Renewable Energy 2026 Comparisons

Italy’s natural abundance of renewable energy sources – sun, water and wind – gives it a significant advantage over other European countries. Throughout 2025, renewable capacity has continued to grow, particularly through photovoltaic, wind and battery storage projects, supported by the increasing electrification of transport, heating and industrial processes.

Having already exceeded its 2020 national renewable energy target, the country now enters a pivotal five-year period that will determine whether it can meet the challenging decarbonisation and climate neutrality goals established by the Integrated National Energy and Climate Plan (PNIEC – Piano Nazionale Integrato per l’Energia e il Clima) and the National Recovery and Resilience Plan (PNRR – Piano Nazionale Ripresa e Resilienza). The energy transition in Italy is driven by these plans as well as by the European Green Deal.

The PNIEC outlines Italy’s strategy for the energy and climate transition. By 2030, 63.4% of electricity must be generated from renewable sources (a target also confirmed by the revised PNIEC). Significant progress has been made in recent years, with this figure rising from 23% in 2010 to 41% in 2024. However, the pace of growth has recently slowed.

The PNRR is an EU-funded programme of reforms and investments that aims to boost Italy’s economy after the COVID-19 pandemic. In 2023, it was revised to adapt to changing geopolitical and energy conditions, with Mission 7 – RePower EU allocating an additional EUR9.5 billion to security and the energy transition. In total, around EUR16 billion has been allocated, and is available until 2026 to facilitate the energy transition.

Recent reforms have shifted the regulatory approach from incentive-based support towards the simplification of permitting procedures and the reduction of administrative barriers. However, there are some issues that may complicate market development. Purchasing land and gaining grid connection is more expensive in Italy than in other European countries. Italy’s fragmented and heterogeneous regulatory framework has proven difficult to navigate, with permitting procedures often falling under overlapping and competing jurisdictions. Constraints presented by the environment, the landscape or the presence of cultural heritage sites have limited or prohibited the construction of renewable energy plants. Furthermore, government schemes aimed at incentivising and simplifying the energy transition have suffered some delays.

Nevertheless, the government is continuing to develop its policy of supporting renewable energy both by innovating its legislation and by promoting incentive initiatives (see 1.3 Renewable Energy Market and Recent Developments).

More than half of energy production (53%) comes from thermoelectric sources. Of this, 12% comes from photovoltaic plants, while 10% comes from wind farms, which are the most important and widespread types of renewable energy in Italy.

Italy’s natural abundance of solar power has made photovoltaic panels a powerful source of energy. Furthermore, recent developments in this technology have rendered it even more efficient and economically suitable for investors. Solar development now prioritises agrivoltaic solutions (AgriPV) – ie, solar plants located on agricultural land with modules mounted above ground level. AgriPV projects enable the simultaneous generation of electricity and the continuation of agricultural activities. Following a July 2026 Constitutional Court ruling upholding the ban on ground-mounted PV in agricultural lands, AgriPV projects have become increasingly important for market operators. Nevertheless, the applicable legislation continues to permit the installation of ground-mounted solar plants in certain designated areas.

Wind power is also significant in Italy (mainly in southern Italy and offshore areas) and has the potential to become one of the main sources of Italy’s energy transition, although slowness of permitting procedures and grid constraints remain significant issues that will need to be dealt with in the coming years.

Hydropower also provides an important source of renewable and dispatchable electricity, with investments focused on refurbishment, repowering and storage. Biomethane is becoming increasingly strategic for gas sector decarbonisation, while geothermal production remains concentrated in Tuscany.

Battery energy storage systems (BESS) are rapidly expanding to improve grid flexibility and facilitate renewable integration. Renewable hydrogen remains at an early stage, mainly targeting hard-to-abate industries and heavy transport.

Despite the progress achieved in recent years, renewable energy deployment will need to accelerate significantly in order to meet the new European and national targets. 

Throughout 2025, the Italian renewable energy market continued to expand, driven by increasing investor confidence, growing electricity demand from industrial consumers and public policies supporting decarbonisation. Photovoltaic projects remain the main driver of new installed capacity, while BESS and corporate Power Purchase Agreements (PPAs) are becoming increasingly relevant.

The entry into force of Legislative Decree No 190/2024 (the “Consolidated Renewable Energy Act”) represents one of the most significant recent legal developments, introducing a simplified permitting framework aimed at reducing administrative barriers, improving co-ordination among authorities and creating greater legal certainty for investors.

Another key area concerns the identification of suitable areas (aree idonee) for renewable energy installations. The implementation of the relevant framework has generated significant litigation, leading administrative courts to clarify the need to balance renewable energy development with landscape and environmental protection.

Grid capacity and connection procedures remain among the main challenges affecting project development, particularly in southern Italy where renewable potential is highest. Recent measures therefore focus on strengthening electricity infrastructure, improving network management and facilitating the integration of new generation capacity and storage systems.

From a commercial perspective, corporate PPAs, increasingly sophisticated financing structures and the expansion of storage projects are contributing to the maturation of the Italian renewable energy market and attracting growing interest from international investors.

