Italy’s natural abundance of renewable energy sources – sun, water and wind – gives it a significant advantage over other European countries. With its 2020 targets already achieved, 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 (Piano Nazionale Integrato per l’Energia e il Clima – PNIEC) and the National Recovery and Resilience Plan (Piano Nazionale di Ripresa e Resilienza – PNRR).

The PNIEC outlines Italy’s strategy for the energy and climate transition. By 2030, 63.4% of electricity must be generated from renewable sources. 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, with monitoring bodies predicting an eight-year delay at the current rate.

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.

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 heterogenous 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 been plagued by 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. Wind power is also significant in Italy and has the potential to become one of the main sources of Italy’s energy transition.

Despite this, the development of renewable energy sources is still falling short of expectations. In 2024, 13 GW of wind power capacity was installed. The annual growth rate over the last decade (6%) will make meeting the 2030 target of 28.1 GW of wind power extremely challenging, and sources estimate a delay of about eight years in reaching this.

Regarding photovoltaics, installed capacity reached 37 GW in 2024, while the target for 2030 is set at 79.3 GW. The average growth rate observed over the last ten years stands at 8.3%, with an expected delay of about four years.

Wind power is therefore growing at a significantly slower rate than necessary, hampered by regulatory obstacles, lengthy connection times and limited market activation. In contrast, photovoltaics are reporting more stable and sustained growth, boosted by technological maturity and greater diffusion throughout the country.

According to Legambiente’s report on the role of renewables and Italian regions in achieving climate targets, published in March 2025, clean technologies reached a total capacity of 74,303 MW at the end of last year – an increase of 7,477.8 MW from the 66,824.9 MW recorded in 2023. This represents over 1.8 million renewable energy plants, which covered 41.1% of Italy’s energy needs in 2024.

These renewable energy plants include:

• 1,203,185 systems with a capacity of less than 6 kW;
• 568,241 plants with a capacity of between 6 and 20 kW;
• 64,638 plants of between 20 and 90 kW capacity;
• 30,905 plants of between 90 and 200 kW capacity;
• 21,613 plants of between 200 kW and 1 MW capacity;
• 3,690 plants of between 1 and 10 MW capacity; and
• 3,690 plants with power above 10 MW.

Of these, 48.4% are solar photovoltaic plants, 28% are hydroelectric plants and 17% are wind farms, followed by bioenergy and geothermal energy, which constitute 5% and 1% respectively.

Over the past year, Italian legislators have worked to simplify and accelerate the energy transition by introducing significant and long-awaited reforms. One of the most important changes concerns the definition of “suitable areas” for renewable energy installations.

Back in 2021, Italy moved to implement the RED II Directive (2018/2001/EU) on renewable energy promotion by identifying these areas through a transitional list. This list was meant to remain in effect until a specific ministerial decree could implement uniform principles and criteria, which would then be transposed by Italy’s 20 regional governments. The classification of a given area as “suitable” is extremely important for economic operators, as it allows them to access a streamlined permitting process, resulting in a considerable reduction in procedural times and administrative costs.

However, this crucial ministerial decree was only approved in 2024, and has sparked significant controversy and conflict between operators and public authorities. The decree grants excessive discretion to individual regions in identifying suitable areas, creating an unclear and inconsistent regulatory framework.

The decree was subsequently challenged before the Regional Administrative Court of Lazio-Rome, which in May 2025 declared it partially illegitimate precisely because of the excessive powers delegated to Italian regions in a matter of national interest, such as energy transition. It was also declared unlawful as it failed to establish the necessary uniform criteria and principles to ensure the effective achievement of energy targets throughout the country, while also undermining investor confidence in projects already under way before its introductions.

The government will now have to start from scratch and adopt new, more precise criteria for identifying “suitable areas” for the installation of renewable energy plants.

Meanwhile, the market has not stopped, as the transitional regime continues to apply.

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 recognises environmental protection (and thus the promotion of energy transition) directly in its Constitution, granting it primary and fundamental importance.

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 reorganises and unifies previous legislation regarding permitting regimes and procedures for constructing and operating renewable energy plants, which was previously fragmented across several legislative acts.

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, incentives and the institutional, financial and legal framework necessary to ensure the achievement of decarbonisation objectives.

Ministerial Decree of 21 June 2024

This measure of the Ministry of the Environment and Energy Security (MASE – Ministero dell’Ambiente e della Sicurezza Energetica) establishes the regulations on identifying areas where it is easier and faster to build renewable energy plants.

