Italy renewable energy 2026: suitable areas updates, tax depreciation boost and excise reforms

Energy in Action newsletter is back. Curated by the Firm’s Energy Industry Group under the direction of partners Edoardo Fea and Carlo Gioffrè, it provides an overview of the main legal and tax developments in the energy sector, in line with previous editions.

In this edition, the newsletter focuses on recent developments in the energy sector, including key legislative changes such as the Bills Decree and DL Milleproroghe 2026. It also covers important tax updates, including incentives for capital investments and energy excise duties, as well as recent case law affecting EU energy regulations.

The news of the Bills Decree

On 18 February 2026, the Council of Ministers approved Decree-Law No. 21, the “Bills Decree,” introducing urgent measures to reduce electricity costs, enhance business competitiveness, support industrial decarbonisation, and address virtual grid saturation.

The decree introduces significant changes to the Conto Energia photovoltaic incentive schemes. Operators of plants over 20 kW with fixed premiums expiring from 1 January 2029 may voluntarily choose between two options:

1. Temporary reduction of premium tariffs to 85% or 70% for the second half of 2026 through 31 December 2027, in exchange for an extension of the incentive agreements by 3 or 6 months, with GSE applying average reduced tariffs. Participation must be communicated by 31 May 2026.
2. Early withdrawal from incentives, permitted from 1 January 2028 for plants up to a total of 10 GW. Payments are distributed in ten annual instalments, adjusted at an interest rate capped at 6%. GSE manages any residual capacity through a competitive procedure by 30 June 2027. Operators who participated in the first scheme may also benefit from this procedure.

The decree also strengthens long-term renewable energy contracts, with a focus on SMEs. It enhances the GSE platform with dedicated sections for contracts of at least three years, supports aggregation mechanisms, and allows GSE to act as a last-resort guarantor with SACE backing.

An additional incentive is introduced for renewable plants over 20 kW selected within the aggregation service framework, financed through general system charges.

DL Milleproroghe 2026

Bill A.S. No. 1812, converting into law Decree-Law No. 200 of 31 December 2025 (the so-called “Milleproroghe”), was approved by the Chamber of Deputies on 23 February 2026 and transmitted to the Senate on 24 February 2026.

The bill postpones the obligation to integrate thermal energy from renewable sources, setting 1 January 2026 as the new effective date, in accordance with Article 13(2) of the Decree-Law.

It amends Article 27(1) of Legislative Decree No. 199/2021, delaying the obligation for companies selling thermal energy for heating and cooling to third parties exceeding 500 tonnes of oil equivalent (TOE) per year. These operators are required to ensure a portion of the energy sold originates from renewable sources.

The detailed implementation framework – including annual increase trajectories, compliance verification, and regulation of compensatory contributions through the Energy and Environmental Services Fund (CSEA) – will be established by a decree of the Minister for the Environment and Energy Security.

The government justified the postponement to allow alignment with the European Commission’s guidelines on waste heat and cold, published on 2 September 2024, and with the updated European framework under Directive (EU) 2023/2413 (RED III).

The provision also aligns national measures with broader European and national renewable energy targets in the thermal sector. Targets under Article 3 of Legislative Decree No. 199/2021 must now be interpreted in light of RED III and PNIEC 2024, which set higher renewable energy targets for heating and cooling by 2030, explicitly recognising waste heat recovery and the renewable share of electricity used for thermal purposes.

2026 Budget Law: increase in depreciation for investments in capital goods

The 2026 Budget Law (Article 1, paragraphs 427–436) introduces a tax incentive to support the digital transition of businesses and encourage investments in new capital goods for production facilities in Italy.

The incentive allows an increase in the acquisition cost of assets for calculating tax-deductible depreciation (IRES and IRPEF) and lease payments, up to 180%, depending on the amount of eligible investments. Eligible investments must be made from 1 January 2026 to 30 September 2028.

Access to the incentive requires submission of communications and certifications through the GSE portal, with implementing provisions to be defined by a Ministerial Decree by 31 January 2026. Beneficiaries are taxpayers operating legitimate business activities who comply with workplace safety and social security obligations. Excluded are companies in liquidation, bankruptcy, or subject to disqualifying sanctions.

Both owned assets and assets acquired via financial leasing qualify, including tangible and intangible capital goods, renewable energy self-generation systems, energy storage systems, and photovoltaic systems manufactured in the EU with minimum efficiency requirements. Eligible assets must be interconnected with the company’s production or supply network.

The intensity of the incentive varies by investment size: 180% up to €2.5 million, 100% for €2.5–10 million, and 50% for €10–20 million. The incentive can be combined with other national or EU grants, provided there is no double financing, but cannot be combined with the 4.0 tax credit claimed for investments in 2025–2026.

The incentive is forfeited if the asset is sold or transferred abroad, unless replaced with a similar or superior asset within the same tax period.

Finally, the law establishes a €1.3 billion Fund within the MEF budget to increase resources for the 4.0 investment tax credit, previously exhausted.