Overall, despite the remaining administrative and infrastructural challenges, regulatory reforms, judicial clarification and infrastructure investment are expected to support the continued development of Italy’s renewable energy sector.

Italy’s energy sector operates under a complex, multi-layered regulatory framework that spans national, regional and municipal levels. While the national government and regional authorities establish overarching policies, each municipality retains independent powers to regulate its own territory, which affects the legitimate installation of renewable energy plants.

The main national legal sources relevant to the renewable energy market are the following.

Italy’s Constitution

The Italian Republic acknowledges and promotes in its Constitution free economic initiatives (Article 41), as well as environmental protection, also in the interest of future generations (Article 9).

Legislative Decree No 199/2021

This implements Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources. It aims to accelerate the energy transition by establishing the tools, mechanisms, incentives and regulatory framework necessary to achieve European and national decarbonisation targets.

Legislative Decree No 190/2024

This consolidates and reorganises previous legislation regarding permitting regimes and procedures for constructing and operating renewable energy plants, which was previously fragmented across several legislative acts. Subsequent amendments also incorporated provisions concerning suitable areas, although the framework remains affected by implementing measures and litigation.

Legislative Decree No 152/2006

Known as the Environmental Code, this is the main source of Italian legislation on environmental matters. It mandates the appropriate authorisations that must be obtained before the construction of a renewable energy plant, and establishes rules for waste disposal, protection from pollution, and water and air management.

Legislative Decree No 28/2011

This defines the tools, mechanisms and incentives as well as the institutional, financial and legal framework necessary to ensure the achievement of decarbonisation objectives.

National legislation is implemented differently in each Italian Region; furthermore, it is supplemented by local regulations and intersects with landscape, environmental and cultural restrictions. All these aspects need to be carefully evaluated for the development of new projects.

The main authorities in the renewable energy sector are as follows.

Ministry of the Environment and Energy Security (MASE – Ministero dell’ambiente e della sicurezza Energetica)

This is the main government body that carries out actions aimed at protecting the environment. It ensures the security of energy infrastructure and systems while also working to promote renewable energy. It adopts decrees that set rules for the energy transition sector and distributes the economic resources of the State and the European Union (EU).

Energy Services Operator (GSE – Gestore dei Servizi Energetici SpA)

Wholly owned by the Ministry of Economy and Finance, this company is responsible for promoting renewable energy sources and energy efficiency. It allocates public resources in these sectors, regulates access procedures, pays contributions, and carries out checks and verifications of regularity and compliance with regulations.

Energy Market Operator (GME – Gestore del Mercato Energetico)

This operates in compliance with MASE guidelines and the regulatory provisions defined by the Regulatory Authority for Energy, Networks and Environment (ARERA – Autorità di regolazione per Energia Reti e Ambiente). It organises and manages the electricity, natural gas and environmental markets.

ARERA

This body regulates and monitors Italy’s electricity, natural gas, water services, waste cycle and district heating sectors. It works to promote competition and efficiency in public utility services and to protect the interests of users and consumers by setting technical and economic market conditions, adopting resolutions, and monitoring the proper functioning of networks and markets.

National Agency for New Technologies, Energy and Sustainable Economic Development (ENEA – Agenzia nazionale per le nuove tecnologie, l’energia e lo sviluppo economico sostenibile)

This public body deals with research and technological innovation. It provides advanced services to businesses, public administration and citizens in the energy, environment and sustainable economic development sectors.

Terna SpA

This Italian company manages the national high and very high-voltage electricity transmission and dispatching network. It maintains the balance between electricity supply and demand, and enables the transition to renewable sources through its public service role.

Please note that the management of the medium and low-voltage network has also been entrusted to other entities operating in different parts of the country (Distribution System Operators – DSOs).

Enel SpA

This Italian energy company is one of the leading global integrated operators in the electricity and gas sectors. The Italian State, through the Ministry of Economy and Finance, is the main shareholder, with 23.6% of the share capital as of 31 December 2024. It is involved in the production and distribution of electricity and gas.

Snam SpA

This energy infrastructure company is Europe’s leading operator in natural gas transportation. It ensures security of supply and promotes the energy transition with investments in green gases (biomethane and hydrogen), energy efficiency and CCS (carbon capture and storage) technology.

The construction and operation of a renewable energy plant in Italy requires both prior authorisation (Legislative Decree No 190/2024) and the successful completion of a specific environmental assessment procedure (Legislative Decree No 152/2006), if applicable.

All projects involving the construction, operation, modification, enhancement or reconstruction of renewable energy generation plants – as well as projects involving work and infrastructure essential for their operation – fall into three categories, as follows.

• Free activity (Attività libera): the implementation of projects in this case does not require any permits, authorisations or administrative approvals, nor is the proponent required to submit any notifications, certifications or declarations to public authorities.
• Simplified Authorisation (Procedura Abilitativa Semplificata – PAS): in this case, the proponent must submit the projects and the documents required by law to the competent public authority. If no express refusal is issued within 30 days from project submission, the authorisation is considered automatically granted.
• Single Authorisation (Autorizzazione Unica – AU): this is the most complex procedure and requires a punctual revision of all the documentation provided by the competent public authority. Once this first review is completed, all public authorities that are required to express their opinion on the project are convened at the same time at a specific meeting (conferenza di servizi). The procedure concludes with an express authorisation measure.

