European member states can unilaterally amend renewable energy feed-in tariffs (FITs) or withdraw them entirely before the end of the contract terms, according to an opinion stated by a member of the European Court of Justice (ECJ).
Advocate general Henrik Saugmandsgaard Øe has said the decision by the Italian government in 2014 to change the terms of FIT payments during their 20-year contract term was not unconstitutional under EU law.
The opinion drawn up by Øe – one of the ECJ's 11 advocates general – on Thursday, will be considered by the court's 27 judges before a final judgement is delivered.
The case was referred to the ECJ by the Regional Administrative Court of Lazio in Italy after a complaint by the Federazione Nazionale Imprese Elettroniche ed Elettrotecniche (ANIE) parent body of renewables association ANIE Rinnovabili and by solar plant operators led by the Athesia Energy subsidiary of South Tyrolean publisher-cum-energy-company Athesia Group. The Italian Constitutional Court ruled, in January 2017, the decrees amending the FIT payment levels were not incompatible with the Italian constitution and the question was then referred to their compatibility with EU law.
On the question of whether the changes applied to solar feed-in tariffs conflicted with the right to conduct business and the right to property guaranteed by the Charter of Fundamental Rights of the European Union, Øe said they did not and even if they did, they would be judged justified and proportionate with regards to the necessity of implementing the bloc's renewable energy objectives. On a third point, whether the incentive scheme revision conflicted with the EU Energy Charter, the advocate general ruled the charter did not apply to disputes between investors and their own EU member states and added, even if it did, the charter did not preclude the rights of member states to alter or wind down clean energy incentive schemes.
Explaining his legal opinion, Øe said the rights granted by the bloc's Charter of Fundamental Rights were not absolute and proportional limitations could be applied to them if necessary in the general interests of the EU. “Member states are free to adapt, alter or withdraw support schemes provided that, inter alia [renewable energy] targets are met,” said the advocate general, noting clean energy incentive schemes were a tool that could be used by member states rather than an obligatory requirement.
Øe said legislation introduced in 2003 to regulate Italy's renewables incentive scheme had envisioned payments would be made in “a decreasing amount.” On that basis, the advocate general stated, responsible solar park owners could not expect agreed payment plans to remain unaltered during their full, 20-year contract term. “I don't consider that the operators of photovoltaic installations can rely on a legitimate expectation that there would be no change in the benefit of those incentives for the entire duration of the contracts concluded with GSE,” said Øe, referring to state energy body the Gestore dei servizi energetici which is the counter party to the clean energy FIT contracts.
The advocate general pointed to ECJ case law from the Agrenergy and Fusignano Due ruling in 2011 which determined provisions of Italy's fifth Conto Energia energy bill were “of such a kind as to indicate at once to prudent and circumspect economic operators that the support scheme applicable to solar photovoltaic plants might be altered or even withdrawn by the national authorities in order to take account of changes in certain circumstances.”
Crucially, Øe highlighted the FIT contracts signed by solar park owners reserved GSE the right to “amend the terms of those contracts unilaterally, in order to take account of developments in the legislative frame of reference.”
On the claim the changes made to the FIT payments restricted the rights to property of solar park owners, Øe said the amendments to the incentive scheme did not limit park operators' ability to control their assets, they merely reduced the amounts paid to them.
The Danish advocate general added, the Italian state had given solar farm owners the choice of three types of FIT contract renegotiation and had offered low-cost loans to reduce the financial burden on those affected. The changes introduced by the government initially saw solar parks paid for 90% of their estimated electricity output with any outstanding balance settled within six months of the end of the year in question. After that, park owners could choose to extend the same level of FIT payments over a 24, rather than 20-year contract; could accept an under payment for a defined period of their 20-year deal, followed by an overpayment; or could accept the default option of a straight 8% cut in payments for facilities with a generation capacity of more than 900 kW, 7% for assets bigger than 500 kW and up to 900 kW or 6% for installations bigger than 200 kW and up to 500 kW.
The opinion is set to be welcomed by the governments of Czechia, Germany, Greece and Spain, which gave input to the ruling and backed the right of EU member states to have the freedom to amend renewables incentive programs. The opinion also had input from the European Commission.