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

MASE

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): 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): 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.

In general, the ownership and transfer of renewable energy assets in Italy is unrestricted, although some exceptions apply.

The first exception is when the asset benefits from specific public subsidies or special forms of public assistance and/or financing. In such cases, limits or restrictions may be imposed on the transferability of the plant even for a considerable period of time (up to 20 to 30 years).

The second exception occurs when the “Golden Power” is used. This is a public intervention power that allows the government to place obstacles in the way of free trade in the name of the public interest and the protection of “strategically important” assets. 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.

If the requirements for exercising these powers are met, any resolution, act or operation that results in changes to the ownership, control or availability of the strategic assets in question, or changes to their intended use, must first be notified (within ten days and in any case before implementation) to the Presidency of the Council of Ministers. 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.

In Italy, there are no general or specific restrictions on foreign access and investment in the renewable energy market.

However, in order to access special incentive schemes or to obtain particular economic and tax benefits, the proponent, developer or landowner may be required to meet specific subjective conditions. Generally, these requirements must be met both at the access stage and when participating in public procedures, and must be maintained over the course of the project’s plant life.

Italy’s renewable energy generation for electricity operates in a liberalised market, involving large utilities and independent power producers, as well as smaller energy communities. The primary renewable technologies are photovoltaic, wind, hydroelectric, geothermal and biomass.

Regulatory oversight is managed by ARERA, which sets tariffs, governs grid access and oversees market mechanisms. Legislative Decree No 190/2024 simplifies project authorisation by establishing three regimes based on project size and impact: free activity, Simplified Authorisation and Single Authorisation (see 2.3 Regulated Activities).

The PNIEC sets ambitious targets for 2030, aiming for about 131 GW of electricity to be covered by renewable sources. Incentive mechanisms include auctions, feed-in tariffs, tax benefits, and support for renewable energy communities.

Outstanding priorities that are currently being tackled by legislative developments include:

• the streamlining of administrative processes;
• the designation of appropriate development sites;
• the balancing of environmental protection with market needs; and
• the implementation of safeguards to prevent excessive market concentration and soil over-exploitation.

Production of renewable gases in Italy has developed significantly over the last decade, with particular increases in biogas and biomethane.

The market is liberalised, with numerous agricultural enterprises, waste management companies, and independent producers active in developing anaerobic digestion and upgrading existing power plants. Assets are typically located in rural areas, where feedstock such as agricultural residues, livestock effluents and organic waste can be processed.

Snam SpA, the transmission system operator, manages the injection of biomethane into the national gas grid through a series of compression stations across the national network. Local distribution companies handle delivery to end users.

Oversight is provided by ARERA, which regulates tariffs, grid access and guarantees of origin. The regulatory framework is defined by Legislative Decree No 199/2021 (Articles 11 and following), which transposes the EU’s Renewable Energy Directive 2018/2001 (RED II), as well as by more recent measures under the PNRR, which increased the production capacity of energy from biomethane in order to reach national and EU targets.

Italy has introduced incentive schemes such as feed-in tariffs and capital grants for upgrading power plants from biogas to biomethane, as well as subsidies for biomethane used in the transport sector.

Key priorities moving forward include simplifying administrative processes, ensuring access to sustainable feedstock, and expanding production capacity to meet national and EU climate and decarbonisation goals.

In Italy, the production of heat from renewable sources is a growing but overall less-developed sector compared to electricity and gas. Key renewable heat sources include biomass, geothermal energy, solar thermal systems, and heat pumps.

The market is liberalised, with participation from utilities, district heating operators, agricultural enterprises, and small-scale producers. In northern and central Italy, biomass and geothermal resources are frequently integrated into district-heating networks. Geothermal exploitation is a long-standing tradition in central Italy, and geothermal heat production remains largely concentrated in this area.

Assets include district-heating power plants and pipelines, biomass boilers, geothermal wells, and distributed solar thermal systems. Local municipalities and regional authorities play a strong role in authorisation and planning, reflecting the territorial nature of heat networks.

National oversight is provided by ARERA for tariff regulation and consumer protection, while MASE defines strategic targets.

The regulatory framework is mainly shaped by Article 10 of Legislative Decree No 199/2021. Incentives are provided both at the national level (such as through the Conto Termico scheme supporting small-scale renewable heating systems) and at the European level.

