Regulatory Stability in the Energy Sector: The Italian Experience

Abstract

Regulatory stability is usually depicted as the key factor to attract investments in any sector. If this is true, then the energy sector needs regulatory stability more than anything else: the transition toward low-carbon energy systems requires an exceptional level and pace of investments. However, this article argues that the goal of regulatory stability and the means to obtain it are sometimes represented in a misleading way. A case study of renewable energy regulation in Italy shows that regulatory stability cannot be equated with a ban on retrospective regulatory intervention and cannot be (only) achieved through national and international litigation. What is needed is a range of procedural and substantive regulatory measures allowing the States to credibly commit to a long-term strategy for renewable energy. The procedural measures hinge on the new National Energy and Climate Plans, to be adopted in the framework of Energy Union governance. The substantive measures include regional coordination of targets and support schemes, innovative financial instruments, and alternative ways to manage disputes.