Provisional text

delivered on 6 February 2025 (1)

Case C-423/23

Secab Soc. coop.

Autorità di Regolazione per Energia Reti e Ambiente (ARERA),

Gestore dei servizi energetici (GSE) SpA,

intervening parties:

Presidenza dei Consiglio dei Ministri,

Ministero della Transizione Ecologica,

Ministero dello Sviluppo Economico,

Associazione Italia Solare ETS,

Assoidroelettrica,

Elettricità Futura – Unione delle imprese elettriche italiane

(Request for a preliminary ruling from the Tribunale Amministrativo Regionale per la Lombardia (Regional Administrative Court, Lombardy, Italy))

( Reference for a preliminary ruling – Internal market for electricity – Directive (EU) 2019/944 – Common rules for the internal market for electricity – Article 5 – Market-based supply prices – Directive (EU) 2018/2001 – Promotion of the use of energy from renewable sources – Regulation (EU) 2022/1854 – Emergency intervention to address high energy prices – Article 6 – Mandatory cap on market revenues – Article 8 – National crisis measures – Mandatory cap on market revenues of electricity producers using certain renewable energy sources – National rule not guaranteeing producers the right to retain 10% of surplus revenues above the cap – Preservation of investments in the renewable energy sector )

1.This request for a preliminary ruling, made by the Tribunale Amministrativo Regionale per la Lombardia (Regional Administrative Court, Lombardy, Italy), concerns in particular the interpretation of Article 5(4) of Directive (EU) 2019/944, (2) recitals 2, 3 and 12 of Directive (EU) 2018/2001 (3) along with recitals 27, 28, 29 and 39, Article 6(1) and Article 8(2)(b) and (c) of Regulation (EU) 2022/1854. (4)

2.The request has arisen in a dispute between Secab Soc. coop, a cooperative undertaking active in the electricity generation sector, and the Autorità di Regolazione per Energia Reti e Ambiente (ARERA) (the Italian Regulatory Authority for Energy, Networks and the Environment; ‘ARERA’) and Gestore dei servizi energetici (GSE) SpA (the energy services provider in Italy; ‘GSE’), concerning the legality of a national rule setting a cap on market revenues from the sale of electricity produced from certain renewable energy sources.

3.In accordance with the Court’s request, the present Opinion will focus on the examination of the second question referred for a preliminary ruling. In essence, this concerns the compatibility of the provisions of EU law cited above with a national rule setting a cap on market revenues from the sale of electricity in a way that does not preserve or promote investment in the renewable energy sector.

4.The present case provides the Court with an opportunity to clarify the criteria to be taken into account when Member States determine the detailed rules for calculating a cap on market revenues from the sale of electricity, in a specific context characterised by soaring energy prices, in particular electricity prices, which have recently reached exceptionally high levels, principally as a result of the war in Ukraine.

II. Legal context

1. Directive 2018/2001

‘(2) In accordance with Article 194(1) [TFEU], promoting renewable forms of energy is one of the goals of the Union energy policy. That goal is pursued by this Directive …

(3) The increased use of energy from renewable sources also has a fundamental part to play in promoting the security of energy supply, sustainable energy at affordable prices …

…

(12) In order to support Member States’ ambitious contributions to the Union target, a financial framework aiming to facilitate investments in renewable energy projects in those Member States should be established, including through the use of financial instruments.’

1. Suppliers shall be free to determine the price at which they supply electricity to customers. Member States shall take appropriate actions to ensure effective competition between suppliers.

…

3. By way of derogation from paragraphs 1 and 2, Member States may apply public interventions in the price setting for the supply of electricity to energy poor or vulnerable household customers. Such public interventions shall be subject to the conditions set out in paragraphs 4 and 5.

4. Public interventions in the price setting for the supply of electricity shall:

(a) pursue a general economic interest and not go beyond what is necessary to achieve that general economic interest;

(b) be clearly defined, transparent, non-discriminatory and verifiable;

(c) guarantee equal access for Union electricity undertakings to customers;

(d) be limited in time and proportionate as regards their beneficiaries;

(e) not result in additional costs for market participants in a discriminatory way.

…

3. Regulation (EU) 2022/1854

7. Recitals 24, 25, 27 to 29, 39, 41 and 48 of Regulation 2022/1854 stated:

‘(24) Given the role of the price in the day-ahead market as a reference for the price in other wholesale electricity markets, and the fact that all market participants receive the clearing price, the technologies with significantly lower marginal costs have consistently recorded high revenues since the Russian military aggression against Ukraine in February 2022, well above their expectations when deciding to invest.

