Battery Energy Storage Systems (BESS)

New Italian regulation and tax duties

Italian Energy Storage

In order to meet the European Union's energy and climate greenhouse gas emissions targets by 2030, EU countries need to establish a 10-year integrated national energy and climate plan to cover the period between 2021 and 2030.

In this way, Italy implemented its "PNIEC"¹ integrated national energy and climate plan aimed at ensuring renewable energy contribute to 40% of gross final national energy consumption by 2030 and specifically to make up 65% of electricity consumption by 2030.

The PNIEC envisages the 2030 energy storage scenario to consist of 8 GW of hydroelectric pumping systems (most of which are already in place), 4GW of distributed energy storage systems (i.e. smaller scale storage systems integrated with residential, mostly photovoltaic plants – many of these distributed energy storage systems are also already in place) and 11GW of stand-alone utility scale storage facilities (which need to be developed).

Therefore, battery energy storage systems (BESS) are needed in Italy.

The Italian market for BESS is growing rapidly and currently amounts to 2.3 GW but it almost exclusively consists of residential scale systems, associated with small scale solar plants, having an average capacity of less than 20 kWh. More specifically, 311,189 storage systems were present in Italy in mid- 2023, with a total power of 2,329 MW and a maximum capacity of 3,946 MWh. 

Public law - authorisation procedure for the construction of BESS

With Decree no. 76/2020² and Decree no. 77/2021³ the Italian legislator has recently introduced significant changes in the regulation of BESS by including them among the public utility works to guarantee the safety of the national electricity system.

Decree no. 7/2022 ("Measures to guarantee the security of the national electricity system") regulates the cases where the realisation of the BESS is subject to an authorisation ("Autorizzazione Unica") issued by the Ministry of the Environment and Energy Safety, by the Region or by the Delegated Provinces, or to the simplified authorisation procedure referred to in article 6 of Legislative Decree 28/2011.

The ordinary procedure is provided in the following cases⁴:

1. Electrochemical storage plants located within areas already occupied by electricity production plants powered by fossil fuels with a power greater than or equal to 300 thermal MW in service, as well as "stand-alone" plants located in non-industrial areas and any connections to the network are authorized through a single authorization;
2. Electrochemical storage systems to be operated in combination with electricity production systems powered by renewable sources are considered works connected to the aforementioned systems, pursuant to current legislation, and are authorised through: 
   - The ordinary procedure issued by the Region or the Delegated Provinces if the storage system has a power greater than 300 kW or, 
   - The simplified procedure for storage systems powered by renewable sources which are already operative or authorized but not yet operative.
    

Otherwise, the simplified procedure is provided that electrochemical storage plants located within areas where industrial plants of any nature are located, including those no longer operational or in the process of being decommissioned, or located within areas where electricity production plants powered by renewable sources are located, or from fossil sources that have a thermal power of less than 300 MW or located in quarry or production and treatment areas of liquid and gaseous hydrocarbons in the process of being decommissioned, which do not involve an extension of the areas themselves, nor an increase in overall height compared to the existing situation, nor do they require changes to the urban planning tools adopted. In the absence of one of the above conditions, the ordinary procedure will apply.

The simplified procedure provides that⁵:

• The owner of the property or the person who has access to the properties affected by the system and related works has to submit to the competent municipal authority - on paper or telematically - at least 30 days before the start of the works, a declaration with a detailed report signed by a qualified project manager and with the appropriate project documents, certifying the compatibility of the project with the approved urban planning instruments and the current building regulations, and that it does not contradict the adopted urban planning instruments, as that it complies with safety and health and hygiene regulations. The technical documents for the connection drawn up by the energy network manager are attached to the declaration;
• If within 30 days the municipal authority finds any non-compliance with the regulations, it will notify the interested party with a reasoned order not to carry out the relevant works;
• The authorisation to carry out the works is evidenced by means of a copy of the declaration which shows the date of its receipt, the list of documents presented in support of the project, the certification of the qualified professional, as well as the documents of consent necessary, if any;
• If within 30 days the competent municipal authority has not raised any objections, the party interested in carrying out the works must send a copy of the simplified declaration for publication in the official regional bulletin to the Region in whose territory the works will be carried out. The regional authority proceeds with the publication within the following ten days. The appeal deadlines established by law run from the date of publication;
• The works must be completed within three years of completion of the simplified authorisation procedure. The interested party is however required to communicate to the Municipality the date of completion of the works;
• Once the works are completed, the designer or a qualified technician issues a final test certificate, which must be sent to the Municipality, which certifies the conformity of the work to the project presented with the declaration, as well as receipt of the submission of the cadastral variation resulting from the works carried out or declaration that they have not led to changes in the cadastral classification.
   

The Regions and autonomous Provinces may extend the threshold for applying the simplified procedure to plants with a nominal power of up to 1 MW.

