In particular, the MTE is expected to be divided into two segments: the Forward Contracts Market (the “MCT”), where the contracts currently traded on the MTE will continue to be negotiated, and the MPPA.
[2] For example, in case of breach of the obligations under the adhesion contract.
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