The choice of procedure depends on the specific characteristics of the project.

Since the construction of renewable energy plants could negatively affect the environment around them, the Italian Environmental Code requires specific environmental assessment procedures on the compatibility of human activity with sustainable development conditions, human health and the conservation of species and ecosystems.

These procedures aim to identify, describe and assess a project’s environmental impacts by examining any significant direct and indirect negative effects. The assessment focuses on five key areas:

• population and human health;
• biodiversity, with particular attention paid to protected species and habitats;
• land, soil, water, air and climate;
• existing real-estate assets, cultural heritage and landscape; and
• the interaction between the factors listed above.

The ownership and transfer of renewable energy assets is unrestricted in Italy. Renewable projects may therefore be freely acquired, sold or transferred by economic operators through either asset deals or share deals, subject to compliance with general corporate, competition and regulatory requirements.

This flexibility has contributed to the significant growth of transactions involving operational renewable plants, development portfolios and ready-to-build projects. Certain regulatory aspects must nevertheless be considered in connection with transfers of renewable energy assets, particularly where projects benefit from public support mechanisms.

Transactions involving incentivised plants require careful analysis of:

• the continued satisfaction of GSE eligibility requirements;
• the transferability of incentive schemes;
• compliance with applicable regulatory conditions following the transaction; and
• the continuity of existing contractual arrangements.

A further relevant aspect is the application of the Golden Power regime, which may require prior notification to the Presidency of the Council of Ministers for transactions involving strategic energy assets or infrastructure considered relevant to national security or the continuity of essential services. If the government considers that the transaction could be harmful to the national public interest, it may use a veto to prevent its execution or may impose specific preliminary conditions.

Energy transactions that fall under this power are largely limited to those in critical sectors or transactions of major economic importance, but they can also include large hydroelectric concessions.

Italy maintains an open and competitive renewable energy market, with no general restrictions on foreign ownership or investment in renewable energy projects. Italian and foreign investors may participate in all stages of project development, including:

• greenfield developments;
• acquisition of operating plants;
• joint ventures; and
• portfolio transactions.

Foreign investment activity is particularly significant in the photovoltaic, wind, battery storage and biomethane sectors, where international infrastructure funds, utilities and institutional investors are increasingly active.

Although market access is generally unrestricted, participation in certain incentive schemes and competitive allocation procedures may require compliance with specific eligibility criteria established by legislation or implementing measures adopted by the GSE.

Foreign investments may also be subject to the Golden Power regime where transactions concern strategic energy assets or infrastructure (please see 2.4 Ownership and Transfer of Control).

Italy’s renewable electricity sector operates within a fully liberalised market open to domestic and foreign operators. The market includes large integrated utilities, independent power producers (IPPs), infrastructure funds, institutional investors, renewable energy communities (so called CERs) and self-consumption schemes.

Photovoltaic and wind energy represent the main drivers of new generation capacity, while hydroelectric, geothermal and biomass plants continue to play an important role in the national electricity mix.

The regulatory framework is primarily based on:

• Legislative Decree No 199/2021, which implemented the RED II Directive establishing the general framework for the development of renewable energy sources in Italy;
• Legislative Decree No 190/2024, which consolidates the administrative regimes applicable to the construction and operation of renewable energy plants; and
• Legislative Decree No 152/2006 (the “Environmental Code”).

Electricity generation is not subject to exclusive concessions; however, the construction and operation of plants require compliance with the relevant permitting procedures and environmental requirements.

The main authorities involved are:

• MASE, responsible for national energy policy;
• Regions (or Provinces, where such powers have been delegated to them by the relevant Region), which are generally the competent authority for the issuance of the relevant authorisations;
• the GSE, which manages incentive schemes;
• ARERA, regulating electricity markets and network access, among others;
• Terna SpA, managing high- and very high-voltage electricity transmission networks and system security; and
• DSOs, responsible for local distribution networks.

The rapid growth of renewable generation has increased the importance of connection procedures, network planning and infrastructure investment.

Recent regulatory initiatives aim to:

• accelerate connection processes;
• strengthen transmission infrastructure;
• improve allocation of available grid capacity; and
• facilitate integration of storage systems.

Renewable electricity financing increasingly relies not only on public incentives but also on market-based mechanisms. PPAs are becoming even more important by providing long-term revenue certainty for developers and enabling industrial consumers to pursue decarbonisation strategies.

Future challenges include:

• accelerating permitting procedures;
• expanding storage capacity;
• reinforcing electricity networks; and
• improving co-ordination between national and regional authorities.

Gas production from renewable sources plays an important role in Italy’s decarbonisation strategy, particularly through the development of biomethane. Although conventional biogas production remains relevant, recent policies have encouraged the conversion of existing biogas plants into biomethane facilities capable of injecting renewable gas into national gas networks.

The sector is open to private investment and includes:

• agricultural companies;
• waste management operators;
• utilities;
• independent energy producers; and
• infrastructure investors.

