Renewable energy and smart grids market in Italy

Italy is a key player in the European energy market, characterized by a diverse energy mix. The country is reducing its reliance on fossil fuels. Natural gas still plays a major role but is gradually being supplemented by renewable energy sources (RES).

Italy’s renewable energy sector is robust, with substantial energy contributions from:

  • hydropower
  • solar
  • wind 

Italy also produces about 6 TWh of geothermal energy annually, with Enel Green Power as the primary operator. Tuscany stands out as the leading region, hosting over 30 geothermal plants, including Europe’s largest facility in Larderello. The nation is investing heavily in biogas and biomethane to enhance energy security and sustainability, aiming for ambitious targets by 20301.

As the largest net importer of electricity in Europe, Italy is improving its energy security by diversifying natural gas supplies and investing in smart grid solutions. The distribution grid, connecting over 30 million households, is crucial for the energy transition. Among the 'Big 5' countries, Italy’s distribution grid ranks second for territorial coverage, and first for:

  • investment capacity
  • smart meter penetration
  • cost-effectiveness

Key opportunities for Canadian energy companies in Italy

  • Italy’s recent move to reintroduce nuclear power as part of its energy mix opens potential partnerships for Canadian companies with expertise in nuclear technology. The establishment of the National Platform for Sustainable Nuclear Power and the focus on developing SMRs and Generation IV reactors present opportunities for Canadian firms to engage in Italy’s future nuclear projects.
  • Italy’s ambitious targets to increase solar and wind capacity by 74 GW (Gigawatts) by 2030 present significant opportunities for Canadian companies specializing in renewable energy technologies.
  • The country’s focus on smart grid technologies and energy storage systems aligns with Canadian innovations in these areas, offering potential for collaboration and market entry.

Industry highlights

264.273 TWh (Terrawatt-hours) of total electricity production in Italy in 2023

41.2% of renewables in Italy’s total power demand in 2024

154,000 people employed in the Italian renewable energy sector in 2023

45% of Italy’s electricity generation was natural gas in 2023

44% renewables share in Italy’s electricity generation in 2024

54.5 TWh produced from Italian wind and solar energy in 2023

Notable challenges for Canadian energy companies in Italy

  • Italy has high electricity costs, with wholesale prices much higher than in other major European countries. It also relies heavily on imported natural gas. Together, these factors put Italian industries at a disadvantage and have contributed to a long decline in manufacturing activity.
  • There is a regional disparity between renewable electricity generation and load centers in Italy. Dispatchable renewable sources like hydro and bioenergy are more prevalent in the northern regions, while the southern regions have a dominant share of variable sources such as solar and wind. These disparities complicate the management of electricity flows and require upgrades to the national transmission and distribution grids.
  • The process of obtaining permits for new renewable energy projects in Italy is often complex, particularly for wind and solar installations. Bureaucratic hurdles and regulatory barriers can delay project timelines and increase costs. This poses challenges for Canadian companies looking to invest in the Italian market.

Italian business landscape

  • Italy’s business landscape is driven by a dynamic SME (small and medium-sized enterprises) structure. This provides a high degree of adaptability and innovation across various industries.
  • The country has a robust energy infrastructure, including extensive LNG and pipeline networks. This enhances energy security and supports the transition to renewable energy sources.
  • Italy is at the forefront of biogas production, hosting over 2,000 active biogas plants and being the second-largest producer of biomethane in Europe7. The country also leads in circular economy practices, ranking first in the EU for investments in this sector and achieving high recycling rates.
  • Italy provides a supportive regulatory framework for the energy sector. There are incentives for: 
    • renewable energy production
    • energy efficiency projects
    • development of smart grid technologies

Upcoming projects and events

Summary

Italy is a leader in the European energy market, with a strong commitment to renewable energy and sustainability. The country aims for carbon neutrality by 2050 and is on track to meet its 2030 targets, including achieving 55% of renewables in electricity generation8. Italy excels in circular economy practices and is making significant investments in smart grids, solar, wind, and biogas. Additionally, Italy is reintroducing nuclear power to diversify its energy mix and reduce reliance on natural gas. The robust national grid and supportive regulatory framework for the energy sector make Italy an attractive market for innovative energy solutions.

For more information on renewable energy in the Italian market please contact Patrizia Giuliotti:

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Additional Information

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