The construction of electrochemical storage systems with a power lower than the threshold of 10 MW does not require the issue of any authorisation, as it is considered a "free activity", unless there are specific landscape, safety or environmental constraints.

New 2024 Excise Tax – Circular no. 17/2024 issued by the Italian Customs and Monopolies Agency

Circular no. 17/2024 of the Italian Customs and Monopolies Agency has clarified many aspects of the fiscal regulation of BESS.

In detail, regardless of the administrative authorisation procedure adopted, from a fiscal perspective, BESS plants connected to the national grid constitute "electrical workshops" pursuant to article 54, paragraph 1 of Legislative Decree no. 504/1995, ("TUA") and, therefore, pursuant to art.1 of the aforementioned Legislative Decree 7/2002 are subject to the payment of the annual licence fee referred to in article 63, paragraphs 3 and 4 of the TUA.

The Circular has specified that the operator of the BESS workshop is required to submit a specific report to the competent Customs Office, pursuant to article 53, paragraph 7 of the TUA, attaching the technical documentation describing the main elements of the system and the related diagrams.

In particular, the BESS electrical workshops are characterised by the interchange of High voltage (AT) or Medium voltage (MT) electricity with the national grid as well as by the presence of systems for measuring the electricity withdrawn or injected into the grid.

The operator is required to provide calibration test certificates for the components of these measurement systems and their combination. Said certificates are valid for three years and issued by one of the laboratories authorised for this purpose by the Custom and Monopoly Agency. To allow field checks, a specific test terminal block is ordinarily provided on the measurement system interchanged with the grid, at the edge of the workshop, in compliance with the requirements of the CEI 13-71 standard. 

For the above-mentioned function of accumulation and supply of electricity produced from renewable sources based on dispatching needs, the operating licence for BESS workshops can be issued by the competent Customs Office, pursuant to article 53, paragraph 7 of the TUA, further to the control of supporting documents which include a specific declaration relating to compliance with fiscal requirements.

The classification of the BESS workshop for fiscal purposes

Regarding the classification of the workshop for tax purposes, it is necessary to distinguish:

• The case of the BESS operates in combination with a production plant (powered by fossil fuels or renewable sources)
  For these workshops, made up of both production and storage equipment, the licence includes both technical cases, therefore both "production workshop" and "accumulation workshop ", and the available power, for tax purposes, is given by the sum of the devices' production and that of the storage devices installed at the plant.
• The case in which the BESS operates exclusively as a storage, transformation and distribution device, that is to say that it constitutes a so-called "stand-alone" plant.
  In this second case, the system auxiliaries draw the electrical energy necessary for their power supply directly from the accumulators and, as far as they are concerned, the available power is the total power of the accumulators installed in the workshop.

Since the energy supplied by the BESS workshops is intended for subsequent resale for commercial purposes, the licence fee is ordinarily Euro 77.47, pursuant to article 63, paragraph 3, letter b) of the TUA.

The uses of electrical energy to power the auxiliary systems of the BESS system (example: air conditioning, lighting, fire prevention systems, etc.) are exempt from excise tax pursuant to article 52, paragraph 3, letter a) of the TUA.

The competent Customs Office may require, pursuant to article 55 of the TUA, the installation of fiscal measurement systems for the verification of consumption within the workshop as well as any consumption that is subject to different tax treatments that may be identified at the workshop.

Finally, the Circular provides that storage systems with very low capacity served by production plants powered by renewable photovoltaic sources with available power not exceeding 20 kW remain governed, without modification, by article 52, paragraph 2, letter a) of the TUA and by Protocol 38562/RU of 31 January 2020.

Therefore, based on the provisions of article 52, paragraph 2 of the TUA, the excise duty on electricity does not apply in the following cases:

• Energy produced with systems powered by renewable sources with a power not exceeding 20 kW;
• Energy used in aircraft, ships, motor vehicles, provided it is produced on board with its own means, excluding accumulators, as well as that produced by the mobile generators supplied to the armed forced of the State and bodies assimilated to them;
• Energy produced with generators powered by biological methane gas;
• Energy produced by small generating plants however operated, provided that their available power does not exceed 1 kW as well as produced in electrical workshops made up of groups emergency generators with not overall available power greater than 200 kW;
• Energy used mainly for chemical reduction and electrolytic and metallurgical processes;
• Energy used in mineralogical processes;
• Energy used for the manufacture of products the final cost of which, calculated as an average per unit, accounts for more than 50% of the production.

Footnotes

1. "Piano Nazionale Integrato per l'Energia e il Clima"

2. See article 62, § 1.

3. See article 31, § 1, lett. a).

4. For an-depth overview, see Study no. 47/2023 published by the Chamber of Deputies on 27 June 2023.

5. Article 6 of Legislative Decree no. 28/2011.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.