PV Investment Italy 2026: Market Analysis, FER-X & Strategies
Italy’s subsidy framework has been back in place since August 2026: The FER-X Decree allocates 37.15 GW, and the strike price for photovoltaic power in the auctions is 80 euros per MWh. The application deadline for the first round is September 30, 2026. What this means for German investors—market, subsidies, permits, taxes.
The short answer
PV Investment Italy 2026 is based on a new framework: The FER-X Decree of June 18, 2026, has been in effect since August 7, 2026, and allocates 37.15 GW. In the auctions, the strike price for photovoltaic power is 80 euros per MWh over 20 years. The application deadline for the first round is September 30, 2026.
This article is intended for investors with at least 100,000 euros in equity and for businesses interested in their own projects—not for private households. It organizes market data, subsidy mechanisms, permitting requirements, and the tax implications of an investment in renewable energy so that you can see which deadlines are still active in 2026 and which have already passed. Each figure includes its source and current status. The page “Photovoltaics as an Investment” provides an overview of this investment segment.
Market Data for 2026: What the Solar Energy Figures in Italy Reveal
Italy’s installed photovoltaic capacity grew from 37,002.1 MW to 43,687.4 MW in 2025, distributed across 2,090,496 systems (Terna, Statistical Data on Electricity in Italy 2025, as of December 31, 2025). In the first half of 2026, 3,093 MW were added, an increase of 10.1 percent compared with the same period the previous year. The PNIEC target for 2030 is 79,253 MW.
The expansion continues to be unevenly distributed. In the first quarter of 2026, 1,439 MW—approximately 1.4 GW—were added, with the remaining 1,654 MW added in the second quarter. This growth is driven by commercial and industrial installations and utility-scale ground-mounted systems, while the residential sector is in decline (Italia Solare, July 17, 2026). The 3,093 MW installed in the first half of the year represent 89,173 new installations—an average of 34.7 kW per installation (Italia Solare, citing Terna-Gaudì). The market is thus supported by a large number of small installations and a small number of large projects. The latter segment is relevant for investors with at least 100,000 euros in equity capital.
Generation grew faster than capacity: 26,294 GWh in the first half of 2026 represents an increase of 19.2 percent (Terna, Monthly Report, June 2026). The gap between capacity and generation growth indicates that the plants connected in 2025 fed electricity into the grid for a full half-year for the first time in 2026.
To put the gap relative to the PNIEC target into perspective: There is a difference of approximately 35.6 GW between the level projected for the end of 2025 and the 79,253 MW target for 2030. At the rate of expansion seen in the first half of 2026, the target would be unattainable. This gap is the reason why Italy has revised its 2026 support framework.
Cumulative interim figures for 2026 are available, though from a different source: Based on Terna’s Gaudì plant registry as of June 30, 2026, the Italia Solare association reports a total capacity of 46,606 MW and 2,255,654 plants (published on July 17, 2026).
This figure cannot be reconciled with the 43,687.4 MW listed above. Terna maintains its consolidated annual figures in one set of statistics, the Gaudì plant registry in a second, and the monthly reports in a third. All three are correct in their own right and measure different things—the monthly reports show changes, the annual statistics show a consolidated inventory, and the plant registry shows the status of grid connections. If you include values from two of these series in the same calculation, you create a discrepancy that does not actually exist.
To put this into a European context: Solar energy now contributes more to Italy’s expansion of renewable energy than wind power, both in terms of electricity generation and new capacity. The energy transition in Italy is thus relying on the same technology as in Germany, but under different market conditions—higher solar radiation, higher prices, and a subsidy system that was overhauled in 2026.
Utility-Scale: Where Solar Farms Become Economically Viable in Italy
Utility-scale projects are driving Italy’s expansion in terms of megawatts, not the number of installations. Large ground-mounted solar farms are thus the main driver of growth, not the number of solar installations. A solar farm in Italy benefits from higher solar radiation than comparable sites in Germany and from a price level that averaged 115.94 euros per MWh in 2025 (GME, Annual Report 2025).
The GME’s PUN Index shows a significantly higher level for 2026: January 132.66, February 114.41, March 143.40, April 119.47, May 119.35, June 132.50, and July 157.04 euros per MWh. The range within a year is thus approximately 43 euros per MWh. An investment model that uses an annual average does not account for this fluctuation.
On the revenue side, the zone price is the determining factor, not the national index. Since January 1, 2021, Italy has been divided into seven physical bidding zones: North, Central-North, Central-South, South, Calabria, Sicily, and Sardinia (ARERA, Resolution 103/2019/R/eel). Price differences arise between these zones as soon as transmission interconnections reach full capacity.
No institution publishes a reliable, technology-specific revenue metric for photovoltaics in Italy. As an approximation, the average recognized zone price in the GSE’s Ritiro Dedicato program is used: 11.5 cents per kWh for 2025 and 12.8 cents per kWh for the first quarter of 2026. This figure includes all renewable sources and is not specific to photovoltaics.
When comparing locations, one should evaluate the zone, grid connection point, and marketing channel together. The southern zones offer higher solar radiation but are more frequently subject to price pressure due to excess generation—this is where the most solar energy meets the lowest local demand. The northern zones provide lower yields but more stable prices and serve customers with high energy costs.
