Less than 20 applications were not considered, as the applicants withdrew from the scheme themselves, explained GSE’s president, Paolo Arrigoni, at an event in Italy.

However, the scheme is currently stalled pending the Commission’s probe into the Energy Release, which could be considered state aid. Subsidising electricity prices for industries on an ongoing basis can distort the European internal single market and goes against Article 107 of TFEU (Treaty on the Functioning of the European Union), which in theory provides an open level playing field.

In this sense, the Energy Release could be potentially categorised as state aid and therefore needed to be approved by the Commission first.

Furthermore, the Energy Release interacts with two other state aid mechanisms in Italy – for indirect emissions costs and for reduced electricity levies. The two state aid schemes can be cumulated, but if the Energy Release is added too, this can lead to overcompensation.

In parallel, the Commission investigates the German decision to subsidise power prices for energy-intensive industries that the new coalition government put forward.

The lawmaker is also expected to finalise a new state aid framework for clean industry, due in June 2025, to support clean tech projects and industrial decarbonisation, as part of the Clean Industrial Deal.

Currently, several state aid schemes steer the demand side of the GO market through a 30 % RES-E sourcing requirement: for indirect emission costs (Veyt quantified demand potential for German and Norwegian beneficiaries) and for tariff discounts, i.e. electricity levies.

GO and PPA market impact

The halt of the Energy Release spells uncertainty for the GO market. GSE will hold its next market session in June 2025, where we could expect the GO volumes that would have otherwise gone to the scheme beneficiaries to be offered in the auction.

This effectively freezes the short-term bearish effect on the Italian market in general, and on 2025, 2026 and 2027 contracts in particular, until the scheme is allowed to recommence.

Furthermore, Veyt notes persistently low renewable generation in recent months in the AIB area and a tightening market balance, which resulted in prices rebounding in week 21.

Additional renewable capacity build-out and with it, the associated GO supply, incentivised by the scheme, is also pushed out in time indefinitely. Together, the pause delays increased industrial RES-E consumption with the associated GOs.

Given the circumstances, it is unclear whether the industrials will adopt the wait-and-see approach, abstaining from GO procurement, or whether the “green conditionality” clause in the two operational state aid schemes will drive them to source RES-E GOs regardless.

During the 2024 disclosure period, more than 5,200 Italian installations benefited from state aid. At the same time, Italian GO cancellations increased by 21.5 TWh.

In 2024, energy-intensive industries in Italy consumed 28 TWh (see above). Allocating 23 TWh of RES-E GOs would cover 80 % of these companies’ electricity needs. Veyt earlier covered the potential impact of the Energy Release on the GO market in a separate analysis.

Separately, the approval to distribute 23 TWh of RES-E and the associated GOs among the 3,000 applicants would result in around 7.67 GWh of renewable power and GO allocation per beneficiary per year.

This means that each beneficiary would receive 23 GWh of renewable electricity and GOs over the scheme’s three-year duration. In turn, each beneficiary would be required to produce double this amount or 46 GWh over a period of 20 years via building their own renewable assets or contracting the capacity via PPAs.

If the production is spread evenly over 20 years, this would require only 2.3 GWh of annual renewable generation which equates to building or contracting a 2 MW solar farm or less than 1 MW onshore wind farm. The latter means installing less than one wind turbine which would be technically impossible.

To compare, Italian solar PPAs in 2024 had an average capacity size of 40.6 MW and average annual production of 55 GWh, according to Veyt’s PPA database. Onshore wind PPAs saw an average 28 MW capacity contracted, producing on average 62 GWh annually.

This suggests that for beneficiaries to be able to find producers willing to sign PPAs, they will have to form consortia and seek multi-buyer agreements for larger-scale projects.