Geothermal energy - Comparison of regulatory framework Germany - Italy

1© Rödl & Partner 05.06.2013
Successful together
European Geothermal Congress 2013
Comparison of regulatory framawork Germany - Italy
Benjamin Richter & Giorgio Castorina| Pisa | 5 June 2013

Agenda
01 Introduction Rödl & Partner
02 Legal security regarding ownership of geothermal resources
03 Legal security regarding water license
2© Rödl & Partner 05.06.2013
04 Economic feed-in tariffs
05 Priority and guaranteed access to the power grid
06 Legal security regarding district heating prices
07 Drilling and power plant construction licenses
08 Your contact

Agenda
3© Rödl & Partner 05.06.2013
08 Your contact

Introduction Rödl & Partner
We are a one-of-a-kind success story from Germany
Founded in 1977 – international expansion since 1989
Your one-stop shop: audit, legal, management and tax consulting
Most familiar with your culture and language
Tailor-made solutions for internationally active companies
4© Rödl & Partner 05.06.2013
Tailor-made solutions for internationally active companies
Our interdisciplinary and comprehensive services offer
Audit
Legal consulting
Tax consulting
Management and IT consulting
Audit
Consult Develop Operate
In close collaboration with
our clients we develop
information for well-
founded decisions that we
implement together

Introduction Rödl & Partner
Rödl & Partner in Europe (excluding Germany)
Almaty ▪ Barcelona ▪ Belgrade
Birmingham ▪ Bolzano
Bratislava ▪ Brno ▪ Bucharest
Budapest ▪ Chişinău ▪ Cluj
Gdańsk ▪ Gliwice ▪ Istanbul
Kaluga ▪ Kharkov ▪ Kiev
Krakow ▪ Ljubljana ▪ Madrid
Milan ▪ Minsk ▪ Moscow
5© Rödl & Partner 05.06.2013
Milan ▪ Minsk ▪ Moscow
Padova ▪ Paris ▪ Plovdiv
Poznań ▪ Prague ▪ Riga
Rome ▪ Sochi ▪ Sofia
St. Petersburg ▪ Stockholm
Tallinn ▪ Tbilisi ▪ Timişoara
Vienna ▪ Vilnius ▪ Warsaw
Wrocław ▪ Zagreb ▪ Zurich
Worldwide 3.200 colleagues - 89 offices - 39 countries

Our references – main focus geothermal energy
National projects
General information Services
Monitoring of the realization of the
geothermal project Unterhaching
Complete project management
Subsidy procurement
Development of the worlds first geological risk insurance
Creation of price system for district heating
Different municipalities in the field of
geothermal energy
Demonstration and evaluation of possible options of action
Estimation of adoption potential
Economic efficiency control / business plan
6© Rödl & Partner 05.06.2013
Economic efficiency control / business plan
Valuation
Consideration of legal form
Forms of participation
Financing institution Project control and economical calculations concerning the market entry in
geothermal energy
UniCredit Legal, economical and organizational consulting for the creation of a power
plant portfolio and its risk management
Industrial company Site selection concerning economical, operative and geological factors as well
as the preparation of applications for the backup of the approved area
Federal Ministry for the Environment,
Nature Conservation and Nuclear Safety
Development of a concept for the realization of a German wide exploration risk
insurance

Our references – main focus geothermal energy
National projects
General information Services
Federal Ministry for the Environment,
Nature Conservation and Nuclear Safety/
World Bank
Development of a benchmarking-study (Pilot project Hungary)
World Bank Examination of two geothermal projects in Kamchatka, Russia, in economical,
legal and technical terms (Electricity supply and district heating)
GEOFAR Financed by the Intelligent Energy Europe – Program of the EU;
7© Rödl & Partner 05.06.2013
GEOFAR Financed by the Intelligent Energy Europe – Program of the EU;
Joint project with 8 partners from 5 EU-countries;
Topic: Financing system geothermal energy
UNEP – United Nation Environmental
Programme
Identification of risks that affect the realization and financing of world wide
renewable energy projects
Industrial companies Advisory service with regard to market entry
Financing institutions Legal and economical due diligence of projects and portfolios

Agenda
8© Rödl & Partner 05.06.2013
08 Your contact

Legal security regarding ownership of geothermal resources
Long term security for an exclusive exploration and exploitation of a
specific geothermal reservoir is highly important due to high
investment costs and project related risk management
Different steps:
Legal security
9© Rödl & Partner 05.06.2013
Different steps:
1. Determination of the exploration field allows preliminary
geological investigations and exploration drillings
2. Based on these results determination of a sufficiently large
exploitation field secures a long-term exclusive right for
exploitation
3. Allocation of the resource ownership for a specific area
regarding
ownership of
geothermal
resources

