To truly focus on renewables, it’s essential not to penalize small producers

28 October 2022

A fundamental piece of the energy transition: to truly emphasize renewables, it’s essential not to penalize small producers.

The European Union, with the Regulation against high bills, approved on September 30th and formally adopted on October 6th, aims to collect approximately 142 billion euros from energy companies to assist families and businesses impacted by rising energy costs. To truly prioritize renewables, it’s crucial not to penalize small producers.

There are two instruments to establish this fund: the first is a cap on electricity prices at 180 euros per Megawatt-hour (until March 31, 2023), with energy producers (wind, solar, geothermal, hydroelectric, biomass fuels excluding biomethane, waste, nuclear, lignite, crude oil products, and peat) required to compensate for excess costs incurred by families and businesses. The second is a temporary tax on windfall profits generated by oil, gas, coal activities, and refineries not covered by the cap.

For the windfall profit tax, the regulation sets a minimum rate that member states can exceed or combine with similar measures already in place at the national level, such as the existing windfall profit tax in Italy.

The Italian regulation on windfall profits, contained in Decree Aiuti Bis, Article 15bis, has sparked numerous controversies, particularly among small and medium-sized enterprises (SMEs) that have become self-sufficient in energy through photovoltaic installations exceeding 20 kW. These enterprises, in addition to their primary activities, also generate renewable energy that they feed into the grid for sale, but are then required to repurchase from the grid.

The increase in electricity costs has created a significant gap between the selling price to the grid, set by the Draghi government at 50 euros per MWh, and the cost of purchasing from the grid for the company.

Even for SMEs where energy production is not their primary activity but a supportive one, the windfall profits that are not actually generated would need to be refunded. This results in losses that impact their financial statements alongside the exorbitant bills they must pay.

Therefore, a modification of the regulation is necessary to exempt SMEs producing renewable energy when this activity is not predominant (i.e., companies that are not strictly energy operators). This is also the stance of ACEPER.

Veronica Pitea, President of the association representing approximately 10,000 renewable energy production facilities, is in daily contact with these small and medium-sized enterprises that use photovoltaics to support their primary activities. She asserts, “The renewable energy sector, which in Italy should be the main driver of energy transition, risks being crippled by this regulation. Small businesses that have photovoltaics supporting their productive activities, from agriculture to manufacturing, are at risk of closure and laying off employees.

“We’re talking about mini-plants started in recent years by small entrepreneurs in agriculture, industry, and craftsmanship who have installed photovoltaic panels in their fields or on rooftops for self-production and surplus resale. However, this is not their core business. Not to mention the significant investments they have had to make; for a 100-kilowatt system, at least half a million euros are required. Government intervention is essential, taking into account the different situations of SMEs. Photovoltaic installations must be recognized as assets essential to transforming businesses under Industry 4.0, and should benefit from incentives and facilitations.”

“Unfortunately,” President Pitea continues, “businesses that have invested in photovoltaics now feel cornered, and this isn’t the first time. The law on windfall profits, which forces the sale of electricity produced by their photovoltaics at 50 euros but requires repurchase at ten times that amount, adds to past grievances: in 2015 with the ‘Spalma Incentivi’, followed by new taxes on self-production from renewable sources and then dispatching charges, leading to the Environmental Tremonti that risks bankrupting thousands of businesses. Perhaps there’s a light at the end of the tunnel, but unfortunately, the complex issue of the Environmental Tremonti and Energy Accounts cumulation hasn’t been resolved yet. ACEPER highlighted from the outset how denying the possibility to combine tax breaks from Tremonti Ambiente with incentives provided by the Energy Accounts would have serious consequences for many companies.

“If we truly want to focus on renewables, we must not penalize small producers who are vital pieces in the energy transition.”

Taken from Green Company Magazine (Volume 8) – see all magazine issues

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