Challenges include the high upfront investment for district-heating networks, administrative complexity, and the need for broader integration of renewable heat into Italy’s energy transition strategy.

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.

Regulation is evolving under the National Hydrogen Strategy, presented in November 2025 by MASE to GSE and under the EU’s Renewable Energy Directive 2018/2001 (RED II). MASE and ARERA provide oversight, set market rules and monitor 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).

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 (net metering) mechanism. This system, managed by GSE, enables producers to offset surplus electricity fed into the grid against later or prior consumption.

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;
• designating suitable and unsuitable development sites;
• balancing environmental protection with market needs; and
• preventing excessive market concentration.

Electricity from renewable sources in Italy is transported through the National Transmission Network (RTN, operated by Terna SpA) and the regional medium and low-voltage grids are managed by DSOs. Oversight is provided by ARERA, which sets tariff methodologies, connection standards and co-ordination rules. Recent resolutions in 2025 (eg, 281/2025/R/com and 131/2025/R/com) have strengthened requirements for grid access, metering and congestion management, recognising the rising impact of renewable generation on network stability.

Storage is formally integrated into grid planning. With Resolution 168/2025/R/EEL, ARERA launched the Electric Storage Capacity Procurement Mechanism (MACSE – Meccanismo di Approvvigionamento di Stoccaggio Elettrico) capacity scheme, under which Terna SpA procures long-term commitments from storage operators through competitive auctions. A key technical annex to this resolution defines performance standards 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.

On the ground, utility-scale batteries are being deployed, particularly in southern Italy, to relieve congestion and support renewable transport across the grid. At the distribution level, DSOs connect smaller batteries paired with rooftop solar, often aggregated into virtual power plants. Traditional pumped hydro remains Italy’s dominant storage form, while pilot projects in hydrogen and thermal storage are currently under evaluation.

Italy’s rapid growth in solar and wind power has created transmission bottlenecks, particularly in the southern regions of the country.

Terna’s Development Plan 2025–2034 has allocated over EUR20 billion to reinforce high-voltage lines and expand cross-zonal interconnections. During planned maintenance or outages, Terna SpA publishes schedules of grid unavailability, enabling generators and storage operators to adapt accordingly.

Curtailment remains limited but is anticipated under Terna SpA’s risk management 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, with compensation mechanisms overseen by ARERA.

Flexibility is increasingly procured from storage, aggregators and demand-side resources. ARERA has launched the MACSE capacity scheme for batteries, while also supporting pilot local flexibility markets managed by DSOs. Demand-response aggregators can now participate in balancing and ancillary service markets through standard contracts that define availability, telemetry and settlement obligations. Incentives include availability payments and market-based remuneration for activated capacity, offering new revenue streams beyond wholesale trading.

Off-grid solutions are niche but expanding. Energy communities and collective self-consumption models allow renewable electricity to be produced and shared locally without relying fully on the public grid. These schemes are rapidly increasing thanks to national incentive programmes as well as the growing availability of standardised models for company incorporation and the contractual subdivision of responsibilities.

Italy has set ambitious targets under the PNRR to scale up biomethane production, through Investment 1.4 “Development of biomethane according to criteria of circular economy promotion”.

Key regulations include the following.

• Ministerial Decree of 15 September 2022, No 340 (PNRR), which governs incentives for biomethane production and injection. 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 Regulation 160/2012/R/gas and Deliberation 46/2015/R/gas, which 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 following are worth noting.

• The existing gas grid (operated by Snam SpA for high‐pressure transmission and regional DSOs for distribution) is used to transport biomethane once upgraded to required purity and pressure. Snam provides technical guidance and regulates tariffs for transport.
• Storage of renewable gas generally utilises existing underground gas storage facilities.

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 defined by ARERA and GSE under the current regulatory framework. The procedures, connection costs and timing are set out in the Ministerial Decree of 2022 and its implementing rules.

In Italy, district heating networks (teleriscaldamento) are a growing component, especially in the northern and Alpine regions. According to ARERA, these networks account for more than 95% of thermal energy dispatched in Lombardy, Piedmont, Trentino-Alto Adige, Emilia-Romagna and Veneto, though smaller grids exist elsewhere. District-heating power plants use renewable sources such as biomass, geothermal, waste-to-energy and solar thermal, alongside natural gas and cogeneration. Short-term thermal storage tanks are integrated into some systems to smooth daily peaks, while seasonal storage is still limited.