In project development, this decision is made earlier than many people realize. Open spaces with secured grid connections are the bottleneck, not the technology—project developers secure sites and connection points long before solar projects move into the implementation phase. Projects of this magnitude tie up capital for two to three years before the first kilowatt-hour is generated—the investment begins with securing the site and obtaining permits, not with the purchase of modules.
FER-X Auctions in Italy: How the Mechanism Will Work in 2026
The FER-X Decree of June 18, 2026 distinguishes between two access pathways. Plants up to 1 MW receive direct access without a bidding process; the regulatory authority ARERA sets the strike price administratively. Plants larger than 1 MW compete in auctions. Both routes result in a 20-year bilateral contract for difference—known internationally as a Contract for Difference (CfD). Italy thus operates a CfD system with a 20-year term.
The total quota is 37.15 GW. Of this, 10 GW is allocated to direct access for plants up to 1 MW across all technologies—open until December 31, 2030—and 27.15 GW is allocated to auctions. Within the auction quota, the Ministry of the Environment provides an estimated breakdown of 16.5 GW for wind, 10 GW for photovoltaics, 0.63 GW for hydropower, and 0.02 GW for sewage gas. This breakdown is explicitly designated as an estimate and is not binding.
The European Commission approved the scheme on June 8, 2026, under reference number SA.115180. The budget estimated under state aid law amounts to 23 billion euros; the legal basis is the CISAF Framework in conjunction with Article 107(3)(c) of the TFEU. Separate procedures with preselection criteria under the Net-Zero Industry Regulation apply to photovoltaic and wind projects exceeding 1 MW.
The contract for difference works both ways: If the market price is below the strike price, the government pays the difference; if it is above the strike price, the operator repays the difference. If prices are negative, no payment is made. For modeling purposes, this means that the strike price serves as both a lower bound and an upper bound on revenue.
A look at Germany illustrates just how significant this concern is: There, the day-ahead price in 2025 was below zero in 573 out of 8,760 hours (Federal Network Agency, January 5, 2026), up from 457 hours in 2024. Anyone calculating an investment in renewable energy over a 20-year period should treat this magnitude as a risk, not as an exception.
A note regarding the legal form, which causes confusion in practice. The decree has no number and has not been published in the Gazzetta Ufficiale. The ministry expressly links its effectiveness to publication on its own website: published on August 6, 2026, effective as of August 7, 2026. It may be cited only as “DM June 18, 2026.”
The award prices from the competitive bidding processes are now available. For photovoltaics, the GSE reports an award price of 80 euros per MWh, an upper price of 95 euros, and a lower price of 65 euros (GSE, Prezzi di aggiudicazione, accessed September 10, 2026). Onshore wind power is set at 85 euros per MWh, and hydropower at 90 euros per MWh. For direct access up to 1 MW, ARERA sets the strike price separately; no published value was available as of September 10, 2026.
| Technology | Exercise Price | Highest Price | Lowest price |
|---|---|---|---|
| Photovoltaics | 80 €/MWh | 95 €/MWh | 65 €/MWh |
| Onshore Wind | 85 €/MWh | 95 €/MWh | 70 €/MWh |
| Hydropower | 90 €/MWh | 105 €/MWh | 80 €/MWh |
| Sewage gas | 85 €/MWh | 100 €/MWh | 75 €/MWh |
| Source: GSE, FER X final — Award Prices, accessed September 10, 2026. The bid in the auction is a percentage discount off the upper price. | |||
Two points are critical to the model calculation. First, the bid in the auction is a percentage discount on the upper price of 95 euros, not on 80. Second, the exercise prices are adjusted for inflation as of the date of the respective tender and are then partially indexed over the twenty years; so the stated value is a starting value, not a fixed amount over the term. The auction calendar itself is included in an appendix to the Executive Decree, which is currently not machine-readable.
A look at Italian price levels illustrates how the difference contract is currently working. The PUN averaged 157.04 euros per MWh in July 2026, was around 180 euros in August, and stood at 202.89 euros during the week of August 31 through September 6, 2026 (GME figures, cited from Staffetta and ANSA, September 3 and 7, 2026). If the market price is so significantly above the strike price of 80 euros, the bilateral spread contract functions not as a subsidy but as a repayment obligation.
This calculation can flip several times over the course of twenty years, and that is precisely the purpose of the instrument: It trades the prospect of peak revenues for a floor. Anyone who calculates based on today’s market prices in 2026 and derives an expected return from that is interpreting the contract the wrong way. Anyone who views it as a hedge against a price level of 40 or 50 euros per MWh is interpreting it correctly.
Applying for FER-X: Deadlines, Application Methods, and Prerequisites
The application process is handled through the GSE portal. Applications for prequalification have been accepted since August 25, 2026. Anyone wishing to participate in the first auction round must submit their prequalification application by September 30, 2026. Facilities larger than 1 MW must also submit an expression of interest.
Photovoltaic Incentives in Italy in 2026: Timeline and Upfront Costs
The process for entering the first auction round consists of five steps:
- Apply for admission to the balancing energy market — mandatory for plants larger than 1 MW; voluntary for those below that capacity.