The regulatory framework is mainly based on Legislative Decree No 199/2021 (which transposed the RED II Directive) and implementing measures governing incentive mechanisms and technical requirements.

Public support schemes managed by the GSE promote both new biomethane facilities and the conversion of existing plants, with particular attention paid to projects contributing to circular economy objectives.

Renewable heat represents a growing component of Italy’s energy transition, although it remains less developed than renewable electricity generation. The sector includes:

• biomass;
• geothermal energy;
• solar thermal systems;
• heat pumps; and
• district heating networks.

The market is liberalised and is served by utilities, district heating operators, industrial companies, agricultural enterprises and specialised renewable energy developers.

Biomass remains one of the main renewable heat sources, while geothermal production continues to be concentrated mainly in Tuscany. Solar thermal technologies and high-efficiency heat pumps are also expanding due to increasing electrification of heating systems.

The regulatory framework is based primarily on Legislative Decree No 199/2021 (which implemented the RED II Directive) and broader energy efficiency legislation. Public support derives from national incentive schemes and European funding programmes aimed at improving building efficiency and reducing fossil fuel consumption.

The main challenges include:

• high investment costs for district heating infrastructure;
• modernisation of existing networks; and
• replacement of fossil-fuel heating systems.

Heat from renewables will become increasingly important in Italy’s energy strategy, complementing green electricity and helping to reduce emissions in the residential, commercial and industrial sectors.

Although Italy’s National Hydrogen Strategy “recognises hydrogen as one of the key solutions for achieving decarbonisation targets in line with the 2030 National Integrated Energy and Climate Plan (PNIEC)”, national production through the use of hydrogen, biofuels and other renewable energy carriers is still in an emerging phase.

The market is liberalised, involving a small number of energy companies, industrial producers, research institutions and pilot projects led by public-private partnerships. Key assets include electrolysers for green hydrogen, bio-refineries for advanced biofuels, and associated storage and distribution infrastructure.

The regulatory framework is evolving under the National Hydrogen Strategy, presented in November 2024 by MASE to the GSE and under the EU’s Renewable Energy Directive 2023/2413 (RED III) and 2018/2001 (RED II).

The Ministry is encouraging research and innovation in the sector, with new funding of more than EUR80 million in incentives in 2026, and with ARERA providing oversight, setting market rules and monitoring access to infrastructure.

Incentives include grants, tax benefits and public-private co-financing programmes, aimed at scaling up production, integrating renewable fuels into transport, and promoting industrial applications. High production costs, limited infrastructure and complexities in obtaining permits present major challenges to the expansion of Italy’s hydrogen and biofuel sectors.

Small-scale generation of renewable energy (such as the use of photovoltaic panels for self-consumption) is regulated by a series of national and EU directives, which aim to simplify procedures, promote distributed generation and integrate energy communities.

Authorisation requirements vary by scale and impact. Energy power plants below specified energy thresholds on non-constrained sites operate as “free activity” under Article 7 of the Renewables Consolidated Act (Legislative Decree No 190/2024) and require no prior authorisation. Larger power plants may require a Simplified Authorisation or a Single Authorisation, depending on size and environmental impact (please see 2.3 Regulated Activities).

On 3 August 2026, Legislative Decree No 5/2026 became fully effective regarding the construction sector. Said decree has introduced significantly more stringent minimum renewable energy sources (RES) integration requirements than those previously in force.

Self-consumption and grid integration allow households to use generated electricity directly or to feed surplus power into the grid via the Scambio sul Posto (on-site exchange) mechanism. This system, managed by the GSE, enables producers to offset surplus electricity fed into the grid against later or prior consumption.

For small and medium enterprises (SMEs), a specific support framework is provided under Investment 16 of the PNRR. This measure funds solar photovoltaic, mini-wind plants, and storage systems with grants covering up to:

• 40% of costs for micro and small enterprises; and
• 30% for medium enterprises.

Recent regulatory updates (Ministerial Decree of 3 December 2025) have further simplified access for SMEs by eliminating the mandatory ex ante energy audit (diagnosi energetica) as a prerequisite for incentives, (although such audits remain eligible for 50% reimbursement if performed voluntarily).

Grid connection is subject to ARERA’s safety rules and technical standards, which ensure fair access to distribution networks. Financial incentives are available, including tax credits, feed-in tariffs for small producers, and support for battery storage systems. The regulatory framework also allows for the creation of renewable energy communities, enabling collective self-consumption and local energy sharing.

Outstanding priorities include:

• streamlining administrative processes;
• balancing environmental protection with market needs; and
• preventing excessive market concentration.

In Italy, electricity from renewable sources is transported through the National Transmission Network (RTN, operated by Terna SpA) and the medium- and low-voltage distribution networks are managed by DSOs.

The legal framework is largely based on Legislative Decree No 79/1999 (the “Bersani Decree”) and has been substantially updated through the implementation of the EU Clean Energy Package, notably by Legislative Decree No 210/2021 and Legislative Decree No 199/2021, which promote the integration of renewable energy, energy storage systems and active consumers into the electricity market.

