Italy’s recent regulatory initiative, Energy Release 2.0, marks a significant step towards accelerating the adoption of renewable energy among energy-intensive users. This measure introduces a structured approach to energy procurement, ensuring long-term sustainability and stability in energy markets. A key element of this regulation is its intersection with Power Purchase Agreements (PPAs), which offer businesses a means to fulfil their energy commitments efficiently.

What is Energy Release 2.0?

Energy Release 2.0 is a regulatory measure introduced by the Italian government to incentivise the expansion of renewable energy capacity. Under this programme, the Gestore dei Servizi Energetici (GSE) transfers available energy to qualifying energy-intensive companies over a 36-month anticipation period. In return, these companies commit to developing new renewable energy plants, ensuring that the advanced energy is repaid over 20 years.

The primary objective of this regulation is to support Italy’s transition to renewable energy by encouraging industrial consumers to invest in new generation capacity instead of relying on traditional energy sources. This initiative is expected to contribute an additional 5GW of renewable energy capacity to Italy’s grid, significantly reducing reliance on fossil fuels.

Who is Affected?

Energy Release 2.0 primarily impacts energy-intensive users, including manufacturers, heavy industries, and large commercial enterprises. To participate, businesses must be registered or in the process of registering on the list held by Cassa per i Servizi Energetici e Ambientali (CSEA).

These companies have two primary options:

1. Develop their own renewable energy capacity (solar, wind, or hydro) to meet their energy repayment obligations.
2. Enter into a PPA with a third-party renewable energy provider, securing a long-term energy supply agreement to comply with the regulation.

Participation Requirements

Eligible energy-intensive users can participate in Energy Release 2.0 either individually or as part of an aggregation. To do so, they must submit an expression of interest by 3rd March 2025. The request must not exceed the company’s average annual electricity consumption, as determined by CSEA registration.

Additionally, participants are required to provide a financial guarantee to ensure compliance with participation requirements. This mechanism is designed to secure commitment from participants and maintain the integrity of the allocation process.

New Generation Capacity Requirements

To comply with Energy Release 2.0, the new generation capacity must:

• Consist of new solar, wind, or hydro plants with a minimum power of 200 kW each OR upgrades to existing systems that increase power by at least 200 kW.
• Be at least twice the capacity required to produce the volume of electricity subject to restitution.
• Be commissioned within 40 months of signing the anticipation contract.
• Be developed independently or through a third-party PPA arrangement.

How Energy Release 2.0 Intersects with PPAs

A PPA (Power Purchase Agreement) is a contractual agreement between an energy buyer and a renewable energy provider, typically spanning 10-20 years. Under Energy Release 2.0, PPAs become a critical compliance tool, enabling energy-intensive businesses to fulfil their commitments without directly developing and managing new renewable energy projects themselves. Instead, they can leverage the expertise of third-party specialists.

The Anticipation and Restitution Contracts

Anticipation Contract

• Must be signed within 30 days following the allocation process.
• Grants energy-intensive companies the right to receive electricity and Guarantees of Origin (GOs) for 36 months.
• Structured as a two-way Contract for Difference (CfD) with a strike price of €65/MWh, ensuring price stability for participants.
• In cases of non-compliance, penalties may apply, including the obligation to return all benefits received during the anticipation period.

Restitution Contract

• Must be signed within 40 months of the anticipation contract.
• Requires participants to return the advanced energy over a 20-year period.
• The contract must be signed by the plant owner, which could either be the energy-intensive company itself or a third-party PPA provider.
• Also structured as a two-way Contract for Difference (CfD) with a strike price of €65/MWh.

How AFS Energy Can Support Companies

AFS Energy plays a key role in helping businesses navigate Energy Release 2.0 by facilitating customised PPAs that align with the initiative’s regulatory framework. Our services include:

• Identifying and securing PPA partners that meet regulatory requirements.
• Developing tailored contractual agreements that optimise cost, risk, and compliance.
• Ensuring seamless integration between PPAs and the Restitution Contract.
• Providing market insights to help clients adapt to Italy’s evolving energy landscape.

Given our expertise in structuring long-term energy agreements, AFS Energy helps businesses secure the best possible renewable energy solutions while ensuring compliance with the regulation.

The Economic and Environmental Impact of Energy Release 2.0

Economic Benefits

The implementation of Energy Release 2.0 is expected to:

• Drive investment worth billions of euros in renewable energy infrastructure.
• Boost economic growth and long-term energy security.
• Create jobs in construction, maintenance, and technology innovation as new renewable projects are developed.

Environmental Impact

• The initiative aims to add 5GW of new renewable energy capacity to Italy’s grid.
• It will contribute significantly to reducing Italy’s carbon footprint.
• It supports Italy’s 2030 and 2050 climate goals, aligning with the European Union’s broader decarbonisation efforts.

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Energy Release 2.0 represents a transformational opportunity for energy-intensive businesses in Italy to accelerate their transition to renewable energy. Through strategically structured PPAs, companies can:

• Meet regulatory requirements
• Stabilise energy costs
• Enhance their sustainability commitments

With AFS Energy’s expert guidance, businesses can leverage PPAs as a strategic tool to navigate this regulatory shift, ensuring long-term compliance and a competitive advantage in an increasingly sustainable energy market.

By partnering with AFS Energy, companies can confidently engage in renewable energy procurement, optimise their energy strategies, and drive long-term business success in alignment with Italy’s ambitious sustainability objectives.