The market structure is localised. About 250 operators manage networks, many of them municipal or regional multi-utilities. Assets include central power plants, insulated distribution pipelines and customer substations. Industrial waste heat recovery is an emerging input, supported by simplification measures for third-party access.

Accordingly, the regulatory framework has advanced with amendments to Legislative Decree No 102/2014 (Law 41/2023), entrusting ARERA with tariff methodologies, quality standards and consumer protection. Key resolutions, such as 252/2016/R/tlr and 214/2024/R/tlr, define rules regarding tariff calculation, revenue caps and transparency. 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.

Both EU and national funds incentivise network expansion and the integration of renewable and recovered heat, positioning district heating as a strategic tool for decarbonising urban areas. This requires increasingly complex legal assistance in the framing of commercial operations, in negotiations with local authorities, and in drafting contractual arrangements.

Italy is shaping a regulatory and infrastructural framework for the transportation and storage of hydrogen. The PNRR funds hydrogen valleys and pilot backbones, while ARERA has been mandated (see Resolution 215/2025/R-gas) to co-ordinate hydrogen regulation until 2026. Its role covers tariffs, technical standards and third-party access, and is aligned with the EU Hydrogen and Decarbonised Gas Market Package. Infrastructure will be operated by unbundled transmission entities, with Snam SpA expected to repurpose part of its network (approximately 3,000 km) into a national hydrogen backbone. 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 systems. Advanced biodiesel and bioethanol are moved via conventional oil pipelines and depots, subject to sustainability certification under the EU’s RED II Directive (2018/2001/EU). 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, though standardised models are expected once hydrogen grids are formally designated. In practice, hydrogen and biofuel transport and storage are nascent but tightly regulated, with infrastructure development centred on neutrality, transparent access and progressive integration with EU networks.

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

Power Purchase Agreements (PPAs) increasingly support the development of renewable energy in Italy. Decree No 152/2025 introduced a national platform for renewable energy PPAs, managed by GME and supervised by GSE.

The EU Electricity Market Design Reform (July 2024) aims to stabilise energy costs, ensure affordable prices for consumers, promote renewable energy investments, and foster renewable energy sharing. Key legal acts include:

• Regulation (EU) 2024/1747, which defines wholesale market rules;
• Directive (EU) 2024/1711, which provides retail market updates; and
• Regulation (EU) 2024/1106, which revises existing REMIT (Regulation on Wholesale Energy Market Integrity and Transparency) transparency rules.

Italy has liberalised the gas supply market, with protections in place for vulnerable customers. Infrastructure modifications, such as the construction of new pipelines, are often required to connect biomethane plants to grids or users. 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 creates policies and decrees, while GSE handles biomethane incentive schemes through competitive public tenders where the highest ranked projects gain access.

Bilateral contracts between producer and supplier (or supplier and end user) must meet ARERA’s regulatory requirements, including minimum content, disclosure, switching rules and penalties. End users have rights under the Consumer Code regarding mis-selling, transparency and cancellation.

The PNIEC sets a biomethane target of 5.7 billion cubic metres/year by 2030. The Ministerial Decree of 15 September 2022 supports new biomethane plants and biogas-to-biomethane conversions through capital contributions and 15-year energy incentives, partially financed by the EU’s Recovery and Resilience Facility. Legislative Decree No 199/2021 (Article 46) regulates biomethane guarantees of origin.

Major gaps exist between current production and targets. Challenges include logistics, grid injection hurdles and high raw material costs. The value of guarantees of origin depends on market demand regulatory clarity, meaning that Italy’s complex regulatory framework can create investment risks. Moreover, access to incentives requires winning tenders and ranking competitively, which can penalise smaller producers.

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. The European Green Deal and the EU’s RED II Directive (2018/2001/EU) have been key in promoting the use of renewable energy, including heating systems. In Italy, Legislative Decree No 28/2011 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.

Legislative Decree No 190/2024 recently rationalised the discipline of the sector, while Legislative Decree No 199/2021 defined important measures to promote the use of energy from renewable sources in order to meet the EU’s decarbonisation targets by 2030.

Despite its potential, the renewable heat market faces several challenges, including the need for infrastructure investment and the scalability of technologies in complex industrial environments. However, government incentives, supportive policies and the growing focus on sustainability are creating new opportunities for the sector, encouraging the development of innovative solutions and the expansion of local and international markets.