- Submitting an application for prequalification via the GSE portal has been possible since August 25, 2026.
- For plants larger than 1 MW, submit an expression of interest as well.
- Submit both documents by September 30, 2026; otherwise, you will not be eligible to participate in the first round.
- After being awarded the contract, construct the facility within the implementation period and submit the application for registration.
The operational rules are set forth in Director’s Decree No. 82 of the Ministry of the Environment, dated August 7, 2026, and published on August 10, 2026. It approves both the procedural rules and the timeline for the procedures. The schedule itself is included in an appendix that is currently not machine-readable.
One prerequisite is often overlooked: Registration in the balancing energy market is a requirement for access. It is mandatory for plants over 1 MW and voluntary for plants up to 1 MW (ARERA, Resolution 227/2025/R/eel dated June 3, 2025). Those who wait until after the contract award to take this step will lose valuable time within the already tight implementation window.
So far, the only information available regarding the implementation window comes from the transitional procedure: 36 months from the publication of the ranking list until the system goes live, followed by 90 calendar days to submit an access application via the FER-X portal. It is not clear whether the final decree will set the same deadlines.
The results of the transitional procedure show how pricing works in practice. The photovoltaic lot PC_FTV_2025_01 was awarded on December 1, 2025, with approximately 7,700 MW—or 7.7 GW—and 474 plants; the weighted award price was 56.825 euros per MWh, with an average discount of 37.34 percent. The wind lot reached 72.851 euros per MWh at the same time.
A second photovoltaic lot with pre-selection criteria was awarded on December 10, 2025: over 1,100 MW, 88 plants, weighted at 66.378 euros per MWh with a discount of 27.696 percent. Both lots are part of the same first round. They are sometimes presented as two consecutive auctions, which distorts the price trend.
No FER-X access procedure took place between the expiration of the transitional decree on December 31, 2025, and the effective date of the new regulation on August 7, 2026. The Ministry and GSE describe the new regulation as a continuation of the previous one. In practice, this gap meant that projects ready for construction in the first half of 2026 had no call for proposals available.
Dispatch and System Services: What TIDE Is Changing
TIDE is the new regulatory framework for dispatching and system services (ARERA, Resolution 345/2023/R/eel of July 25, 2023, effective as of January 1, 2025). It is gradually replacing the previous regulations. The current version is Revision 4, as per Delibera 227/2025/R/eel dated June 3, 2025.
The TIDE reform is therefore not a new pricing model, but a new access and billing system. Anyone who interprets it as a pricing reform is looking for its impact in the wrong place.
TIDE Reform: Electricity Market Access, Aggregation, and Control Power
Implementation is taking place in phases. The transition phase ran from January 1, 2025, to January 31, 2026. The consolidation phase has been in effect since February 1, 2026. ARERA has deliberately not set a date for the final phase; it will begin at a time to be determined by the grid operator, Terna.
Three changes are relevant for plant operators. First, TIDE separates the role of the balancing group manager from that of the provider of system services; the two roles may, but do not have to, be held by the same entity. Second, market access is technology-neutral. Third, there are two separate licensing pathways, depending on whether frequency-related services are to be provided.
Aggregation occurs at three levels: individual plant, node-based group, and zone-based group. Each unit has exactly one system service provider. For photovoltaic systems with storage, it is important to note that, for approved storage systems, the consumption side must be assigned to the same generation unit.
The schedule has been postponed several times. Market procurement of primary control power began on June 3, 2026, instead of February 1, 2026. The obligation to submit bids has been in effect since September 1, 2026. The end of the trial phase is set for November 30, 2026. The planned withdrawal trading units have been suspended until further notice.
For battery storage, ARERA has permanently capped the mandatory supply requirement for primary control power at 10 percent of rated capacity instead of 100 percent (Resolution 190/2026/R/eel of May 26, 2026). This preserves flexibility for other revenue sources and is the most important single aspect of the reform for revenue models with multiple revenue streams.
Zone Prices, PUN, and the Implications for PPA Contracts
Effective January 1, 2025, Italy changed the billing method for the purchase side. Since then, purchase bids from consumer units have been valued at the zone price; the national unit price now applies only through a balancing component. This was mandated by a ministerial decree dated April 18, 2024, implementing Article 13 of Legislative Decree 210/2021.
This does not change anything regarding the payment for photovoltaic systems on the spot market. Generators were paid at the zone price both before and after January 1, 2025. Anyone who reads that Italy has changed its pricing structure should keep this distinction in mind: It affects the demand side, not the feed-in.
An exception is crucial for investors. The PUN Index remains the reference price for the futures market, for PUN-linked futures, and for assessing deviations from the schedule on the PCE trading platform. On that platform, the regulation explicitly covers purchases and sales. Anyone holding PUN-indexed futures or purchase contracts is therefore certainly affected.
Practical implications for contract drafting: A PPA indexed to the PUN and a plant that is compensated at the zone price follow two different price trends. This fundamental difference should be included in the model calculation, not in a footnote. PPAs have been common in Italy for years—in a PPA, the issue of indexation is more often underestimated than the term.
