Le Italian hydroelectric power plants are the new “hunting ground” for foreign investors, With the Lombardia which is establishing itself as the “treasure” of energy, holding 25% of the national booty. While Enel's concessions will be valid until 2029, all eyes are on Friday October 18, when will expire il gang for the first two hydroelectric power plants put out to tender by the Region: the Codera Ratti-Dongo, with a power of 19 MW and currently managed by Edison, and the residue, 4 MW, owned by A2A. Despite some appeals filed by operators in the sector, the administrative court rejected the requests for suspension, thus allowing the continuation of the tender process.
But who are the contenders? It is rumoured that among those interested there are big names such as the Czech group eph, founded by billionaire Daniel Kretinsky, the Swiss Bkw, and perhaps even the Australian fund Macquarie, already active in Italy with Autostrade and Open Fiber. But to have confirmation of these rumors, we will have to wait until Friday, when the envelopes will finally be opened.
The importance of the hydroelectric sector and the fears of Italian operators
The hydroelectric sector is not just a pillar of energy production, but also plays a crucial role in the country's energy security. In fact, it represents about 20% of total electricity production and over 40% of renewable energy, thus contributing to the stability of the national electricity system.
Italian operators fear that this one-way opening, i.e. without reciprocity, to foreign investors could create an unjustified market asymmetry, harming local businesses and the security of strategic assets. Foreign investors may have superior financial resources, allowing them to submit more competitive bids; furthermore, they may use asset valuation methods that do not reflect their true value. Marco Stangalino, director of Power Asset Edison, stressed: “The estimate of the value of the assets owned by the operators, arbitrarily defined by the Region, is even twenty times lower than the real value”. These dynamics can lead to the acquisition of vital plants at costs that do not take into account their strategic and operational importance.
Hydroelectric: how the tenders work and why we are the only ones in Europe
Italy is in a unique position within the European Union, being one of the few countries (The unique beyond Spain) to put to tender for hydroelectric concessions. This process began in 2011, when the EU launched an infringement procedure against countries that did not guarantee competition in the energy sector. Unlike France, where the system is predominantly public, and Germany, where concessions last up to 90 years, Italy opted for a law in 2018 that establishes three ways of privatizing the management of plants at the expiry of the concession: pure tender, public-private partnership and mixed companies.
However, in 2021, Europe ha obligation to put out to tender cancelled la plant management and many countries immediately cancelled the tenders, while Italy decided to maintain the provision, making it part of the clauses for receiving the PNRR, allowing all foreign operators to enter our country to manage a strategic asset for energy production.
Hydroelectric power plant tenders: operators awaiting new rules
To address concerns, the Regions and the government have proposed a “way out” that involves direct negotiations between the Region and the outgoing concessionaire, allowing for a fairer market price. However, Minister Pichetto-Fratin's proposal to introduce this variant was blocked by minister Raffaele Fitto, concerned about the repercussions on the PNRR. Even an attempt to postpone the races by a year failed.
So Lombardy continued on its path by launching the first two tenders. “We are only applying the current regulations. We have helped to develop the variant of direct negotiation but at the moment it is not a method provided for by law”, declared the councillor for Energy of the Fontana council, Massimo Sertori. Now, the hopes of Italian operators are placed in Commissioner Fitto, who, once installed as European Commissioner and responsible for the PNRR, could negotiate new rules with the EU.
Despite the lack of clear regulatory guidelines, Lombardy has decided to continue with the tenders, with the offices already working on new calls for tenders, although it is not clear for which power plants. Thus, the risk of a foreign "invasion" to the detriment of local companies remains a current and worrying issue.