More recently, Law No 49/2026 reformed the grid connection regime to address virtual grid saturation by empowering Terna SpA to manage connection capacity more dynamically and linking the allocation of grid capacity more closely with the actual progress of projects through the permitting process.

Storage is increasingly integrated into grid planning via the MACSE (Electricity Storage Capacity Procurement Mechanism), established under ARERA’s regulatory framework under which Terna SpA procures long-term commitments from storage operators through competitive auctions. A key technical annex identifies technical parameters for lithium-ion batteries – including efficiency levels, discharge duration (two to eight hours) and degradation profiles – to guide auction design and cost evaluation. These benchmarks ensure that procured storage can provide reliable and suitable support to the transmission system.

Utility-scale batteries are being deployed, particularly in southern Italy, to relieve congestion and support the transmission of electricity from renewable sources. At the distribution level, DSOs connect smaller batteries paired with rooftop solar, which may be aggregated into virtual power plants or other aggregation schemes. Pumped-storage hydropower remains Italy’s predominant storage technology, while pilot projects in hydrogen and thermal storage are currently under evaluation.

Italy addresses grid congestion through Terna SpA’s 2025–2034 Development Plan, which provides for investments exceeding EUR23 billion in new transmission infrastructure, interconnections and grid reinforcement measures. Grid congestion is also managed operationally through balancing and re-dispatching markets, ancillary services and storage resources. During planned maintenance or outages, Terna publishes schedules of grid unavailability, enabling generators and storage operators to adapt accordingly.

Curtailment remains limited but is available under Terna’s operational framework when transmission constraints threaten system stability. In such cases, re-dispatch markets are used first; forced curtailment is applied only as a last resort, while compensation mechanisms for non-programmable renewable generation are governed by ARERA.

Flexibility of the system is supported with storage, aggregators and demand-side resources under the regulatory framework established by ARERA and Terna, currently based on the TIDE framework. Balancing service providers (BSPs) can aggregate eligible resources and participate in balancing and ancillary service markets subject to the applicable market rules, including availability, telemetry and settlement requirements. Incentives include market-based remuneration and, where applicable, availability and capacity payments, offering new revenue streams beyond wholesale trading.

The Capacity Market also allows eligible storage and demand-side resources to contribute to system adequacy, while ARERA has authorised pilot local flexibility markets managed by participating DSOs.

Off-grid solutions play only a marginal role in Italy. The supply of electricity from renewable sources is generally based on the public transmission and distribution networks. Renewable energy communities and collective self-consumption schemes promote the local generation and sharing of renewable electricity, but they remain connected to the public grid and therefore do not constitute off-grid solutions.

Italy is scaling up biomethane production through Investment 1.4 of the PNRR. Key regulations include the following/

• Ministerial Decree of 15 September 2022, No 340 (PNRR), which governs incentives for biomethane production and injection. The framework was subsequently amended following the revision of the Italian PNRR approved at EU level in 2026, with the aim of facilitating the implementation of supported projects while preserving access to available funding. It establishes competitive procedures, eligibility criteria, sustainability requirements consistent with RED II, and financial support (capital grants and tariff premiums) for new and converted power plants.
• ARERA regulations set technical and economic rules for connecting biomethane production power plants to the gas transmission and distribution networks. They mandate non-discriminatory access and compatibility with network safety and quality standards.

On transportation and storage, the existing gas grid (operated by Snam SpA for high‐pressure transmission and regional DSOs for distribution) and underground storage facilities are used to the transport biomethane once upgraded to required purity and pressure. Snam provides technical guidance and operates the transmission network, while transport and storage tariffs are regulated by ARERA. Regulatory rules ensure that storage operators maintain safety, quality and non-discriminatory access.

Producers seeking to inject biomethane must satisfy sustainability requirements (regarding feedstock criteria and emission calculations) and technical specifications (concerning gas quality, odourisation and pressure), as provided for under the applicable legislation, ARERA regulations and the relevant network codes. The GSE is responsible for verifying compliance with the sustainability requirements for incentive purposes.

In Italy, district heating networks (teleriscaldamento) are a growing component, especially in the northern and Alpine regions. According to ARERA, these networks account for the vast majority of thermal energy dispatched in Lombardy, Piedmont, Trentino-Alto Adige, Emilia-Romagna and Veneto, though smaller grids exist elsewhere. These networks use biomass, geothermal, waste-to-energy and solar thermal. To address intermittency and seasonal misalignment, Italy is deploying large water storage tanks (eg, Iren’s system in Turin) and thermal batteries.

The market remains localised, managed by roughly 250 municipal or regional multi-utilities. Assets include central heat generation plants, insulated distribution pipelines and customer substations. Industrial waste heat recovery is an emerging input, supported by recent measures promoting its recovery and integration into district heating systems. The regulatory framework is primarily based on Legislative Decree No 102/2014 (implementing the Energy Efficiency Directive), as subsequently amended, and on Legislative Decree No 199/2021 implementing the RED II Directive, which promotes the development of renewable heating and cooling and more efficient district heating systems.