(25) In a situation where consumers are exposed to extremely high prices which also harm the Union’s economy, it is necessary to limit, on a temporary basis, the extraordinary market revenues of producers with lower marginal costs by way of application of the cap on market revenues achieved through the sale of electricity within the Union.

…

(27) The level at which the cap on market revenues is set should not jeopardise the ability of the producers to which it is applied, including renewable energy producers, to recover their investment and operating costs and should preserve and incentivise future investments in the capacity needed for a decarbonised and reliable electricity system. The cap on market revenues, being a uniform cap across the Union, is best suited to preserve the functioning of the internal electricity market, as it maintains price-based competition between electricity producers based on different technologies, in particular for renewables.

(28) While occasional and short-term peaks on prices can be considered a normal feature in an electricity market and may be useful for some investors to recover their generation investment, the extreme and lasting price increase observed since February 2022 is markedly different from a normal market situation of occasional peak prices. Therefore, the cap on market revenues should not be set below the reasonable expectations of market participants as to the average level of electricity prices in the hours during which the demand for electricity was at its highest, before Russia’s war of aggression against Ukraine. Before February 2022, the average peak prices in the electricity wholesale market were significantly and consistently expected below 180 EUR per MWh across the Union in the last decades, despite the differences in electricity prices between regions in the Union. Since the initial investment decision of market participants was taken based on an expectation that, on average, the prices would be lower than that level during peak hours, setting the cap on market revenues at a 180 EUR per MWh constitutes a level well above those initial market expectations. By leaving a margin on the price that investors could reasonably have expected, it is necessary to ensure that the cap on market revenues does not counteract the initial assessment of investment profitability.

(29) Moreover, the cap on market revenues of 180 EUR per MWh is consistently higher, including a reasonable margin, than the current levelised cost of energy (LCOE) for the relevant generation technologies, allowing producers to which it applies to cover their investments and operating costs. Considering that the cap on market revenues leaves a considerable margin between the reasonable LCOE and the cap on market revenues, it can therefore not be expected to impair the investment in new inframarginal capacities.

…

(39) To account for security of supply concerns, Member States should have the possibility to set the cap on market revenues in a way that allows the electricity producers to retain 10% of the surplus revenues above the cap on market revenues.

…

(41) Member States should retain the possibility to further limit the revenues of the producers to which the cap on market revenues applies …

…

(48) Public interventions in price setting for the supply of electricity constitute, in principle, a market-distortive measure. Such interventions may therefore only be carried out as public service obligations and should be subject to specific conditions. Currently, under Directive (EU) 2019/944, regulated prices are possible for households and micro-enterprises, and they are also possible, including below cost, for energy poor and vulnerable customers. However, in the presence of the current exceptional rise of electricity prices, the toolbox of available measures that the Member States have at their disposal to support consumers should be temporarily extended by providing the possibility to extend regulated prices to SMEs and by permitting regulated prices below cost. Such an extension could be financed by the cap on market revenues.’

8. Article 6 of that regulation, entitled ‘Mandatory cap on market revenues’, stated the following in paragraphs 1 and 2:

1. Market revenues of producers obtained from the generation of electricity from the sources referred to in Article 7(1) shall be capped to a maximum of 180 EUR per MWh of electricity produced.

9. Article 7 of that regulation, entitled ‘Application of the cap on market revenues to electricity producers’, established the following in paragraph 1:

The cap on market revenues provided for in Article 6 shall apply to the market revenues obtained from the sale of electricity produced from the following sources:

…

(d) hydropower without reservoir;

…

10. Article 8 of the same regulation, entitled ‘National crisis measures’, provided as follows:

1. Member States may:

(a) maintain or introduce measures that further limit the market revenues of producers generating electricity from the sources listed in Article 7(1), including the possibility to differentiate between technologies …;

…

(a) be proportionate and non-discriminatory;

(b) not jeopardise investment signals;

(c) ensure that the investments and operating costs are covered;

(d) not distort the functioning of electricity wholesale markets, and in particular, not affect the merit order and the price formation on the wholesale market;

(e) be compatible with Union law.

11. Article 10 of Regulation 2022/1854, entitled ‘Distribution of the surplus revenues’, stated as follows in paragraph 1:

Member States shall ensure that all surplus revenues resulting from the application of the cap on market revenues are used to finance measures in support of final electricity customers that mitigate the impact of high electricity prices on those customers, in a targeted manner.