The zoning structure itself remains unaffected by the change. The seven physical bidding zones have been in place since January 1, 2021; at that time, Calabria was added, Umbria was moved to Centro Sud, and the special domestic generation zones were eliminated. In addition, there are virtual zones for the foreign clearinghouses.
Utility Bill Decree: What Investors Need to Know
The “Decreto Bollette,” implemented by Law 49/2026 and in effect since April 19, 2026, affects several revenue mechanisms in the Italian electricity market. Some measures are subject to an EU state aid review, while others have been suspended by ARERA. For investors, the effective date of individual articles is of particular importance.
This process has its own page that breaks down the mechanisms in detail. For the purposes of this post, it suffices to note that the measures affect the unhedged portion of a project’s revenue, not the portion hedged through a spread contract. For details, see “Decreto Bollette: Implications for PV Investors.”
Energy Release 2.0: Results and Construction Obligations for Project Developers
Energy Release 2.0 provides energy-intensive businesses with electricity at 65 euros per MWh in exchange for the construction of new renewable capacity. The legal basis for this program is Article 1, paragraph 2, of Legislative Decree 181/2023 and Ministerial Decree No. 268 of July 23, 2024, as amended by Decree No. 204 of July 29, 2025.
The competitive bidding process ran from April 13 to May 13, 2026, with no provision for an extension. The GSE published the ranking on June 9, 2026: A single successful bidder will assume the return obligation of 21 energy-intensive businesses and aggregators totaling 1,734,184 MWh.
This amount must be put into context—though not in relation to the 24 TWh per year allocated in advance as provided for by the program. These are two sides of the same mechanism: On the “Anticipazione” side, demand significantly exceeded supply, while the 1,734,184 MWh is the result of the competitive bidding process for the return obligation. Comparing these two figures does not provide any insight into the program’s utilization rate. A subsequent window had not been published as of September 10, 2026.
Nevertheless, the mechanism remains attractive to project developers because it triggers a construction obligation. Anyone who receives electricity under the advance allocation must build new generation capacity equal to at least twice the annual production within 40 months of signing the contract, with the facility commissioned no later than December 31, 2030. The repayment period is 20 years.
Battery Storage and the MACSE Capacity Market
Italy is establishing its own procurement market for storage capacity through MACSE. The first auction for the 2028 delivery year took place on September 30, 2025. The grid operator’s preliminary report cited approximately 10 GWh at a capacity-weighted average of 12,959 euros per MWh per year. Following the partial withdrawal of one successful bidder, the grid operator’s updated report shows 9,968 MWh across 14 storage systems and a maximum capacity of 1,491.4 MW.
The winning bid prices vary significantly by zone: Southern Calabria 12,137, Central-Southern Italy 14,566, Sardinia 15,029, and Sicily 15,846 euros per MWh per year, each as a weighted average based on a 15-year contract term. The maximum bid price set in the tender was 37,000 euros per MWh per year.
The second auction for the 2029 delivery year is scheduled for November 24, 2026, at 10:00 a.m. The demand is 16 GWh and is distributed exclusively across Southern Italy and the islands; for Northern and Central-Northern Italy, it is set to zero. The time remaining until the auction:
- Applications for admission: July 7–27, 2026 — deadline has passed.
- Upload documents to the portal by September 10, 2026 — deadline has passed.
- Deposit of the security deposit: in October 2026, prior to the auction.
- Auction: November 24, 2026, 10:00 a.m.
In Consultation Document 283/2026/R/eel dated July 31, 2026, ARERA proposed a maximum price of 22,000 euros per MWh per year. The consultation ended on September 7, 2026; as of September 14, 2026, a final decision had not yet been reached. The proposed figure is significantly below the maximum price set in the first round, but above the actual winning bid prices achieved in that round.
The 16 GWh from the second round correspond to half of the additional capacity that ARERA deems necessary by 2030: 32 GWh. The figures currently circulating—50 GWh by 2030—are not substantiated by any primary source. For investors, this means that, following the auction in November 2026, a volume of roughly the same magnitude will still be available for allocation.
Regarding the inventory: As of December 31, 2025, Terna reports 1,812.7 MW of gross capacity from standalone large-scale storage systems, excluding pumped-storage facilities. In addition, there are 884,355 systems behind the meter with a total capacity of 5,570 MW and 11,020 MWh, primarily residential storage systems. These two figures are measured differently and should not be added together.
New capacity additions slowed noticeably in 2026. In the first half of the year, 593 MW and 1,350 MWh were added—a decline of 45.7 percent in power and 59.9 percent in capacity compared with the same period the previous year. Terna does not publish a cumulative absolute value in GWh for 2026.
Agri-Photovoltaics in Italy: Funding Framework for Agri-PV Projects
The Italian agri-PV subsidy program is based on Ministerial Decree No. 436 of December 22, 2023, which took effect on February 14, 2024. It combines an investment grant of up to 40 percent with a 20-year feed-in tariff agreement. The European Commission approved the scheme on November 10, 2023, under SA.107161.
There are two figures circulating regarding the amounts, each of which measures different things. The 1.7 billion euros is the total amount approved under state aid law: approximately 1.1 billion euros in investment grants from the Recovery and Resilience Facility, plus approximately 560 million euros in estimated feed-in tariffs over 20 years. The grant portion alone is lower.