Comparison Germany vs. Italy
Subsoil owned by the state
Germany
10© Rödl & Partner 05.06.2013
Exploitation permit issued for a period of 50 years
Royalty payments of max. 10% can be imposed
• Currently not implemented in the case of geothermal
resources

Ownership in Germany
Procedure
Requirements for application for ownership
• Being the holder of the exploration and exploitation permit
• Economic exploitation has to be credibly shown
11© Rödl & Partner 05.06.2013
Procedure
for
application
and
advantages
At the moment of awarding the ownership of the resource the
exploitation permit for the respective area expires
Ownership can be entered into the land registry and used to safeguard
a credit

Land property extends to the subsoil
Resources in the subsoil are owned and kept by the
state or the region, and their exploration and
exploitation need the issuance of licenses
Italy
12© Rödl & Partner 05.06.2013
Exploitation permit can be issued for a period of 30
years, preferably to the holder of the exploration
permit
Royalties are provided for the issuance of the permits.
Further royalties are provided for power generation,
but limited to plants with nominal power higher than 4
MW

Agenda
13© Rödl & Partner 05.06.2013
08 Your contact

Legal security regarding water license
Exploitation permit according to mining law only allows for the
exploitation of geothermal energyLegal security
14© Rödl & Partner 05.06.2013
exploitation of geothermal energy
Further license necessary for the utilization of water or steam
Legal security
regarding water
license

Legally possible to obtain water licenses for decades
License, generally granted for few years and have to be prolonged
on a regular basis
Period of validity of water license and exploitation permit differ
considerably
Germany
15© Rödl & Partner 05.06.2013
considerably
• Further risk in project realization
• So far all necessary water licenses for geothermal projects have been
issued
Proof of disposal of test water and drilling fluid necessary
In water legislation no legal claim possible
• In some states mining authority entitled to override the interests of water
legislation

License can be granted for up to 30 years
• Same period of validity as for exploitation permit
• Security of the investment, once both licenses are obtained
Italy
16© Rödl & Partner 05.06.2013
• Security of the investment, once both licenses are obtained
Granted by the province or region upon payment of a yearly fee
No specific prescriptions concerning geothermal fluids and its
treatment
Legal claims delegated to the court of public water

Agenda
17© Rödl & Partner 05.06.2013
08 Your contact

Economic feed-in tariffs
In relation to geothermal power plants, the amount and especially the
long-term security of feed-in tariffs play a crucial role, due to the long
project preparation phase
18© Rödl & Partner 05.06.2013
Feed-in tariffs should allow for an adequate risk-award ratio that
rewards the relatively high risks of the drilling exploration
Reference value for the calculation of the feed-in tariff (net vs. gross
capacity of the installation) has major influence on the profitability of a
project
Economic feed-in
tariffs

Renewable Energy Source Act (EEG) offers in general a stable and
Germany
19© Rödl & Partner 05.06.2013
Renewable Energy Source Act (EEG) offers in general a stable and
secure investment environment
• Gross capacity of the renewable energy technology can be fed into the
distribution network
• Feed-in tariff for hydro-geothermal power: 25 €cent/kWh
• Fixed feed-in tariff secured for 20 years

Incentive for the power generated
• Added to the income for the sales to the public entity (GSE)
Italy
20© Rödl & Partner 05.06.2013
• Added to the income for the sales to the public entity (GSE)
• Granted for 20 years
• Sliding Feed-in Premium Value of Feed-in tariff MINUS hourly zonal
energy market price
• Current value: 85 – 135 €cent/kWh, depending on the nominal power of the
plant
• Premium tariffs for innovative technologies provided

Agenda
21© Rödl & Partner 05.06.2013
08 Your contact

Priority and guaranteed access to the power grid
Has to be ensured by all EU Member States (Directive 2009/28/EC
on the promotion of the use of energy from renewable sources)
Priority and
guaranteed access
to the power grid
22© Rödl & Partner 05.06.2013
Immediate and priority connection to grid systems shall be
granted by grid system operators (GSOs) to installations
generating electricity from renewable energy sources (RES)
Germany

GSOs are only then entitled to reduce output of RE plants to
prevent a grid overload
Germany
23© Rödl & Partner 05.06.2013
Costs for the connection to the grid are to be borne by the
installation operator
• The GSO bears the additional costs in case of assigning a grid
connection point which is not at the shortest linear distance form the
installation
Costs for optimizing, strengthening and expanding the grid system
have to be borne by the GSOs

Applications aimed at the connection of RE plants must be given
priority by the grid operator
Italy
24© Rödl & Partner 05.06.2013
The Energy Authority shall prioritize the dispatch of power
generated by RE
Only in cases of high risk for the national grid, the grid operator is
entitled to reduce the input of RE plants
Costs for the connection to the grid shall be borne by the
installation operator