12. Article 22 of that regulation, entitled ‘Entry into force and application’, provided as follows in paragraph 2:

…

(c) Articles 6, 7, and 8 shall apply from 1 December 2022 to 30 June 2023;

…

1. Decree-Law No 4/2022

13.

Decree-Law No 4/2022, as amended by legge n. 25 – Conversione in legge, con modificazioni, del decreto-legge 27 gennaio 2022, n. 4, recante misure urgenti in materia di sostegno alle imprese e agli operatori economici, di lavoro, salute e servizi territoriali, connesse all’emergenza da COVID-19, nonché per il contenimento degli effetti degli aumenti dei prezzi nel settore elettrico (Law No 25 converting into law, with amendments, Decree-Law No 4 on urgent measures to support businesses and economic operators, labour, health and local services, in the context of the COVID-19 crisis, and to contain the effects of price increases in the electricity sector), of 28 March 2022 (5) (‘Decree-Law No 4/2022’), contains an Article 15bis entitled ‘Additional measures relating to electricity generated by plants using renewable sources’, which provides as follows:

‘1. From 1 February 2022 until 31 December 2022, a two-way compensation mechanism shall be applied to energy prices for electricity fed into the grid by:

(a)photovoltaic plants with a capacity of more than 20 kW subject to fixed premiums resulting from the feed-in tariff mechanism (Conto Energia), which are not dependent on market prices;

(b)plants with a capacity of more than 20 kW using solar, hydroelectric, geothermal and wind energy sources and not covered by incentive mechanisms, commissioned before 1 January 2010.

…

3. For the purposes of paragraph 1, GSE shall calculate the difference between the values referred to in points (a) and (b) below:

(a)a reference price equal to that indicated in the table [annexed to this] decree-law, for each market zone [, of between EUR 56 and EUR 58 per MWh (except in the islands of Sardinia and Sicily, for which it is set at EUR 61 per MWh and EUR 75 per MWh respectively)];

(b)a market price equal to:

(1)for the plants referred to in paragraph 1(a) and for the plants referred to in paragraph 1(b) using solar, wind, geothermal and run-of-river water energy sources, the hourly price of electricity in the market zone or, for supply contracts concluded before 27 January 2022 that do not meet the conditions laid down in paragraph 7, the price indicated in those contracts;

(2)for the plants referred to in paragraph 1(b) other than those referred to in point 1) above, the monthly arithmetic average of the hourly electricity prices in the market zones, or, for supply contracts concluded before 27 January 2022 that do not meet the conditions laid down in paragraph 7, the price indicated in those contracts.

4. If the difference referred to in paragraph 3 is positive, GSE shall pay the corresponding amount to the producer. If this difference is negative, GSE shall make a balance adjustment or claim the corresponding amount from the producer.

…’

14.Article 11(2) of decreto-legge n. 115 – Misure urgenti in materia di energia, emergenza idrica, politiche sociali e industriali (Decree-Law No 115 on urgent measures in the field of energy, the water crisis, and social and industrial policies), of 9 August 2022 (6) as amended by Law No 142 of 21 September 2022, extended the application of the compensation mechanism introduced in Article 15bis until 30 June 2023.

15.Article 1(30) of legge n. 197 – Bilancio di previsione dello Stato per l’anno finanziario 2023 e bilancio pluriennale per il triennio 2023-2025 (Law No 197 of 29 December 2022 – National budget for the 2023 financial year and multi-year budget for the period 2023-2025) of 29 December 2022 (7) (‘Law No 197/2022’) reads as follows:

‘Pursuant to Regulation [2022/1854], from 1 December 2022 until 30 June 2023, a cap shall be applied to the market revenues obtained by electricity producers, through a one-way compensation mechanism, in respect of electricity fed into the grid by:

(a)plants using renewable sources that do not fall within the scope of Article 15bis of [Decree-Law No 4/2022];

…’

III. The dispute in the main proceedings, the questions referred and the procedure before the Court

16.Secab is a cooperative undertaking operating in the electricity-generating sector, managing run-of-river hydroelectric plants. In so far as this undertaking falls within the scope of Article 15bis of Decree-Law No 4/2022 (‘the contested provision’), it has been subject to the revenue capping measure provided for in that provision. After having received several invoices from GSE, Secab brought an action before the Tribunale Amministrativo Regionale per la Lombardia (Regional Administrative Court, Lombardy), the referring court, seeking the annulment, inter alia, of the invoices issued to it by GSE on 18 October and 15 November 2022 under the contested provision. To support its action, Secab submitted that the contested provision was contrary to EU law.