The hydrogen market in Italy is still expanding. In November 2024, MASE released the National Hydrogen Strategy, which sets out scenarios and strategies for the development of the field. The short-term horizon (up to 2030) identifies hard-to-abate (HTA) industries – such as steel, foundries, ceramics, glass cement, and air and maritime transport – as the market end users. In addition, it outlines the development of public-funded areas (“Hydrogen Valleys”) that concentrate the production and consumption of hydrogen and create synergies.

Contracts between producers (such as electrolyser operators or hydrogen plants) and industrial users are stipulated in the form of long-term supply agreements or PPAs. ARERA plays a regulatory and oversight role in the development of the hydrogen market, as recently confirmed in Resolution No 1/ENERGIA/2025. This provision also extended ARERA’s deadline for co-ordinating the development of Italy’s hydrogen supply chain until 31 December 2026.

The renewable energy market is more advanced in regards to other sources: energy from solar, wind and hydroelectric power, or biomethane produced from waste, is sold not only to large industrial off-takers but also to residential customers. Energy can be traded through PPAs or renewable certificates, or can be exchanged within renewable energy communities. ARERA oversees energy tariffs, market access and consumer protection, whereas GSE releases guarantees of origin 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). 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 GME) or through bilateral negotiations between private operators.

Guarantees of origin 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. Guarantees of origin can be traded through public procedures managed by GME or within private negotiations.

PPAs have become particularly widespread in Italy in recent years. These are typically long-term agreements concluded between a renewable energy operator and energy-intensive companies, with the aim of providing the latter with greater certainty regarding the price of the energy they purchase.

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 constantly expanding in order to meet the 2030 target of 80 GW additional capacity, while individual regions must also achieve specific annual renewable energy targets in the same timeframe.

Italy’s national regulatory framework designates specific areas as suitable zones to prioritise renewable energy development, with operators typically forming private agreements with landowners in order to secure access to them. There are also areas owned by public authorities, which are allocated through competitive procedures. 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. However, significant growth is expected as the latest national regulation aims to avoid land consumption (particularly in agricultural areas) and instead favours alternative solutions, including water-based installations. These will likely play a key role in achieving Italy’s national target of an additional 80 GW of renewable energy.

In comparison to onshore projects, the authorisation procedures for developing offshore projects are longer and more complex, particularly in regards to environmental procedures and connection to the national electricity grid. In addition, 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, based on the cash flows generated by electricity sales.

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 its construction and operation, as this authorisation 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 GSE, a national public authority which aims to support private operators that install renewable energy plants to generate electricity. The incentives are related to various types of intervention, such as the construction of new renewable plants, the reactivation of decommissioned renewable plants, and the revamping and re-powering of existing renewable plants.

Operators receive their incentives when the renewable plant begins operating, and they typically last around 20 years, which is the average lifespan of a plant.

For renewable power plants with a capacity of greater than 1 MWp, incentives are allocated by GSE through competitive procedures that are carried out with reference to power capacity quotas. These are held on a periodic basis, and in the coming years GSE is expected to hold several competitive procedures considering the national decarbonisation targets to be reached by 2030.

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.

In order to ensure that this decommissioning obligation is complied with, the operator is required to provide the competent public authorities with a financial decree, 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 provided by the operator and thus take over the dismantling activities.

Furthermore, components of the renewable energy power plants, such as solar panels, are often classified as waste electrical and electronic equipment. The operator is required to dispose of these, and should do so in compliance with a specific legal procedure requiring their separation from other types of waste, with the option of joining consortia established for this purpose.

In order to achieve the decarbonisation targets set by the EU, Italy must simplify and accelerate deployment of existing technologies (photovoltaic, wind power and batteries). At the same time, it must actively encourage the further development and adoption of other renewable energy sources. In particular, hydroelectric power represents an undeveloped strategic asset with enormous potential, both in generating power and in providing long-term investment stability.

Notably, last year, nuclear energy was included for the first time in the PNIEC, and in June 2025 Italy joined the European Nuclear Alliance. The development of nuclear power could be a crucial strategic component, capable of complementing Italy’s existing renewable technologies by addressing the intermittency issues that they can present. However, its adoption requires the Italian Parliament to create new directives defining the life cycle of nuclear plants.