Legal security regarding district heating prices
Determination of prices in a way that allowsLegal security
26© Rödl & Partner 05.06.2013
Determination of prices in a way that allows
• Achievement of a certain rate of return on the investment
• Passing increasing prices to consumers
Legal security
regarding district
heating prices

Any heat supply contract (except for industrial customers) has to be
based on the “regulation on general conditions for the supply with
district heat”
Germany
27© Rödl & Partner 05.06.2013
The price sliding clause should appropriately include:
• Development of production and supply costs
• Respective circumstances of the heat market
• The price factor associated to the contribution of the costs for fossil
fuels has to be shown separately
Price is not completely free of any regulation but can be oriented
to the present situation of the heat supply costs

Regulatory framework missing. Risks of cartel and monopoly of the
operators
Italy
28© Rödl & Partner 05.06.2013
Investigations have been started up on 2012 by the ”Antitrust
Authority”
Possible creation of an indipendent Authority
Due to the expansion of district heating and to the growing attention
of the institutions, regulation of the sector in the next years
predictable

Drilling and power plant construction licenses
Drilling regulated by mining legislation
Germany
30© Rödl & Partner 05.06.2013
Construction of the power plant subject to building law

Drilling and power plant construction licenses
Issuance of drilling licenses by:
• The respective region
(When geothermal resources of national/local interest)
Italy
31© Rödl & Partner 05.06.2013
(When geothermal resources of national/local interest)
• Ministry for Economic Development
(For geothermal resources found in territorial waters)
Construction license issued by the region, province or municipality
depending on
• Plant’s nominal power
• Source
• D.lgs. 387/2003 created a specific rapid procedure for renewable energies
plant (so-called Autorizzazione uUnica”

Conclusions
Regulatory framework offering legally secure and economic conditions is of utmost
importance for the realization of deep-seated geothermal energy projects
32© Rödl & Partner 05.06.2013
This country comparison illustrates the necessity to gain extensive knowledge on the
regulatory conditions of any specific location before taking an investment decision.

Your contact
Benjamin Richter
Rödl & Partner
Denninger Straße 84
D-81925 Munich
Germany
34© Rödl & Partner 05.06.2013
„Each and every person counts“ – to the Castellers and to us.
Human towers symbolise in a unique way the Rödl & Partner corporate culture. They personify our philosophy of solidarity, balance, courage
and team spirit. They stand for the growth that is based on own resources, the growth which has made Rödl & Partner the company we are
today. „Força, Equilibri, Valor i Seny“ (strength, equilibrium, valour and common sense) is the Catalan motto of all Castellers, describing their
fundamental values very accurately. It is to our liking and also reflects our mentality. Therefore Rödl & Partner embarked on a collaborative
journey with the representatives of this long-standing tradition of human towers – Castellers de Barcelona – in May 2011. The association
from Barcelona stands, among many other things, for this intangible cultural heritage.
D-81925 Munich
Phone +49 (89) 928780-350
Fax +49 (89) 928780-300
E-Mail benjamin.richter@roedl.com

Your contact
Italy Svenja Bartels
Rachtsanwaltin/Avv.
Partner
Via Francesco Rismondo 2/E
Giorgio Castorina
Dottore
35131 Padova
35© Rödl & Partner 05.06.2013
„Each and every person counts“ – to the Castellers and to us.
Human towers symbolise in a unique way the Rödl & Partner corporate culture. They personify our philosophy of solidarity, balance, courage
and team spirit. They stand for the growth that is based on own resources, the growth which has made Rödl & Partner the company we are
today. „Força, Equilibri, Valor i Seny“ (strength, equilibrium, valour and common sense) is the Catalan motto of all Castellers, describing their
fundamental values very accurately. It is to our liking and also reflects our mentality. Therefore Rödl & Partner embarked on a collaborative
journey with the representatives of this long-standing tradition of human towers – Castellers de Barcelona – in May 2011. The association
from Barcelona stands, among many other things, for this intangible cultural heritage.
35131 Padova
Phone: +39 (049) 80 46 911
Fax: +39 (049) 80 46 920
E-Mail: svenja.bartels@roedl.it
35131 Padova
Phone: +39 (049) 80 46 911
Fax: +39 (049) 80 46 920
E-Mail: giorgio.castorina@roedl.it

We and the Castellers de Barcelona
The human towers are like us:
“every single individual counts”
– when working together and
when supporting our clients.
36© Rödl & Partner 05.06.2013

Geothermal energy - Comparison of regulatory framework Germany - Italy

Recommended

Recommended

More Related Content

What's hot

What's hot (13)

Viewers also liked

Viewers also liked (17)

Similar to Geothermal energy - Comparison of regulatory framework Germany - Italy

Similar to Geothermal energy - Comparison of regulatory framework Germany - Italy (20)

More from Giorgio Castorina

More from Giorgio Castorina (9)

Recently uploaded

Recently uploaded (20)

Geothermal energy - Comparison of regulatory framework Germany - Italy