17.Under those circumstances, the referring court observes that the implementation of the contested provision – initially covering the period between 1 February 2022 and 31 December 2022 – was extended by Decree-Law No 115/2022 of 9 August 2022, as amended by Law No 142 of 21 September 2022, to 30 June 2023; that Regulation 2022/1854 did not enter into force until 8 October 2022; that Regulation 2022/1854 laid down a higher revenue cap and a broader scope than those introduced by the contested provision; and that paragraphs 30 to 38 of Article 1 of Law No 197/2022 implemented Articles 6 to 8 of that regulation for the period from 1 December 2022 to 30 June 2023 but excluded plants powered by renewable sources, which were already covered by the contested provision. Therefore, although it predated Regulation 2022/1854, that provision was in fact the national law implementing that regulation with regard to energy produced by renewable sources covered by that provision.

18.The referring court adds that the contested provision, like Regulation 2022/1854, was adopted with the aim of limiting, on a temporary basis, the extraordinary market revenues obtained by energy producers that, not using gas for production, have costs that are independent of natural gas price trends. That provision applied a cap to such extraordinary revenues and distributed the corresponding amounts to end customers. Nevertheless, the referring court is uncertain about the specific arrangements used by the Italian legislature to determine the cap.

19.First, as regards the amount of the revenue cap laid down in the contested provision, the referring court notes that, even though the reference price referred to in paragraph 3(a) of that provision is very different from the price set by EU law, (8) it is fair in so far as it corresponds to the arithmetic average of the prices in each market zone recorded from 1 January 2010 to 31 December 2020, adjusted for inflation. However, that court wonders whether, in the light of recital 28 of Regulation 2022/1854, reference should instead have been made to the hours during which demand was at its highest, before the war in Ukraine. The referring court also notes that the average value applied by the Italian legislature included the year 2020, which was affected by the anomalies caused by the COVID-19 epidemic, during which the single national price had reached a historically low level. The referring court therefore has doubts as to whether the market revenue cap introduced through the contested provision is proportionate and reasonable, given that it does not appear to guarantee that producers may retain 10% of their revenues above that cap, as required by recital 39 of Regulation 2022/1854.

20.Second, the referring court questions the capacity of the contested provision to protect investments made in the renewable energy sector and the ability to make such investments in the future. (9) That court also refers to recitals 28 and 29 of Regulation 2022/1854, according to which, in setting the cap, a ‘reasonable margin’ in relation to the price that investors could have expected should be left, with the aim of ensuring that this cap does not affect the initial assessment of investment profitability, which the Italian legislature does not seem to have taken into account. Indeed, the contested provision does not merely limit the financial capacity of undertakings producing energy from renewable sources to make investments, but undermines investor confidence in the growth of the sector, whereas the Court of Justice has already recognised the need to ‘foster, from a long-term perspective, investment in new installations’. (10)

21.Third and finally, the referring court questions the compatibility of the contested provision with Regulation 2022/1854, in particular as regards the existence of a possible difference in treatment of producers using different other sources and which would not be subject to the same cap, a factor that could give rise to discrimination against certain producers, such as Secab, and consequently lead to market dysfunction. (11)

22.In those circumstances the Tribunale Amministrativo Regionale per la Lombardia (Regional Administrative Court, Lombardy) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

(1)‘(1) Do Article 5(4) of Directive [2019/944], recitals 3 and 12 of Directive [2018/2001], and recitals 27, 28, 29 and 39, Article 6(1) and Article 8(2) of Regulation [2022/1854] preclude a national rule which sets a cap on market revenue obtained from the sale of electricity in the manner provided for in Article 15bis of Decree-Law No 4 … which does not guarantee that producers may retain 10% of their revenues above that cap?

(2)Do Article 5(4) of Directive [2019/944], recitals 2, 3 and 12 of Directive [2018/2001] [and] recitals 27, 28, 29 and 39, Article 6(1) [and] Article 8(2)(b) and (c) of Regulation [2022/1854] preclude a national rule which sets a cap on market revenues obtained from the sale of electricity in the manner provided for in Article 15bis of Decree-Law No 4/2022 … which does not preserve and incentivise investments in the renewable energy sector?

