Energy Release 2.0 IPP agreements due
Independent power producers have until March 9 to sign agreements with industrial offtakers in Italy to build 22.5TWh of new renewable capacity on their behalf and inherit a €65/MWh contract for difference with national power operator GSE in return.
The agreement between IPPs and industrial energy consumers comes as an addendum to Italy's Energy Release 2.0 initiative, which is a 23-year CfD scheme between the government and energy-intensive consumers.
KKR-backed Encavis has said it has contracts for 3.7GWh, which represents over 16% of the entire volume offered under Energy Release 2.0. Watson Farley & Williams advised Encavis on the contractual framework enabling its participation within Energy Release 2.0.
“IPPs taking on Energy Release CfDs are expected to raise holdco-level debt financing and then distribute it across special purpose companies in project portfolios," Watson Farley & Williams Associate Francesco Vanzaghi told PFI.
Israeli developer Nofar's subsidiary Sunprime has said in a statement that is has signed Energy Release 2.0 contracts for 100MW solar capacity. Other developers with Energy Release 2.0 addendum contracts remain undisclosed until the final agreements are signed by March 9.
The basic concept of the Energy Release 2.0 initiative is that heavy industry players get discounted electricity from GSE via a €65/MWh CfD, nearly halving the current power price average of €125/MWh in the country.
In return for the 23-year discounted pricing, offtakers are expected to build new renewable power schemes across solar, wind and hydro within three years and get to keep the CfD strike price for another 20.
The initiative includes an addendum option which allows the industrial offtakers to delegate the construction, operation and 20-year CfD remainder to an IPP, which is what most industrial offtakers have opted to do.
“Energy operator GSE sells electricity from the grid to energy‑intensive users called ‘energivori’ from January 2025 to December 2027 at the €65/MWh strike price. This is classed as the ‘anticipation’ phase of the 23-year mechanism,” Vanzaghi told PFI.
“As soon as each plant reaches COD, the second ‘refund’ phase kicks in as the energivori users enter a 20-year CfD with GSE, where they are technically expected to be selling energy to the energy operator,” he said.
In most cases, however, "the heavy industry energivori users will have the addendum in place and will have delegated the production and sale of power to an IPP", Vanzaghi said, and "this transfers the energivori users’ CfD obligation to the chosen IPP and turns the offtake into a contract between the IPP and the GSE."
“At the end of the entire 23-year contract, the losses endured by GSE to subsidise the low fixed price tariff in the first three years will be added to what GSE will have collected in the 20 years with the delegated developer,” he explained.
Developers have expressed strong interest, because the scheme gives them the chance to secure a CfD at a pre-determined strike price rather than going through competitive bidding. The scheme guarantees large volumes of new renewable capacity to build. This gives developers a clear long‑term pipeline of projects.
As of February 2026, a total of 476 contracts totalling 22.5TWh has been awarded. Initial requests in March 2025 had reached 70TWh against a total auctioned volume of 72TWh, however, the overall number of bids decreased at final bidding because of changes to the process introduced in November 2025.
