Italy Energy Growth in Renewables

Italy ranks third in Europe for both renewable power consumption and generation. Total installed power from renewables in Italy is 58 GW. Year to date November 2022 data shows that renewables satisfied 32.4% of Italy’s electricity demand.  Specifically, hydroelectric power covered 8.9% of demand, solar power 9.2%, wind power 6.4%, bioenergy 5.6% and geothermal 1.7%.  The fastest growing subsectors were solar and wind.

In its National Resilience and Recovery Plan (NRRP), Italy devoted €59 billion (approximately US$66 billion) to incentivize renewables in the 2021-2026 timeframe, to meet European Union clean energy targets.  Specifically, Italy plans to eliminate coal by 2025 and to bring renewables’ share of final gross electricity production to 72% by 2030 and 95-100% by 2050.  More specifically, Italy will have to add 70 GW of electric renewables, which added to the current 58 GW will reach a total of 128 GW by 2030, allowing the renewable mix to cover the above-mentioned 72% quota. To integrate the new renewable power, it will be also necessary to install at least 60 GWh of large size storage systems, in addition to strengthening electric networks.

Up until recently, growth in renewable plant installations in Italy had been sluggish at best. This is due to the widespread presence of Nimby (not in my backyard) and Nimto (not in my terms of office) syndromes, combined with strong bureaucratic difficulties affecting the authorization process for new plants. Local institutions – municipalities and regions – were often responsible for project delays and denials, together with authorities responsible for monuments, the environment and historical buildings. However, lately there have been remarkable signs of improvement, which led to Italy’s rise in ranking from 15th to 12th place in the latest edition of the Ernst and Young Renewable Energy Country Attractiveness Index.  The Index ranks the top 40 countries in the world for investment attractiveness and development opportunities in the renewable energy sector.

First and foremost the Ministry-run “Environmental Impact Assessment” (VIA) procedure was simplified. This is demonstrated by Data from the Ministry of the Environment and Energy Security (MASE) reporting on the work carried out in 2022 by the two key government bodies responsible for environmental impact assessment demonstrated this. From the beginning of 2022 to mid-December 2022, the two technical bodies noted above have in fact authorized as many as 7.1 GW of new renewable plants in Italy. A figure which, explains MASE, “exceeds expectations”. Furthermore, offshore wind installations on plants up to 10 MW have been simplified and new regulations are expected in support of renewables and for ancillary technologies associated with renewables (such as batteries).  The announcement that five GW of offshore wind projects will be made available through auctions between 2023 and 2026 also boosted optimism, as well as the inauguration of the first Italian offshore wind plant (Beleolico, near Taranto).

The results are as follows: from January to September 2022, solar, wind and hydroelectric plant installations grew by 1.98 GW, equal to an increase of 146% compared to the first 9 months of 2021. Italian photovoltaics (PV) alone accounted for three quarters of  new green power installations, with 1.57 GW of new PV installed capacity as of September 3, 2022  (up by 159% over the previous year). Provisional forecasts for end of year 2022 PV installations total 2.6 GW of new plants, bringing the total PV installed capacity in Italy to 24 GW.  Wind power also recorded a strong growth trend in 2022 with 381 MW of new installed capacity: a total of 135 plants were connected to the grid from January to September 2022. Hydroelectric also recovered, although at a decidedly slower pace from January to September, connecting to the grid 37 MW of new power.

Although renewables in Italy are growing, renewables association ANIE Rinnovabili underlines how the incremental trend is not yet aligned with the energy objectives leading up to 2030.  “The main criticality – explains the Association – lies in the authorization procedures and in designing a regulatory and medium/long-term regulatory framework”.  One of the main problems is that for the completion of the environmental impact evaluation procedure, the approval of the Ministry of the Environment commissions cited above is not enough. It is also necessary to acquire the evaluation of the Ministry of Culture, whose opinion is often opposed to that of the Ministry of the Environment. Evaluations from the two ministries are necessary for photovoltaic projects with power ≥ 10 MW and wind projects with power ≥30 M. Furthermore, for the actual construction and operation of the plants it is necessary to obtain a so-called “Autorizzazione Unica”, the evaluation of which is placed in the hands of the regional, provincial, municipal and local bodies, and risks frustrating the efforts of the proponents of the projects and of the ministries.

However, it is hoped that a concerted, joint effort from the national and local governments and authorities will lead to the authorization of more renewable energy projects. This is needed due to the conflict in the Ukraine, which threatens Italy’s domestic energy security. Italy’s goal is to  become independent of Russian gas by the second half of 2024.  Clean energy will have a key role in this improvement of domestic energy security.

Opportunities may exist for U.S. firms in the renewable energy space in Italy, especially in energy storage, hydrogen-related technologies and offshore wind. U.S. entrepreneurs interested in connecting with Italian industry players and seeking representation and information on how the U.S. Commercial service can assist U.S. companies should reach out to: federico.bevini@trade.gov