(3)Do recital 3 of Directive [2018/2001], and recitals 27 and 41, Article 7(1)(h), (i) and (j) [and] Article 8(1)(a) and (d) and (2) of Regulation [2022/1854] preclude a national rule which sets a cap on market revenues obtained from the sale of electricity in the manner provided for in Article 15bis of Decree-Law No 4 … which does not provide for any specific cap on the revenues obtained from the sale of energy produced from hard coal, or a regulation differentiating between different sources of production?’

23.Secab, GSE, the Italian, Belgian and Greek Governments and the European Commission filed written observations. Secab, ARERA, GSE, Associazione Italia Solare ETS, Assoidroelettrica, Elettricità Futura – Unione delle imprese elettriche italiane, the Italian and Greek Governments and the Commission also presented oral arguments at the hearing held on 6 November 2024.

24.Before examining the second question referred for a preliminary ruling, on which the Court has requested that the present Opinion be specifically focused, it is necessary to rule on the pleas of inadmissibility raised by GSE and the Italian Government.

25.GSE and the Italian Government submit that the reference for a preliminary ruling is inadmissible on the ground that the requirements of Article 94 of the Rules of Procedure of the Court of Justice have not been complied with, given that the order for reference does not contain the legal and factual material necessary to enable the Court to give a useful answer to the questions referred. With regard, more specifically, to the second question referred, those parties maintain that the referring court merely reproduced the arguments put forward by Secab in its application to the referring court and did not provide any useful evidence to the Court to show that the revenue cap provided for at national level was a deterrent to investment in the renewable energy sector.

26.While it is true that the referring court has largely adopted Secab’s line of argument, I consider that that circumstance is not in itself sufficient to conclude that the present reference for a preliminary ruling is inadmissible. It is settled case-law of the Court that it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. (12) It follows that questions raised by national courts enjoy a presumption of relevance and that the Court may refuse to rule on those questions only if it appears that the interpretation sought bears no relation to the actual facts or subject matter of the dispute in the main proceedings, the problem is hypothetical or the Court does not have before it the factual or legal material necessary to give a useful answer to those questions. (13)

27.This is not the case in this instance. The interpretation of EU law sought by the referring court has a direct bearing on the subject matter of the main proceedings, and the issues raised by those proceedings are not hypothetical but, rather, real. Moreover, the Court has before it the factual and legal material necessary to give a useful answer to the questions referred.

28.It should be noted at the outset that the second question referred for a preliminary ruling, as formulated by the referring court, appears to be based on the premiss that the contested provision does not preserve or incentivise investment in the renewable energy sector. It must be noted, however, as explained in point 26 of the present Opinion, that the reference for a preliminary ruling does not contain any analysis on this point.

29.

Accordingly, I believe that, in order to provide a useful answer to the referring court, the second question for a preliminary ruling should be reworded and that, by that question, that court is asking, in substance, whether Article 5(4) of Directive 2019/944, recitals 2, 3 and 12 of Directive 2018/2001, and recitals 27, 28, 29 and 39, Article 6(1) and Article 8(2)(b) and (c) of Regulation 2022/1854 must be interpreted as precluding a national rule that sets a cap on market revenues, determining that cap by reference to the arithmetic average of prices recorded in the relevant market zone over the last decade, revalued in line with inflation.

1. Compatibility of the contested provision with Directive 2018/2001

30.With regard to Directive 2018/2001, it should be noted at the outset that, by its second question referred, the referring court is seeking only an interpretation of recitals 2, 3 and 12 of that directive, without identifying any other specific provision of that directive that is capable of giving effect to those recitals and which, in the present case, is relevant for the purposes of the dispute in the main proceedings or has been infringed.

31.However, according to the settled case-law of the Court, while the preamble to an EU act provides elements of interpretation which are likely to clarify the intention of the author of that act, it has no binding legal value. (14) Consequently, it cannot be relied on alone either to establish rights or obligations in the absence of equivalent or complementary provisions in the body of the directive, or to derogate from the provisions of the act itself or to interpret those provisions in a manner that is manifestly contrary to their wording. (15)

32.In any event, it should be noted, for the sake of completeness, that it is not apparent from any of recitals 2, 3 and 12 of Directive 2018/2001 that those recitals could preclude a national rule such as that at issue in the present case. Indeed, the only inference that can be drawn from these recitals is that promoting the use of energy from renewable sources is an objective of the European Union’s energy policy and that Member States should implement measures to facilitate investment in renewable energy projects. (16)

33.It follows that recitals 2, 3 and 12 of Directive 2018/2001 referred to in the second question referred for a preliminary ruling cannot preclude a national rule such as that at issue in the main proceedings.