The grant amount was originally set at 1,098,992,050.96 euros. A Commission proposal dated August 7, 2026, calls for a reduction to 999,000,000 euros; this reduction will take effect through a supplemental agreement. In four grant awards issued between June 5 and August 12, 2026, the GSE approved a total of 998,562,000.02 euros—practically the full allocation.
The key message for investors, therefore, is this: The application window for this program has closed. Administration of the program was transferred to the GSE in February 2026 (Article 27 of DL 19/2026, converted by Legge 50/2026). The deadline for finalizing the grant agreements expired on June 30, 2026, and was extendable by 60 days by law; the final act is dated August 12, 2026.
For projects that have already been approved, a new commissioning deadline of 24 months from the publication of the respective approval notice applies—meaning project development continues, but without new applications. Anyone wishing to get involved today will therefore acquire a project stake in an existing approval—no new funding is available. For an overview of this segment, see “Agri-PV Italy as an Investment.”
A note regarding the confusion over names: Parco Agrisolare is a different program. It supports rooftop systems on agricultural buildings and is administered by the Ministry of Agriculture. Figures from this program do not belong in an agri-PV calculation.
Permitting Law: Suitable Sites for Renewable Energy
The designation of suitable sites for renewable energy facilities is based on Article 20 of Legislative Decree No. 199/2021 and the Ministerial Decree of June 21, 2024 (Official Gazette No. 153 of July 2, 2024). The decree sets forth the conditions under which a simplified permitting process is available.
The legal situation changed in 2026 in favor of planning certainty. In 2025, the Lazio Administrative Court had struck down two paragraphs of the decree. The Council of State amended this ruling with Decision No. 6151/2026 of July 30, 2026; the affected paragraphs are once again in effect. Earlier descriptions that characterize the decree as partially repealed are now outdated.
Two additional rulings are relevant to project practice. In its ruling No. 4135/2026 of March 5, 2026, the Lazio Administrative Court dismissed a project developer’s lawsuit, holding that tacit consent does not apply in environmental impact assessment proceedings. The authority must issue an explicit decision.
In its ruling No. 346/2026 of February 14, 2026, the Administrative Court of Sardinia ruled to the contrary and overturned a decision denying the application. The key point of the ruling is that a lack of suitability can never amount to an absolute and blanket prohibition. Lack of suitability precludes the use of the simplified procedure, but does not preclude the feasibility of the project.
Both rulings are based on the case law of the Constitutional Court, which has declared regional exclusion regulations in Sardinia and Calabria to be unconstitutional. For due diligence, this means that an area outside the designated zones is eligible for approval, but the procedural process is longer and the outcome is less certain.
Taxes for German Investors in Italian Project Companies
An Italian project company pays 24 percent corporate income tax (Article 77 of the TUIR). In addition, there is the regional tax IRAP, with a standard rate of 3.90 percent. For the 2026 and 2027 tax periods, this rate will increase by two percentage points to 5.90 percent for the energy sector.
The increase is based on Article 3, paragraph 1, of Decree-Law No. 21 of February 20, 2026, converted with amendments by Law No. 49 of April 10, 2026. It covers the economic activity categories B/06, B/09.1, C/19.2, D/35.1, D/35.2, D/35.4, and H/49.50.1—that is, in addition to the generation, transmission, and distribution of electrical energy, it also includes extraction, refining, and pipeline transportation. The increase applies only if the activity is carried out predominantly. The regions may vary the rate by up to 0.92 points.
Withholding tax on distributions: 26, 1.20, or 0 percent
Italy generally levies a 26 percent withholding tax on the distribution (Article 27, paragraph 3, of DPR 600/1973 in conjunction with DL 66/2014). However, this rate usually does not apply to the typical structure used by German investors—and this is precisely where calculations are often incorrect.
For corporations headquartered in the EU or the EEA that are subject to corporate income tax there, the rate is 1.20 percent, with no minimum ownership requirement and no holding period (Article 27, paragraph 3-ter of DPR 600/1973). The 26 percent rate expressly excludes these corporations. The rate remains unchanged in 2026.
Withholding tax is fully waived for direct equity interests of 10 percent or more that are held continuously for at least one year (Article 27-bis of Presidential Decree 600/1973; threshold lowered by Article 2, paragraph 2, of Legislative Decree 49/2007). The exemption may be applied for directly at the source; the required documentation must then be submitted prior to payment.
Double Taxation Treaties and the German Side
For individuals and free-floating shares, the Double Taxation Agreement of October 18, 1989, applies. Under the treaty, the withholding tax can be reduced to 15 percent: Article 10, paragraph 2, limits it to 15 percent, while Article 10, paragraph 3, limits it to 10 percent for direct equity holdings of at least 25 percent. For interest, Article 11, paragraph 2, also specifies 10 percent—two different provisions with the same figure.
Refunds of excess withholding tax are not processed through the Federal Central Tax Office but through the Italian tax authorities; the Centro Operativo di Pescara is responsible for this. The deadline is 48 months from the date of withholding (Article 38 of Presidential Decree 602/1973). A certificate of residence, a declaration regarding a permanent establishment, and proof of withholding are required.