ARERA is entrusted with tariff methodologies, quality standards and consumer protection for district heating and cooling service (see Resolution 214/2024/R/tlr).

Operators must comply with the OITLR framework (Information Obligations for Entities Operating in the District Heating and Cooling Sector – Obblighi Informativi Per I Soggetti Operanti Nel Settore Del Teleriscaldamento E Teleraffrescamento) on reporting and commercial quality.

In addition, the OIERT Ministerial Decree (No 137/2026) introduces a mandatory renewable thermal energy injection quota for companies selling heat to third parties, forcing a progressive inclusion of “green heat” (geothermal, certified biomass, solar thermal) into distribution grids.

Italy does not currently impose a general obligation requiring district heating operators to inject a minimum share of renewable heat into their networks. Rather, the applicable legislation promotes renewable and recovered heat through incentive schemes and energy efficiency measures.

Incentives for decarbonisation are being enhanced through “Conto Termico 3.0” (a 2025 update), which supports the deployment of renewable thermal technologies, including biomass, solar thermal and high-efficiency heat pumps. These developments require increasingly complex legal assistance in the framing of commercial operations, in negotiations with local authorities, and in drafting contractual arrangements.

Italy is rapidly developing its hydrogen infrastructure. Under the impulse of the PNRR funds and Snam’s 2025–2029 Strategic Plan, EUR12.4 billion has been allocated for multi-molecule infrastructure focused on energy security and Net Zero. A cornerstone of this plan is the SoutH2 Corridor, a technical project to connect Italy, Austria and Germany for hydrogen transport.

The regulatory framework is currently evolving to implement the EU Hydrogen and Decarbonised Gas Market Package. ARERA is progressively adapting the existing gas regulatory framework, including in relation to tariffs and network regulation, pending full implementation of the new EU rules.

On the production side, Italian companies are actively participating in European Hydrogen Bank auctions, including “as-a-service” models, to scale up green hydrogen capacity. Storage options include geological sites, pressurised vessels, and blending in existing gas grids under strict quality rules.

For other biofuels, the transport system largely uses existing infrastructure, subject to sustainability certification under the RED III Directive. The GSE issues guarantees of origin and monitors blending mandates, while distributors are obliged to meet annual quotas. Biomethane, already regulated (see 4.3 Gas), continues to use the natural gas grid managed by Snam SpA and DSOs.

Market participants include electrolyser developers, industrial off-takers, refineries, utilities and storage operators. Contracts remain mostly bilateral, often backed by state support; standard models are emerging alongside the European Hydrogen Bank’s competitive framework, ensuring transparent access and progressive integration with pan-European networks. 

Italy’s electricity market has been liberalised ever since Legislative Decree No 79/1999 (the “Bersani Decree”), which separated generation, transmission, distribution and supply. The market involves several key players, including producers of renewable energy, distributors that manage the local networks, suppliers that sell electricity to end users, and the GSE.

PPAs are a cornerstone for renewable development. The national platform, managed by the GME and supervised by the GSE, is now fully operational, providing a dedicated bulletin board and negotiation environment for long-term contracts. This tool is designed to stabilise energy prices, particularly for large industrial electricity energy consumers.

The EU Electricity Market Design Reform, introduced by Regulation (EU) 2024/1747 and Directive (EU) 2024/1711, aims to stabilise electricity prices, strengthen consumer protection and promote long-term investment in renewable energy. In Italy, the existing regulatory framework already supports these objectives through the rules governing renewable energy communities, collective and remote self-consumption, and long-term contracting, while further national implementing measures are expected as part of the transposition of the new EU framework.

Italy has liberalised the gas supply market, with protections in place for vulnerable customers. Suppliers purchase gas (natural gas, biomethane blend or pure biomethane), alongside guarantees of origin, and supply end users under contract.

ARERA regulates the gas market, network access, technical quality and consumer protections. MASE is responsible for national energy policy, while the GSE administers biomethane incentive schemes through competitive public tenders under the applicable Ministerial Decree.

Infrastructure modifications, such as the construction of new pipelines, are often required to connect biomethane plants to the gas network or users.

Bilateral contracts between producer and supplier (or supplier and end user) are generally negotiated on a commercial basis but must comply with ARERA’s regulatory requirements, including minimum content, consumer information, disclosure, switching rules and penalties. End users have rights under the Consumer Code regarding mis-selling, transparency and cancellation.

The Ministerial Decree of 15 September 2022 remains the principal incentive framework for biomethane production and injection, as subsequently amended following the revision of the Italian PNRR.

The market for guarantees of origin (GOs) has expanded beyond transport to include industrial and civil sectors, facilitating Green Gas Purchase Agreements (GGPAs). These bilateral long-term contracts are increasingly used, although there is no standard contractual model under Italian law.

The market for heat from renewable sources involves the supply of sustainable thermal energy through technologies such as solar thermal, geothermal, biomass and heat pumps. The main applications include residential heating, industrial processes and district-heating systems. This sector is rapidly expanding due to the growing need to decarbonise the energy sector and reduce greenhouse gas emissions.