With regard to Directive 2019/944, it should be noted at the outset that Article 5 of the directive aims to guarantee effective competition to support consumers, while ensuring the protection of energy poor and vulnerable household customers.

34.More specifically, paragraph 1 of that article states that suppliers are to be free to determine the price at which they supply electricity to customers and that Member States are to take appropriate actions to ensure effective competition between suppliers. However, paragraph 3 of that article recognises that under certain circumstances it might be necessary to derogate from this general principle. That paragraph 3 thus establishes that Member States may apply public interventions in the price setting for the supply of electricity to energy poor or vulnerable household customers, subject to the conditions set out in paragraphs 4 and 5 of Article 5. Paragraph 4, which is specifically referred to in the second question referred for a preliminary ruling, lays down a series of general criteria that public interventions in the price setting for the supply of electricity are required to fulfil. (17)

35.However, it has to be said that Article 5 concerns Member States’ interventions in the electricity retail market and relates to the prices at which electricity is sold to end consumers by electricity suppliers. Consequently, that provision has no bearing on an intervention such as that provided for by the contested provision which, for its part, concerns the setting of a cap on the revenue of electricity producers on the wholesale market, which is specifically governed by Regulation 2022/1854. (18)

36.It is important to note, moreover, that, while it cannot be ruled out that the setting of such a cap might have an indirect effect on the prices at which electricity is sold to end consumers, the limited information provided in the order for reference on that point does not make it possible to consider that a national rule such as that at issue in the main proceedings should be treated as State intervention in the setting of the price at which electricity is supplied to customers. Under Article 5(4) of Directive 2019/944, this is in principle prohibited. (19)

37.It should also be noted that Regulation 2022/1854 pursues general interest objectives that are analogous to those pursued by Article 5(4) of Directive 2019/944 and, more specifically, to the objective of protecting consumers, in particular by extending the possibilities for intervention available to the Member States in order to support consumers affected by the energy crisis. (20)

39.That being the case, I am of the view that Article 5(4) of Directive 2019/944 must be interpreted as not precluding a national rule such as that at issue in the main proceedings.

3. Compatibility of the contested provision with Regulation 2022/1854

40.With regard to Regulation 2022/1854, it should first be made clear that this regulation constitutes an emergency intervention to address the increase in energy prices, by means of which the European Union legislature wished to create a harmonised framework for the redistribution of excess revenue in order to allay concerns about distortions among producers that could jeopardise the energy market. (21)

41.Thus, while Article 6(1) of Regulation 2022/1854 establishes that the market revenues of producers obtained from the generation of electricity from the sources referred to in Article 7(1) of that regulation are to be capped at a maximum of EUR 180 per MWh of electricity produced, Article 8(1)(a) of that regulation authorises Member States to maintain or introduce measures that further limit those revenues.

42.It should also be noted that, although no provision of Regulation 2022/1854 contains specific information as to how the cap ultimately set by the Member States is to be calculated, if a Member State were to decide to set a lower cap than that determined by that regulation, that cap would be required to comply with the conditions laid down in Article 8(2) of that regulation. Thus, only if it is established that the cap set by a Member State could infringe the criteria established under that provision could that cap be considered incompatible with EU law.

43.These clarifications having been made, it should be noted that the referring court is essentially concerned with the question of setting the price level on the basis of which the revenue cap is applied, with that court considering that the contested provision is incapable of preserving and incentivising investment in the renewable energy sector and that the cap on market revenues is not proportionate and reasonable. (22)

44.It should be noted, in the first place, as stated in point 41 of the present Opinion, that the mere fact that the amount of the cap chosen by the Italian Government is lower than the cap laid down by Article 6(1) of Regulation 2022/1854 is not in itself such as to render the contested provision incompatible with that regulation. It is clear from the wording of the regulation itself and, more specifically, from Article 8(1), that the Member States have, first, the option of adopting a cap lower than the maximum cap of EUR 180 per MWh laid down by the EU legislature and, secondly, that they have a certain margin of discretion enabling them to set the amount of that cap, taking into account the specific characteristics of their national markets. (23) Moreover, the fact that this cap differs significantly from the amount set by Regulation 2022/1854, as pointed out by the referring court, is not in itself sufficient to establish incompatibility with the regulation. (24)

