ITALY: Energy Decree (DL Bollette) – Law Decree no. 21/2026

What is Italy doing?

There are two fundamental reforms of Italy’s electricity market that are currently undergoing: (i) Energy Decree; and (ii) Grid connection reform.

Energy Decree (i.e., Law Decree no. 21 of 20 February 2026) was published in the Official Gazette on 20 February 2026 and entered into force on 21 February 2026. It contains 12 articles, covering mainly electricity, gas, renewables, grid connections and data centres.

Italy’s Government has stated that the reforms are aimed at reducing the weight of energy bills on families and companies thus potentially saving up to EUR 5 billion. The grid connection reform is aimed at reducing the number of projects currently in the permitting and national grid “limbo”, such that focus can be made on those projects that have actually been permitted. 

ES view: It would appear that the Italian Government is seeking to keep energy costs down in the short term for families and businesses which are exposed to the volatility of international markets whilst also reforming the structures around how projects are connected to the national grid (as part of the energy transition and digitalisation of the grid and the wider Italian economy).

What are the key elements of the reforms?

Energy Decree (DL Bollette):

• FITs (Conto Energia): The Energy Decree targets PV plants with capacity above 20 kW that are still receiving feed-in tariffs under the first four “Conti Energia” (DM 28 July 2005; DM 19 February 2007; DM 6 August 2010 and DM 5 May 2011). Three voluntary mechanisms are offered (the deadline to elect options (a) or (b) is 31 May 2026): (a) a 15% reduction in the FIT premium for the period July 2026 – December 2027, in exchange for a 3-month extension of the incentive term; (b) a 30% reduction in the FIT premium for the same period, in exchange for a 6-month extension; and (c) an early exit from the Conto Energia from 1 January 2028 (election to be made by 30 September 2026), capped at 10 GW nationally, with a lump-sum payment equal to 90% of the net present value of remaining incentives, paid in ten annual instalments. This exit is conditional upon a full repowering of the plant by 31 December 2030, using modules registered in the national registry, which must at least double the expected output.
• ASOS: The ASOS (general system charges supporting renewables) are being reduced for non-domestic users across all voltage levels (low, medium, high and very high tension), with the exception of public lighting, energy-intensive users already benefiting from exemptions, and rail transport (RFI). The reduction is funded from two sources: (i) a 2 percentage-point increase in IRAP for energy sector companies (extraction, refining, production and distribution of electricity and gas) – estimated at EUR 431 million in 2026, EUR 500 million in 2027 and EUR 68 million in 2028, translating into a discount of approximately 3.4 €/MWh in 2026 and 4 €/MWh in 2027; and (ii) a realignment of the timing of system charge payments from distributors to CSEA, yielding an estimated EUR 850 million (approximately 6.8 €/MWh) in savings for all non-domestic users;
• GSE as guarantor of PPAs: The GSE acts as guarantor of last resort for qualifying counterparties in renewable energy PPAs with a minimum duration of 3 years. The GSE’s existing PPA noticeboard (bacheca) is being expanded on the demand side, with dedicated sections for long-term contracts. Critically, the Acquirente Unico (Single Buyer) will coordinate demand aggregation services – enabling SMEs to form collective purchasing groups under ARERA guidelines. SACE guarantees of up to EUR 250 million are available for 2026. A premium is offered to renewable producers who sell energy to corporates through PPA contracts via the Acquirente Unico. The structural aim is the decoupling of electricity prices from gas prices, allowing offtakers to access renewable energy at market prices below gas-indexed wholesale rates. 

Grid connection reform

The effect of the revised Energy Decree (Article 7) is that there will be a fundamentally different way to secure a grid connection (STMG) for project developers. Terna will be required to publish on a quarterly basis the maximum additional capacity available for new connections in each portion of the national transmission grid. ARERA has 180 days to update the technical and economic conditions for connections, introducing competitive and non-discriminatory procedures (“open season”) for the allocation of capacity slots. Existing connection solutions that have been issued but not validated by the grid operator referred to projects not authorized will lose their effectiveness once the new ARERA rules are published, but the relevant connection fees paid will be reimbursed. However, projects that are already fully authorised are “safe” and their connection rights are preserved. Moreover, if a project has obtained a positive EIA (VIA) of the decree of Screening EIA excluding the need to undergo full EIA, the relevant secured connection solution will be taken into consideration by the Grid Operator, provided that the relevant technical connection design was duly attached and subjected to the environmental assessment. ARERA may also allow connections in excess of currently available capacity, introducing a “flexible connection” model aimed at optimising infrastructure use and accelerating the connection of renewable plants and storage systems.