At both the European and the Italian level, various regulations and incentives are driving the adoption of renewable energy solutions. In Italy, Legislative Decree No 28/2011, Legislative Decree No 199/2021 and the PNIEC outline policies and targets for reducing emissions and increasing the share of renewables in the energy mix, with a particular focus on the heating sector.

The regulatory framework is also evolving following the adoption of RED III (Directive (EU) 2023/2413), whose implementation is expected to further promote the use of renewable energy in the heating and cooling sector in line with the EU’s 2030 decarbonisation objectives.

The incentive framework is also being reshaped by the ongoing revision of the Conto Termico scheme, which is intended to broaden access to incentives for renewable heating technologies and improve support for businesses and public administrations.

For district heating, ARERA’s regulatory period for 2024–2027 (notably via Resolution 214/2024/R/tlr) involves the implementation of a new tariff methodology and technical quality standards. Enhanced rules on price transparency and consumer protection are being progressively introduced, bringing the heat sector’s regulation closer to the established standards of the electricity and gas markets. These updates, combined with national and EU funding, address previous infrastructure challenges and encourage the decarbonisation of urban and industrial environments.

The hydrogen market in Italy is expanding. In November 2024, MASE released the National Hydrogen Strategy, which sets out strategies for the development of the field, targeting hard-to-abate (HTA) industries (eg, steel, ceramics, air and maritime transport) as the market primary end users, and improving the development of public-funded areas (“Hydrogen Valleys”) where the production and consumption of hydrogen are concentrated.

The sector is being reshaped by the EU Hydrogen and Gas Decarbonisation Package (2024), distinguishing renewable gases from low-carbon fuels (70% emission reduction threshold). A major innovation is the “active customer” model, allowing gas consumers to produce and store renewable gas, similar to power prosumers, while remaining liable for system imbalances.

Contracts between producers and off-takers are generally stipulated in the form of long-term supply agreements. ARERA’s oversight role, extended until December 2026, now includes the definition of codici di rete (network codes) for hydrogen. These codes follow a two-track approach.

• Blending: hydrogen is injected into existing natural gas grids, regulated by Snam and DSO codes. Technical limits (originally 0.5%, now increasing towards 2% and higher) are strictly monitored to ensure safety and gas quality parameters.
• Dedicated networks: 100% hydrogen pipelines (including repurposed gas pipes such as the SoutH2 Corridor), where a regulated third-party access (TPA) model is applied. These networks require strict corporate unbundling and must meet international technical standards.

In contrast, renewable electricity and biomethane markets are better established, providing solutions such as serving both industrial and residential users through PPAs, renewable energy communities, and the GSE’s GO system.

To protect consumers during the natural gas phase-out, new transparency rules require bills to specify renewable quotas and sustainable alternatives. ARERA oversees energy tariffs, market access and consumer protection, whereas the GSE releases GOs and administers incentives.

In Italy, the trade of renewable energy certificates is largely conducted through the so-called White Certificates (Certificati Bianchi), which certify energy savings achieved through energy efficiency projects. One White Certificate corresponds to the saving of one ton of oil equivalent (TOE). The GSE – the Italian public authority regulating incentives for renewable energy – grants operators one White Certificate for each TOE of savings achieved, and these certificates can be traded either on the public market platform (managed by the GME) or through bilateral negotiations between private operators.

GOs are another fundamental component of energy trading, as they allow energy suppliers to demonstrate to end customers that a certain share of the energy supplied has been produced from renewable sources. GOs can be traded through public procedures managed by the GME or within private negotiations. Standardised models for long-term agreements are being tested, such as Green Gas Purchase Agreements (GGPAs) for biomethane.

PPAs have become particularly widespread in Italy in recent years, encouraged by the new online platform for long-term agreements, between a renewable energy operator and energy-intensive companies, which provides the latter with greater certainty regarding the price of the energy they purchase.

In addition, under the Energy Release mechanism introduced in Italy this year, the GSE provides energy-intensive companies with renewable electricity at a regulated sale price, lower than market price, through long-term contracts. In return, such companies must support the development of new renewable energy plants, either by building them directly or entering into PPAs with renewable energy producers.

To develop onshore renewable energy projects in Italy, private operators must obtain regulatory approvals from public authorities through authorisation procedures that address environmental and construction concerns, which vary depending on the plant’s capacity (please see 2.3 Regulated Activities).

The market is mature and consistently growing. In 2025, renewables covered 41% of demand, with significant growth in large-scale storage (+1.7 GW). In order to meet the 2030 target of 80 GW additional capacity, each Italian Region is required to meet annual renewable energy capacity targets by promoting the installation of renewable energy plants.

To facilitate the achievement of such targets, Legislative Decree No 190/2024:

• identifies areas deemed suitable for the installation of renewable energy plants, and granted the Regions the power to designate additional suitable areas beyond those already identified under such decree; and
• provides that Terna SpA shall definitively allocate grid capacity only to projects that have already obtained the authorisation for construction and operation.

This year, therefore, a significant regulatory change was introduced, as the previous chronological criterion based on the submission of connection requests (First Come, First Served) was replaced by the criterion based on the achievement of the relevant authorisation (First Permitted, First Connected), in order to ensure the definitive reservation of grid capacity.