45.With regard to recitals 27, 28, 29 and 39 of Regulation 2022/1854, referred to by the referring court in its second question, these recitals cannot be read as imposing a precise methodology on the Member States for calculating the revenue cap. While these recitals may indeed provide useful guidance on how to set the cap in question and on how to avoid possible negative effects on investments, they cannot be considered as establishing binding rules that are different from or go beyond the obligations incumbent on Member States under the abovementioned provisions of the regulation. (25)

46.As regards, more specifically, the doubts expressed by the referring court as to the compatibility of the methodology applied by the Italian Government in setting the amount of the cap with recitals 28 and 29 of Regulation 2022/1854, it should be noted that those provisions are primarily intended to explain the choice of the amount of the cap of EUR 180 per MWh made by the EU legislature in Article 6(1) of that regulation and to provide guidance to Member States in calculating their national caps, without imposing any specific arrangements for putting such a cap in place, (26) the only obligation in that regard being compliance with the conditions laid down in Article 8(2) of that regulation. (27)

47.With regard, in the second place, to the criteria other than the amount of the cap in the strict sense and the methods for calculating it to be applied by the Member States in setting that cap, it is worth recalling that Article 8(2)(b) and (c) of Regulation 2022/1854 requires Member States to ensure that the cap is set at a level that does not jeopardise investment signals and that ensures that investment and operating costs are covered while allowing investors a reasonable margin in relation to the price they could have expected.

48.It is important to highlight, on this point, the fact that the examination of the compatibility of the level of the cap chosen by the Italian Government with regard to the abovementioned parameters is based on a factual assessment taking account of the specific characteristics of the national market, which only the referring court is, ultimately, competent to carry out, since it has, moreover, the necessary factual data to do so. (28) However, although it is for the referring court to assess whether the contested provision could have a negative impact on investment, and in particular whether the reference price was set at a level that went beyond those expectations and exceeded the limits of what could be considered necessary and proportionate, the Court can nevertheless provide guidance in this regard. The following criteria are, in my view, relevant to the analysis that the referring court will be called upon to carry out.

49.It is important to remember, first, that as an emergency intervention linked to the particular market situation following Russia’s war of aggression against Ukraine, the temporary scope of the contested provision is limited to a short period of time. (29) It should be noted, on that point, that the measures provided for in Regulation 2022/1854 are not, as such, permanent market interventions, but, rather, one-off interventions designed to address extraordinary circumstances.

50.The duration of a measure and its extraordinary nature are criteria that must be taken into consideration when examining the necessity and proportionality of a given measure in order to assess the extent of its effects, (30) particularly when, as in the present case, the effects on existing investments in the field of renewable energy – which are, by their very nature, long-term investments – are examined. This is all the more true, moreover, when the examination concerns the impact of the contested provision on future investments, which, given the limited temporary nature of the cap in question, will in all likelihood not be subject to that cap, since the production cycle for most of these installations will not begin until after the scheme in question has expired. (31)

51.It is clear from the wording of Regulation 2022/1854 itself that the cap on market revenues must be set so as to cover excess revenues, taking into account those that could not be expected by investors at the time when the investment decision was taken. However, by definition, such extraordinary profits could not correspond to the revenues that the companies concerned could have expected if the unforeseeable circumstances on the energy markets had not occurred. (32)

52.It should be pointed out in this respect that the principle of the protection of legitimate expectations, invoked by Secab, cannot be interpreted as meaning that an economic operator can invoke that principle against any intervention by the public authorities intended to remedy a market failure, in particular when that intervention takes the form of emergency intervention following an unprecedented and therefore unforeseeable event. It is settled case-law of the Court that this principle may be relied on by any economic operator on whose part national authorities have created reasonable expectations. (33) However, where a prudent and circumspect economic operator could have foreseen the adoption of a measure likely to affect its interests, that operator cannot plead that principle if the measure is adopted. The same case-law establishes that economic operators cannot have a legitimate expectation that an existing situation which is capable of being altered by the national authorities in the exercise of their discretionary power will be maintained.

53.In the present case, no expectation could have arisen on the part of the undertakings concerned in relation to how the national authorities might respond to such extraordinary revenues, as the authorities immediately implemented emergency measures to address the unforeseeable increase in gas prices. Indeed, a prudent and circumspect economic operator should have expected such an intervention given the extraordinary situation and its significant impact not only on the energy market but on the economy more generally. Similarly, still less could there be an expectation based on the realisation of profits resulting from an extraordinary situation, which such an operator could not have expected at the time the decision to invest was taken. (34)

54.It should be noted, on this point, that the Italian Government’s use of an objective criterion based on the conditions prevailing on the market before the energy crisis in order to establish the cap – such as the arithmetical average of prices in the decade preceding the energy crisis – is, in my view, such as to meet the requirements of Regulation 2022/1854 in terms of investors’ expectations at the time of their investment in order to ensure that the cap in question is set at a price level that investors could reasonably anticipate. (35)

55.

