In Brief

On June 20, 2025, the Italian government adopted a long-anticipated ministerial decree to activate a national platform for the negotiation of renewable energy PPAs, complemented by a state-backed guarantee scheme. Under this scheme, Italy’s GSE will intervene as a “guarantor of last resort” in case of counterparty default. This mechanism, developed under the REPowerEU reforms, sets a precedent in Europe — but it raises questions on its necessity and effectiveness for a market that thrives on tailored bilateral agreements.

The Core of the Decree

The decree, adopted jointly by the Ministry of Environment and Energy Security and the Ministry of Economy and Finance, implements Article 28 of Legislative Decree 199/2021. Key provisions include:

• The creation of a new organized market platform (MPPA) managed by the GME for long-term renewable PPAs.
• The GSE will serve as a guarantor of last resort, stepping in to fulfil the obligations of a defaulting party, whether seller or buyer, within certain financial limits.
• The platform is voluntary, and only counterparties that pass GSE-defined eligibility and financial criteria can participate.
• The guarantee mechanism is limited to €45 million/year for 2025–2027, financed via ETS auction proceeds.
• Contracts must have a duration between 5 and 10 years and follow standardized formats similar to those of the existing MTE (Mercato a Termine dell’Energia).
• The GSE will define “prezzo di riserva” (reserve prices) to apply in case of substitution.
• ARERA will set the fees that parties will pay to access the guarantee service, within 90 days from the decree’s entry into force.

The EU Context: A First-of-its-Kind Model

The measure draws its legitimacy from the EU Electricity Market Design reform, which calls on Member States to eliminate unjustified barriers to PPAs and promote aggregation and guarantee tools.

While Spain and France have introduced similar support schemes, key differences remain—and both have seen limited market uptake. Unlike Italy, neither country operates a centralized trading platform, offering “only” credit guarantees that cover up to 80% of PPA termination costs, and focusing primarily on shielding industrial offtakers. Italy’s model is more balanced, offering symmetrical support to both buyers and sellers, and uniquely integrates a state-operated trading infrastructure.

A Useful Tool, but Not a Game-Changer

From the perspective of investors and corporate buyers, the guarantee may ease concerns in isolated cases, such as with smaller offtakers or developers with limited track records. However, given the current maturity of the Italian PPA market, the core value of these contracts still lies in their flexibility: custom tenors, price structures (e.g. pay-as-produced, baseload, floor), indexation clauses, ESG linkages, and carefully negotiated risk allocations.

The platform is voluntary and built around standardized contracts, which may limit its appeal for sophisticated market players seeking tailored arrangements. Given the persistently low liquidity on the EEX Italian forward market—where no volumes are traded beyond year Y+3—it is difficult to foresee significant trading activity on the MPPA under a standardized product structure.

Furthermore, credit risk is only one of many variables in a PPA: this scheme does not address risks related to shape, volume, imbalance, regulatory shifts, or offtake strategies. While the guarantee may offer a degree of additional security, particularly for new entrants, it is unlikely to substitute the need for thorough credit diligence, structured contracts, and tailored negotiation, which remain essential.

What It Means for Market Participants

For developers:

• The platform may help de-risk certain transactions, particularly with mid-sized industrial offtakers.
• However, developers with large pipelines will likely continue to pursue bilateral deals.

For offtakers:

• The GSE backstop may lower entry barriers for buyers who might otherwise struggle to obtain parent guarantees or LC coverage.
• Yet, larger corporate buyers seeking custom structures and full hedging will find limited added value in the standardized format.

For banks and investors:

• This may reduce perceived credit exposure in limited cases, but is unlikely to fundamentally shift underwriting criteria.
• As such, the decree may be more symbolically important, representing Italy’s commitment to scaling renewables and improving market liquidity.

Final Takeaway

Italy’s new GSE-backed PPA platform introduces a bold, state-supported innovation, potentially inspiring similar mechanisms elsewhere in the EU. However, its practical impact on the PPA market remains to be seen. For now, the most bankable and strategic PPAs will likely remain outside the platform — negotiated directly, privately, and uniquely.