Once ready-to-build status is secured, it is standard market practice for private operators to enter into Engineering Procurement and Construction (EPC) and Operation and Maintenance (O&M) agreements, which allow them to manage the construction and operation phases, respectively.

Italy’s offshore renewable energy development market is still in its early stages, with only one active plant in Taranto. However, significant growth is expected as the latest national regulation favours alternative solutions, including water-based installations.

In comparison to onshore projects, the authorisation procedures for developing offshore projects are longer and more complex, particularly in regard to environmental procedures and connection to the national electricity grid. In addition, Law Decree No 19/2025 (converted, with amendments, into Law No 60/2025) reintroduced regional consultation into the State-led process, and as water areas are public property belonging to the State a further authorisation stage is required.

Project financing of renewable energy assets is particularly common in Italy due to the significant initial investment costs that such projects entail for private operators. From a legal perspective, in order to implement project financing with financial institutions such as banks, private operators must establish a special purpose vehicle (SPV). This is a company created specifically to carry out the project, separate from the sponsors, and directly managing the cash flows. In addition, the operator must submit an economic-financial plan that demonstrates the renewable project’s capacity to repay the loan, increasingly supported by incentives issued by the relevant public authorities.

With regard to potential legal risks, banks have historically preferred to finance renewable projects that hold a Single Authorisation (please see 2.3 Regulated Activities) approving their construction and operation, as it provides greater certainty regarding consolidation timelines. Recently, however, banks have been increasingly open to financing renewable projects carried out under simplified procedures (ie, Simplified Authorisation and free building activities; see again 2.3 Regulated Activities), since Legislative Decree No 190/2024 has clarified the relevant consolidation timelines.

In Italy, incentives are economic contributions granted by the GSE, through competitive procedures to support private operators installing renewable plants or implementing efficiency measures. For power generation, support covers new plants, revamping and repowering, typically lasting 20 years. For plants above 1 MWp, the GSE allocates quotas via competitive procedures to reach 2030 targets.

In addition, this year the FER X Transitional Decree and other implementing decrees were adopted, providing for the allocation of incentives, over the coming years, to operators developing new renewable energy plants.

Furthermore, the White Certificates (please see 5.5 Renewable Energy Certificates and (Corporate) Power Purchase Agreements) scheme was recently updated by MASE Directorial Decree No 203/2026, simplifying access for circular economy, electrification and data centre projects. These certificates, representing primary energy savings, are now clearly cumulable with other public funds such as the PNRR up to a 50% limit.

Operators receive their incentives once projects are operational, following specific technical procedures, sector-specific guides, and calculation algorithms to determine additional energy savings across various productive sectors.

At the end of a plant’s lifetime, or once the duration of a renewable energy power plant established in the authorisation procedure has passed, private operators are legally required to decommission it in order to return the area to the same condition it was in prior to the installation.

To ensure compliance, the operator is required to provide the competent public authorities with a financial guarantee, typically in the form of a bank or insurance surety bond, during the final stage of the authorisation procedure. If the operator fails to observe its decommissioning obligation, the competent public authorities may enforce the financial guarantee to take over the dismantling.

Furthermore, components of renewable energy power plants, such as solar panels, are often classified as waste electrical and electronic equipment, (RAEE – Rifiuti di Apparecchiature Elettriche ed Elettroniche). Updated 2025 regulations, aligned with the EU Critical Raw Materials Act, impose stricter extended producer responsibility for recycling critical materials such as silicon and silver. Operators must dispose of them in compliance with a specific procedure, requiring their separation from other types of waste, with the option of joining consortia established for this purpose.

Italy’s renewable energy policy for the coming years will continue to focus on achieving the decarbonisation objectives established by the PNIEC, the European Green Deal and European climate legislation. While significant progress has been made in increasing renewable capacity, the main challenge will be accelerating project deployment to meet the 2030 targets.

A key priority will be the implementation of the reforms introduced by Legislative Decree No 190/2024, aimed at simplifying permitting procedures, reducing administrative uncertainty and improving co-ordination among public authorities. Further clarification is also expected regarding the regulation of suitable areas, following recent judicial developments concerning the balance between national and regional competences.

Electricity infrastructure will remain central to the energy transition. Future policies are expected to support:

• reinforcement of transmission and distribution networks;
• BESS; and
• digitalisation and flexibility of the electricity system.

Market-based mechanisms, including PPAs, renewable energy communities and self-consumption schemes, are expected to play an increasingly important role as the renewable energy market progressively moves beyond reliance on direct public support.

Renewable gases will continue to receive policy support, with biomethane remaining a key instrument for gas sector decarbonisation and renewable hydrogen focusing mainly on hard-to-abate industries and heavy transport.

Italy is also still evaluating the potential role of new-generation nuclear technologies as a complementary solution for energy security and system stability, although any future development will require a dedicated regulatory framework.

Overall, Italian energy policy is expected to focus on creating a stable and investment-oriented framework capable of accelerating renewable deployment while ensuring energy security, environmental protection and long-term market integration.