Third, it is important to emphasise that it is clear from the text of Regulation 2022/1854 itself that the factors to be taken into account in assessing the effects of the contested provision on investment include the cost structure of the plants concerned and, in particular, the levelised cost of energy (36) for the technology in question. (37) It appears that the energy installations powered by renewable sources and covered by the contested provision are characterised by a predominance of fixed costs, with variable costs being much lower. Furthermore, as also noted by the referring court, these installations incur costs that are independent of natural gas price trends, since they do not use gas as a raw material to produce energy. Subject to the verifications to be carried out by the referring court, it would appear that the cost structure of renewable energy producers, as in the case of Secab, has remained largely unchanged, despite the unforeseeable increase in the price of fossil fuels, particularly gas, as this increase had no impact on the energy generation costs of those operators. (38)

Fourth, it should be noted that the capping mechanism introduced by the contested provision is in fact ‘two-way’, since it allows, on the one hand, not only the capping of revenue in the event of an excessive increase in market prices, but also creates a legal obligation to compensate the producers concerned if there is an excessive decrease in market prices and in particular when wholesale prices fall below the average price indicated. (39) So, if this (reference) price is set at a level that enables the undertakings concerned to cover their costs and generate a ‘reasonable margin’ compared with the price that investors could have expected, a factor that it is for the referring court to verify, such a mechanism is likely to preserve investments in renewable energies.

I should note, in the third and final place, that the measures introduced by Regulation 2022/1854 are aimed not only at preserving the structure and functioning of the energy markets in the European Union, but also, more generally, at mitigating the negative effects that the energy crisis has had on the economies of the Member States and on European citizens. With regard, more specifically, to consumer protection, Article 10 of Regulation 2022/1854 expressly provides that surplus revenues resulting from the application of the cap on market revenues can be used to finance measures in support of final electricity customers that mitigate the impact of high electricity prices on those customers. (40)

Although consumer protection was not discussed by the referring court, it is important to highlight the fact that, as an emergency measure designed to protect the public interest, Regulation 2022/1854 balances the interests of energy producers, including the protection of their investments in renewable energy, against those of consumers. Accordingly, the mechanism for levying and redistributing surplus revenue is justified by the need to strike a balance between these producers, particularly those who benefited unexpectedly from the unforeseen rise in energy prices, and electricity consumers, who have been particularly hard hit by the rise in electricity prices as a result of the energy crisis. (41)

Based on all the foregoing, I propose that the answer to the second question referred for a preliminary ruling, as reworded, should be that Article 5(4) of Directive 2019/944, recitals 2, 3 and 12 of Directive 2018/2001, and recitals 27, 28, 29 and 39 and Article 6(1) of Regulation 2022/1854 must be interpreted as not precluding a national rule requiring that the cap on market revenues be determined on the basis of the arithmetic average of prices recorded in the relevant market zone over the last decade, revalued in line with inflation, provided that the conditions laid down in Article 8(2)(b) and (c) of Regulation 2022/1854 are satisfied.

In the light of the foregoing considerations, I propose that the Court answer the second question referred for a preliminary ruling by the Tribunale Amministrativo Regionale per la Lombardia (Regional Administrative Court, Lombardy, Italy) as follows:

Article 5(4) of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU, recitals 2, 3 and 12 of Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources, and recitals 27, 28, 29 and 39 and Article 6(1) of Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices,

must be interpreted as not precluding a national rule requiring that the cap on market revenues be determined on the basis of the arithmetic average of prices recorded in the relevant market zone over the last decade, revalued in line with inflation, provided that the conditions laid down in Article 8(2)(b) and (c) of Regulation 2022/1854 are satisfied.

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Original language: French.

Directive of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (OJ 2019 L 158, p. 125).

Directive of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (OJ 2018 L 328, p. 82).

Council Regulation of 6 October 2022 on an emergency intervention to address high energy prices (OJ 2022 L 261, p. 1).

Ordinary Supplement to GURI No 73 of 28 March 2022.

GURI No 185 of 9 August 2022.

Ordinary Supplement to GURI No 303 of 29 December 2022.

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