Under the German provisions, Article 24, paragraph 3(a) of the agreement generally exempts Italian income subject to the progression clause. The box exemption for dividends requires a minimum ownership interest of 10 percent and applies expressly only to corporations—a GmbH & Co. KG acting as a shareholder is excluded. For all other dividends, the credit method applies.
Every audit should include two caveats. According to Protocol Article 16(d), the exemption applies only if the income was actually taxed in Italy. And according to Protocol Article 8, the maximum rates specified in Articles 10 and 11 do not apply if the remuneration is profit-related and deductible by the payer.
At the German level, the exemption for income from equity investments under Section 8b of the German Corporate Income Tax Act (KStG) applies to corporations: 95 percent of such income remains tax-exempt, while 5 percent is considered a non-deductible business expense. The threshold under Section 8b(4) of the KStG is 10 percent at the beginning of the calendar year; for trade tax purposes, Section 9(7) of the German Trade Tax Act (GewStG) must be observed.
A Date to Keep in Mind for Future Planning: As of January 1, 2027, the aforementioned Italian regulations will be replaced by Articles 55 and 56 of Legislative Decree No. 33 of March 24, 2025. As things stand at present, this is a recodification that does not involve any changes to the rates or thresholds.
IAB and Special Depreciation for Investments in Italy
For a facility located in Italy, the investment deduction and special depreciation under § 7g of the Income Tax Act (EStG) do not apply if the asset is used in the taxpayer’s own business. § 7g(1), first sentence, of the EStG requires that the asset be used at a domestic business establishment; § 7g(6)(2) of the EStG sets forth the same requirement for special depreciation.
Two distinctions are important. First, if a German investor holds an interest in an Italian corporation, the investment is not considered a business asset of the investor’s business at all—and for that reason alone, Section 7g does not apply. Second, the text of the law lists not only a domestic permanent establishment but also leasing as an alternative, and the law does not explicitly restrict leasing to domestic activities.
Whether a particular lease arrangement changes this depends on the specific circumstances and should be addressed through tax consulting. Based on the wording alone, it is not possible to infer either a general exclusion or applicability. Anyone planning to use this arrangement should seek a binding clarification in advance.
By way of comparison, here are the key figures for domestic systems: The investment tax credit requires a profit threshold of 200,000 euros in the year of the deduction; the maximum amount is 200,000 euros per business over four fiscal years; and the special depreciation allowance permits up to 40 percent over five years. The guidelines on the investment tax credit for photovoltaics explain the system.
Practical implications for structuring: Anyone who wants to take advantage of German tax incentives needs a solar power system located in Germany. Anyone investing in Italy must plan without Section 7g and in accordance with Italian tax laws. Both approaches can make sense—they just can’t be combined in a single calculation.
Three Strategies for PV Investment in Italy in 2026
Based on the market conditions in 2026, three approaches can be identified. They differ not primarily in terms of expected returns, but rather in the proportion of revenue they hedge and the lead time they require. A purely market-based model without hedging is difficult to justify given the price spread.
- FER-X Differential Contract, with storage if applicable. The 20-year differential contract sets a minimum revenue threshold of 80 euros per MWh in auctions and simultaneously caps the upper limit—at today’s market levels of 180 to 200 euros, this initially means a repayment rather than a subsidy. An integrated storage system enables system services and arbitrage opportunities outside the contract. The next deadline for prequalification is September 30, 2026. Prerequisite: admission to the balancing energy market.
- Power Purchase Agreement with partial marketing. A long-term Power Purchase Agreement—commonly referred to as a PPA in the market—guarantees a portion of the revenue, while the remainder is market-based. Indexation is key: A contract indexed to the PUN and a facility compensated at the zone price follow two different price series. This fundamental difference must be quantified in the model calculation, not in a footnote.
- Storage via the capacity market. The MACSE auction for the 2029 delivery year will take place on November 24, 2026, with a demand of 16 GWh exclusively in southern Italy and on the islands. The premium runs for 15 years. As of September 14, 2026, ARERA had not yet made a final decision on the proposed maximum price of 22,000 euros per MWh per year.
The same approval framework applies to all three options. A site located within the designated areas shortens the process, while a site outside those areas does not preclude approval. The grid connection point and the zone have a greater impact on revenue than the choice of modules.
The risks vary accordingly. Option 1 carries a maturity and approval risk; Option 2, a price and basis risk; and Option 3, the risk of a maximum price that has not yet been finalized. None of the three options is risk-free—they simply distribute the risk differently over the term.
Contracting Parties and Structure
In both markets, the contracting party is mediplan Helm e.K., a registered business entity with personal and unlimited liability of its owner pursuant to Sections 1, 17, and 19 of the German Commercial Code (HGB). This also applies to Italian projects. LOGIC ENERGY ITALY SRL acts as an intermediary in this context, not as a contracting party.
For you as an investor, this means two things. Your contractual relationship is governed by German law, and the commitment is backed by a natural person’s personal assets—not a liability pool limited to the company’s share capital. The Italian legal situation described in this article pertains to the project level: the company that holds the investment, its corporate income tax, its IRAP, and the withholding tax on its distributions.
