Italy: Umbria Outlines Criteria for Measuring Photovoltaic Environmental Compensation

The Umbria Regional Executive approved Decree No. 1229 on November 4, which establishes the criteria for determining the economic value of environmental and territorial compensations that proponents of renewable energy facilities must provide to municipalities. This measure applies to single authorization (AU) procedures and simplified enabling procedures (PAS) and includes two annexes: one for photovoltaic and agrivoltaic systems, and another for wind power.

Decree-Law No. 190/2024 set compensation rates between 1% and 3% of the economic value of expected production over the facility’s useful life for PAS, and between 1% and 4% for AU, but did not specify how to calculate that value. According to the Region, this gap has led to issues and, in some cases, conflicts between proponents and public administrations. The decree implements Article 7 of Regional Law No. 7/2025, which raises the minimum threshold to 2% of revenues for facilities under AU in suitable areas and to 3% in unsuitable areas.

For photovoltaic systems, this criterion applies to applications submitted in 2026 and assumes a useful life of 20 years. The first-year energy yield must be estimated using the PVGIS software and reduced by 0.75% per year to account for module degradation. The average over the 20-year period determines the expected annual average energy yield.

The reference price is the Central-South zonal price of the Day-Ahead Market (MGP) of the Italian Power Exchange (GME) in 2025. Since photovoltaic systems generate electricity only during daylight hours, the region does not use the 24-hour average of 116.32 €/MWh. Instead, it uses six average prices calculated over progressively wider daytime intervals: ranging from 91.55 €/MWh for the three-hour window between 1:00 p.m. and 3:00 p.m., to 112.49 €/MWh for the 12-hour window between 8:00 a.m. and 7:00 p.m. Each interval corresponds to an annual equivalent number of operating hours, ranging from 1,095 to 4,380. The applicant determines the applicable price based on the equivalent operating hours of their facility, calculated by dividing the annual average energy yield by the nominal active power, using linear interpolation for intermediate values. Any applicable incentives must be added to this price.

Multiplying the average generation capacity by the energy value yields the annual revenues, which are then discounted over 20 years at the legal interest rate (1.6% for 2026, equivalent to a coefficient of 17). On this amount, net of self-consumed energy, the following percentages are applied: 1–3% for PAS and 2–4% for AU. This criterion does not apply to the self-consumed share in self-consumption configurations and renewable energy communities (CER). It remains possible to adopt an alternative criterion, provided it is equivalent and specified in an analytical, verifiable, and reproducible manner.

The annex presents the case of a 9.8 MW facility. PVGIS estimates a production of 13,667 MWh in the first year, equivalent to an average of 12,736 MWh over 20 years and approximately 1,300 equivalent hours. The reference price is therefore €94.64/MWh, and in the absence of incentives, the annual revenues amount to approximately €1.2 million, which becomes €20.49 million when discounted. The compensations thus range between €204,901 and €614,703 in the case of PAS, and between €409,802 and €819,604 in the case of AU.

The baseline values, namely prices and interest rates, will be updated annually by January 15. Under the regional law, environmental compensations are to be fulfilled preferably through the construction of renewable energy facilities, which are to be transferred to the municipalities and dedicated to public services or to Community Energy Companies (CER) for which the municipality is a promoter or member. The 2010 national guidelines also provide for environmental mitigation measures, energy efficiency improvements, and citizen awareness initiatives.