Sonnedix is one of the signatories of the following open letter, published in the Italian national press (Il Sole 24 Ore and Corriere della Sera on Thursday, 5 March), advocating for a more competitive and energy-secure Italy.

The recent Energy Decree (so-called Bills Decree) seeks to address this problem with specific interventions such as a proposed measure on the ETS (Emission Trading System), aimed at containing the cost of electricity through the marginal pricing mechanism. However, it does not address structural factors such as excessive dependence on fossil fuel generation, whose supply, predominantly imported, exposes the country to strong price fluctuations and energy security risks.

The signatories of this letter represent national and international investors and independent electricity producers committed to developing new renewable and storage capacity in Italy.  Their work represents the solution to the long-term structural reduction of energy costs, as evidenced by the results of the recent RES Auction Rounds (FER) and MACSE (Italy’s Electricity Storage Procurement Mechanism) auctions, in which the average auction price was less than half the market price and where independent operators obtained the majority of the allocations. These allocations trigger new investments that strengthen the country's energy independence, while supporting a strong national and European industrial sector.

Today, some short-term measures envisaged in the aforementioned ‘Bill Decree’ will weaken investor confidence, slowing the development of new investments and halting the resulting decline in energy prices.The signatory companies therefore ask the Italian Government – in particular Ministry of Environment and Energy Security (MASE), Ministry of Business and Made in Italy (MIMIT) and the Presidency of the Council – for a clear and coordinated direction to support the sustainable growth of the electricity system also from an economic point of view.

Our proposals for a more competitive Italy:

Renewables and storage are mature technologies and already represent the cheapest solution for electricity production: recent auctions confirm this. But in order to attract the huge private capital needed for the energy transition, a stable, long-term, predictable regulatory framework consistent with the objectives of the NECP and PNRR is needed.

The immediate definition of a multi-year and stable calendar, with defined volumes and dates of tenders for renewables and storage systems, is essential to plan, mobilize investments and ensure competitive prices for businesses and households.

The latest tenders also demonstrate  that competition between projects is a key factor for reducing award prices. For this reason, regulatory certainty and speed in permitting and grid access become essential to ensure lower prices.

In order to deploy storage capacity throughout the country, it is necessary that the upcoming MACSE auctions are effectively contestable and, wherever feasible, extended to the entire national territory – including Northern Italy – through the introduction of mechanisms that ensure equal opportunities for new operators.

This is particularly relevant at a time when the ETS rule contained in the decree significantly reduces revenues on the spot market, making it even more important to support the development of storage through competitive auction mechanisms.

In addition, the new rules proposed by Terna for the Capacity Market, particularly through the definition of derating coefficients, favour gas-fired plants over storage solutions, thereby undermining the principle of technological neutrality.

The PPA (Power Purchase Agreement), or long-term energy contracting, is a bilateral and flexible instrument that plays a key role in promoting the development of renewables and in managing the volatility of energy prices.

To make the benefits of PPAs accessible to businesses, including SMEs, it is necessary to foster a more advanced energy procurement culture. The regulation should favor purchasing consortia, without imposing obligations, and provide the possibility that Italy’s Energy Services Operator (GSE) facilitates SMEs access to this instrument, for example by allowing the consortia to participate as an additional demand in the same tenders.

In this context, the role of the GSE as guarantor of last resort would strengthen the bankability of projects, increasing investor confidence and encouraging further investments in renewables.

We share the intention behind the Government’s action to improve the overall efficiency of the market, including through an intervention on the ETS mechanism aimed at reducing the impact of CO₂ costs on energy prices and correcting certain distortions in the marginal price formation mechanism, which do not provide any benefit to newly built plants. However, the measure currently envisaged risks redistributing ETS costs indiscriminately across all final consumers, including those who have already chosen to source electricity from renewable suppliers.

We believe that the cost of the ETS should instead be allocated proportionally to the actual emissions content of each energy supply, reflecting the true environmental impact of the various sources. This would make renewable energy more attractive and ETS allocation more cost-effective, underscoring the competitive advantage of clean supplies and further encouraging the spread of long-term contracts from renewable sources, including PPAs. This would contribute to the structural reduction of energy costs, stimulating electricity demand and the electrification of consumption, with a consequent boost to the competitiveness of the industrial system and national energy independence. 

The high electricity prices in Italy derive mainly from the Country’s strong dependence on generation from fossil fuels and the significant fiscal burden that weighs on the bills of households and businesses. The structural solution to reducing energy costs and strengthening national energy sovereignty lies in renewables and storage. Increasing the use of gas cannot provide a lasting answer, as it would further expose the country to market volatility and dependence on third countries.

It is possible to combine lower electricity costs, price stability for Italian households and businesses, and enhanced energy security through action complementary to the Bills Decree, in line with the points set out above.

Private operators and their shareholders are ready to support significant investments in new renewable and storage capacity, provided that certain, long-lasting, and consistent rules are in place. Investors in new renewables aren't looking for returns or high prices: they are, however, demanding clear and certain conditions that will allow them to safeguard the investments made to date and permit them to continue investing to structurally reduce the cost of tomorrow's energy.