This distinction is why the questions of location and structure can be addressed separately. Anyone wishing to take advantage of the German investment tax credit must have a facility located in Germany. Anyone seeking access to the Italian incentive framework must do so through an Italian project company. The article “Photovoltaics as an Investment” explains how photovoltaics compares to other asset classes.
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Frequently Asked Questions (FAQ)
Is the FER-X Decree of 2026 in effect?
Yes. The decree dated June 18, 2026, was published on the Ministry of the Environment’s website on August 6, 2026, and has been in effect since August 7, 2026. It was not published in the Gazzetta Ufficiale; the ministry expressly states that its effectiveness is contingent upon publication on its own website.
When is the deadline for submitting the FER-X application?
Applications for prequalification have been available via the GSE portal since August 25, 2026. To participate in the first auction round, applications must be submitted by September 30, 2026. Plants with a capacity exceeding 1 MW must also submit an expression of interest and obtain admission to the balancing energy market.
What is the exercise price under FER-X?
For the auctions, the GSE sets the price at 80 euros per MWh, with an upper limit of 95 euros and a lower limit of 65 euros. Participants bid a percentage discount off the 95 euros. ARERA sets the price separately for direct access up to 1 MW—no figure was available as of September 10, 2026.
What is the withholding tax rate on distributions from Italy?
The general rate is 26 percent. However, for entities based in the EU or the EEA, a rate of 1.20 percent applies, with no minimum ownership requirement. Pursuant to Article 27-bis of DPR 600/1973, withholding tax is fully waived for direct ownership interests of 10 percent or more held for at least one year.
Where can I claim a refund for excess Italian withholding tax?
With the Italian tax authorities—specifically, the Centro Operativo di Pescara—not with the Federal Central Tax Office. The deadline is 48 months from the date of withholding. The following are required: a certificate of residency from the German tax authorities, a declaration regarding the permanent establishment, and proof of withholding.
Does the investment tax credit apply to an investment in Italy?
No, if you use the equipment in your own business. Section 7g(1), first sentence, of the Income Tax Act (EStG) requires a domestic business establishment; Section 7g(6)(2) of the EStG also requires this for special depreciation. In the case of an equity interest in an Italian company, the provision does not apply in any event.
Is the Italian agri-PV subsidy program still open?
No. The GSE has approved approximately 998.6 million euros in four grant decisions through August 12, 2026—out of a total budget of 1.099 billion euros, which a Commission proposal dated August 7, 2026, aims to reduce to 999 million. The funding window is closed. Projects that have already been approved have 24 months from the publication of their grant award decision to begin operations.
What does the increase in the IRAP rate to 5.90 percent mean?
The standard IRAP rate remains at 3.90 percent. For companies in the energy sector, a surcharge of two percentage points will apply in the 2026 and 2027 tax periods. This applies only if the company’s primary business activity falls within one of the covered economic sectors, including D/35.1. The rate may vary by 0.92 points depending on the region.
Will the TIDE reform affect the returns on my investment?
No, not on the spot market. TIDE handles dispatching, system services, and their billing. Pricing on the day-ahead and intraday markets remains unaffected. This affects balancing group management, prequalification, and balancing fees—as well as storage operators, through the mandatory bidding requirement for balancing power.
When is the next MACSE auction?
On November 24, 2026, at 10:00 a.m., for the 2029 delivery year. The demand is 16 GWh and is open for bidding exclusively for Southern Italy, Calabria, Sicily, and Sardinia; for Northern Italy and Central-Northern Italy, the demand is zero. The deadline for uploading documents to the portal was September 10, 2026; the security deposit must be paid prior to the auction.
Conclusion: A closed funding framework with tight deadlines
The Italian support program will close again in 2026: FER-X has been in effect since August, the strike price for photovoltaics in the auctions is 80 euros per MWh, and the first application deadline is September 30. Those who join now will enter into a 20-year difference contract with a minimum revenue guarantee—not with an expected return based on market prices.
At the same time, two avenues have closed. The Agri-PV subsidy program has been fully utilized, and Energy Release 2.0 has concluded its process with a single successful applicant. Anyone seeking access to these programs can now only do so through existing approvals.
The tax implications are manageable, but they require a decision on the structure before any investment is made. The difference between 26 percent, 1.20 percent, and zero percent withholding tax does not lie in negotiating skills, but in the legal form and the level of ownership.
For those who want to take the next step: Discuss the project. The tax framework is explained in the guide on the investment tax credit; a comparison of asset classes is provided in the article “Photovoltaics as an Investment”; and the market situation in a neighboring country is covered in the article “Italy’s PV Market 2025.”