The aim of this reform is to target virtual grid saturation, increase transparency and predictability in how grid connection rights are allocated, prevent speculative reservation of capacity that blocks others, enable better grid investment planning by aggregating real demand from committed projects and help integrate renewable energy sources and large loads (like data centres) more effectively into the transmission system.

ES view: In the short to medium term, the effect of this reform is expected to be that 76GW of wind projects that are in permitting and 95GW of solar PV projects in permitting will no longer be guaranteed a connection to the grid and as such will need to take part in open season.  There is expected to be circa 26GW of wind projects and 22GW of solar PV projects in limbo (meaning they have an approval (benestare) or positive EIA) which will lead to uncertainty for developers as to whether a project’s connection is secure or not. It is estimated that around 6GW of wind projects and 30GW of solar PV projects are “safe” i.e. permitted and as such will carry on in the current regime. It should be noted that there are circa 180 days before the reform kicks in so any projects that achieve a permit before then will be “safe”.

What other key measures does the decree contain?

• Data centres (Article 8): The decree introduces a single authorisation procedure for the construction and expansion of data centres, with a maximum timeframe of 10 months (which could be exceptionally increase up to 3 more months for particularly complicated projects) and halved EIA (VIA) deadlines. The competent authority is the one identified for the AIA (Environmental Integrated Authorization), hence Regional authorities are competent for facilities with a thermal power equal or higher than 50 MW; the MASE takes over in case of DCs with thermal power equal or higher than 300 MW. Notably, there is no obligation for data centres to source energy from renewable sources – a significant gap given that a single hyperscale facility can consume between 100 and 500 MW. This is relevant for renewable developers as corporate PPAs with hyperscalers could emerge as a key market opportunity.
• ETS decoupling (Article 6): Article 6 of the Decree could significantly influence how electricity prices are set in Italy. ARERA must, within three months, introduce rules to verify whether wholesale market operators are offering prices above marginal cost without justified economic reasons. Only opportunity costs can justify bids higher than marginal cost, and ARERA may challenge offers that do not comply. ARERA must also define how, from 1 January 2027, certain variable components of the natural gas transport tariff and some ETS‑related costs will be reimbursed to gas‑fired power producers. These measures will only take effect after approval by the European Commission, as they may constitute State aid. The European Commission will also scrutinise compatibility of this measure with the EU ETS framework. The cost of these reimbursements will be recovered through charges applied to electricity withdrawals. ARERA will also check that beneficiaries reflect the reimbursements in their market offers; otherwise, they may be required to return the amounts and face potential penalties. Capacity Market rules will be updated so that these changes are fully incorporated into the bids of thermoelectric plants. Since gas‑fired plants often set the wholesale electricity price and include ETS costs in their variable costs, increases in CO₂ allowance prices tend to raise electricity prices for all producers.
• Gas market measures (Articles 9–10): The gas stockpiled by GSE and SNAM during the 2022 energy crisis will be sold on the market to reduce transport and distribution charges for industrial gas consumers (gasivori and large users). A liquidity service managed by SNAM will eliminate the spread between the Italian PSV index and the European TTF benchmark (currently approximately 2 €/MWh), with a maximum budget of EUR 200 million.
• Biogas, biofuels and CCUS (Articles 5/11): Biogas plants above 300 kW must convert to biomethane production in order to access incentives beyond 2030. Plants up to 300 kW retain minimum guaranteed prices until 2037 even without conversion. The decree also introduces a framework for CO₂ capture and storage (CCUS), with ARERA tasked with defining access rules for transport networks and storage sites within 120 days.

What should I do? 

As with all major overhauls of complex regulations, we would strongly recommend getting in touch to see how these reforms affect your projects or business if you believe you are affected by them.

What else do I need to know?

The Energy Decree entered into force on 21 February 2026 (the day after publication in the Official Gazette). Key implementation milestones are as follows: (i) ARERA has 180 days from the entry into force to update the grid connection rules, meaning the new open season regime is expected to become operational around August 2026; (ii) the voluntary FIT reduction schemes apply from July 2026 to December 2027; (iii) the early exit from Conto Energia opens from 1 January 2028; and (iv) the IRAP surcharge for energy companies applies for 2026–2028. Energy Decree must be converted into Law by Parliament within 60 days (i.e., within 20 April 2026) and during the law conversion proceeding amendments may be introduced.