Italy Design and Construction Smart City Market

The market for Italian “intelligent” and sustainable cities grew +23% in 2022, reaching €900 million ($945 million), according to a June 2023 report from the Smart City Observatory of the Milan Polytechnic University and the Intesa Sanpaolo Innovation Center, part of Intesa Sanpaolo, one of Italy’s top two banking groups.  This amount is expected to grow further 1. as funds from the European Union co-financed National Recovery and Resilience Plan (NRRP, known as the “PNNR” in Italy) are released into the market, 2. as cities increase their other investments in smart solutions, and 3. as established companies and startups create new solutions and market opportunities.

One in five Italian cities launched at least one new smart city project in 2022.  Some of the catalysts for this growth included investments in fundamental applications for smart cities such as “intelligent” public lighting (24%), smart mobility (21%), remote reading and remote management systems for electricity, water and gas (smart metering), together with smart buildings (12%).

Furthermore, 89% of Italian local governments declared that they have launched initiatives for the smart transformation in recent years and are planning to further invest in “smart” projects, focusing on smart mobility, smart building and analysis of data related to tourism, mobility, and events in cities.

The NRRP has allocated at least €17.1 billion ($18.1 billion) in funds to Smart Cities related development, divided as follows:

• €9 billion ($9.5 billion) for the digitization of public administration which includes investments enabling Smart Cities solutions.
• €7 billion ($7.4 billion) for ecological transition and “green revolution” investments intended to increase energy efficiency and sustainability of cities, as well as projects to 1. reduce hydrogeological risks, 2. create renewable energy communities in small urban centers, and 3. integrate smart monitoring of the territory.
• €5 billion ($5.3 billion) for cities to develop and implement “Integrated Urban Plans” to transform the outskirts of 14 Metropolitan Cities making them smarter and more sustainable through the creation of new services for citizens and the digitization of infrastructure.
• €1 billion ($1.1 billion) for urban regeneration projects.

Opportunities therefore may exist in a broad range of advanced smart cities and intelligent transportation solutions. However, when public procurement is involved, U.S. businesses should also consider that the decision-making processes for public approvals and investments in Italy may take longer – and involve more stakeholders – than in other markets.

For more information, contact Joshua.Lawrence@trade.gov .