References
- MASE — Final FER-X Decree Published — Effective August 7, 2026
- MASE — Minister Pichetto Signs the Final FER-X Plan, 37.15 GW — Signed June 18, 2026
- MASE — European Commission Gives Green Light to FER-X Once It Is Fully Operational — June 8, 2026
- European Commission — Press Release IP/26/1270 regarding SA.115180 — June 8, 2026
- MASE — Directorial Decree No. 82 of August 7, 2026 (FER-X Operating Rules) — August 10, 2026
- GSE — FER-X Finalized, Operational Rules Approved — Portal Opens August 25, 2026; Deadline September 30, 2026
- MASE — The FER-X Transitional Decree Takes Effect — Ministerial Decree of December 30, 2024
- GSE — Ranking of Calls for Proposals for Wind and Solar Power Plants — December 1, 2025
- GSE — Rankings for the NZIA Call for Proposals for Photovoltaic Systems — December 10, 2025
- GSE — FER X Final, Award Prices — Retrieved September 10, 2026
- GSE — FER X Definitive: How It Works — Accessed September 10, 2026
- GSE — Energy Release 2.0, Ranking Published — June 9, 2026
- GSE — Energy Release 2.0, the call for proposals — Retrieved August 20, 2026
- Official Gazette — Press Release Regarding the Ministerial Decree of July 23, 2024 (Energy Release) — Official Gazette No. 177, dated July 30, 2024
- Terna — Statistical Data on Electricity in Italy 2025, Generation Facilities — As of December 31, 2025
- Terna — Monthly Report on the Electric Power System, June 2026 — As of June 30, 2026
- Terna — Identification of Relevant Network Areas, Annex A.24 Rev. 05 — effective as of January 1, 2021
- Terna — Report on the Results of the MACSE Auction for the 2028 Delivery Year — October 7, 2025
- Terna — MACSE Auction, Delivery Year 2029 — Auction on November 24, 2026
- ARERA — Resolution 345/2023/R/eel (TIDE) — July 25, 2023
- ARERA — Resolution 227/2025/R/eel (TIDE Rev. 4) — June 3, 2025
- ARERA — Resolution 190/2026/R/eel (FCR deadlines, 10 percent cap) — May 26, 2026
- ARERA — Resolution 304/2024/R/eel (Exceeding the PUN) — July 23, 2024
- ARERA — Resolution 103/2019/R/eel (Zone Delineation) — March 19, 2019
- GME — 2025 Annual Report — PUN 2025
- GME — MGP Results, PUN Index — Monthly Figures for 2026, accessed August 20, 2026
- GSE — Dedicated Withdrawal, Economic Regulation of the Service — Retrieved August 20, 2026
- MASE — PNIEC 2024, Table 11 — Target of 79,253 MW for 2030
- MASE — Investment 1.1: Agrivoltaic Development — DM 436/2023
- European Commission — Press Release IP/23/5451 regarding SA.107161 — November 10, 2023
- GSE — Agrivoltaic Development Permit Documents — Retrieved August 20, 2026
- Official Gazette — Decree-Law 19/2026 (Change of Operator for Agrivoltaico) — Official Gazette No. 41 of February 19, 2026
- Official Gazette — June 21, 2024 (Eligible Areas) — Official Gazette No. 153, dated July 2, 2024
- Federal Network Agency — Press Release on the Electricity Market in 2025 — 573 Hours of Negative Prices, January 5, 2026
- SMARD — Highest PV Feed-in in Every Quarter — 2025 Year in Review
- Normattiva — Art. 77 of Presidential Decree 917/1986 (IRES) — Retrieved August 20, 2026
- Normattiva — Art. 3 of Decree Law 21/2026 (IRAP Surcharge for the Energy Sector) — Official Gazette No. 42 of February 20, 2026
- Normattiva — Art. 27 of Presidential Decree 600/1973 (Withholding Tax on Dividends) — Retrieved August 20, 2026
- Normattiva — Art. 27-bis of Presidential Decree 600/1973 (Parent-Subsidiary) — Retrieved August 20, 2026
- Normattiva — Art. 38 of Presidential Decree No. 602/1973 (Reimbursement Deadline) — Retrieved August 20, 2026
- Italian Revenue Agency — Refunds, Non-Residents (Businesses) — Pescara Operations Center
- Official Gazette — Law No. 459/1992, Germany–Italy Double Taxation Agreement — Official Gazette No. 280 of November 27, 1992
- Federal Ministry of Finance — Germany–Italy Double Taxation Agreement of October 18, 1989 — Federal Law Gazette 1990 II, p. 742
- Text of Section 7g of the Income Tax Act (Federal Ministry of Justice) — Accessed August 20, 2026
- Text of § 8b of the Corporate Income Tax Act (Federal Ministry of Justice) — Retrieved August 20, 2026
- Normattiva — Legislative Decree No. 33 of March 24, 2025 (Effective as of January 1, 2027) — Official Gazette No. 71 of March 26, 2025
- ARERA — Consultation Document 283/2026/R/eel (MACSE, maximum premium) — July 31, 2026; consultation period ends September 7, 2026
- Terna — Monthly Report on the Electric Power System, July 2026 — As of July 31, 2026
- Italia Solare on Terna-Gaudì — PV Capacity as of June 30, 2026 (46,606 MW / 2,255,654 installations) — Published July 17, 2026
- Staffetta/RiEnergia — The Summer of 2026 in the Electricity Market (PUN July and August 2026, GME Data) — September 3, 2026
- ANSA — Electricity prices in September exceed 200 euros/MWh (GME weekly figures) — September 7, 2026
