Italy Power Market Analysis by Mordor Intelligence
The Italy Power Market size in terms of installed base is expected to grow from 144.86 gigawatt in 2025 to 182.54 gigawatt by 2030, at a CAGR of 4.73% during the forecast period (2025-2030).
The expansion is anchored in rapid renewable energy deployment, grid-modernization spending of EUR 23 billion through 2030, and deliberate diversification away from Russian gas. Renewable generation satisfied a record 41.2% of national electricity demand in 2024, led by a 19.3% surge in solar output and a 30.4% rebound in hydro generation.[1]Terna S.p.A., “2024 Market Outlook,” terna.it Natural gas remains the dominant dispatchable resource, but streamlined permitting under Legislative Decree 199/2021 and corporate power-purchase agreements are accelerating photovoltaic additions. Grid-scale battery auctions scheduled for September 2025 will unlock 9 GW of storage by 2030, further supporting intermittent renewables. Persistently high wholesale prices—143.03 EUR/MWh in January 2025—underscore the urgency of supply diversification and cost-stable renewables.[2]Mercato Elettrico, “PUN Prices January 2025,” mercatoelettrico.org
Key Report Takeaways
- By generation source, thermal power retained 59% of Italy's power market share in 2024, while renewables are set to record a 5.32% CAGR through 2030.
- By end-user, the utilities segment led with 68.12% revenue share in 2024, whereas the residential segment is projected to advance at a 12.89% CAGR between 2025 and 2030.
- Enel, Edison, A2A, and ERG collectively accountedfor a major share of generation capacity in 2024, reflecting a moderately concentrated competitive landscape.
Italy Power Market Trends and Insights
Drivers Impact Analysis
Driver | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
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Accelerated Permitting Reforms under Legislative Decree 199/2021 | +1.2% | National, with faster implementation in northern regions | Medium term (2-4 years) |
Grid-scale Battery Capacity Market Auctions (Terna) | +0.8% | National, concentrated in southern Italy | Medium term (2-4 years) |
Coal Phase-out by 2025 Creating Capacity Gap | +0.9% | National, particularly Sardinia and mainland coal plants | Short term (≤ 2 years) |
REPowerEU-funded HVDC Projects (e.g., Tyrrhenian Link) | +0.6% | Southern Italy, Sicily, Sardinia | Long term (≥ 4 years) |
Corporate PPAs Surge among Luxury & FMCG Majors | +0.4% | National, concentrated in industrial regions | Short term (≤ 2 years) |
Superbonus 110% Stimulus for Rooftop PV | +0.3% | National, higher uptake in northern Italy | Short term (≤ 2 years) |
Source: Mordor Intelligence
Accelerated Permitting Reforms under Legislative Decree 199/2021
Implementation of Legislative Decree 199/2021 has trimmed authorization timelines for renewable projects by about one third, thanks to digitalized permitting portals and clearer zoning of “suitable areas”. Photovoltaic capacity caps were raised and wind-farm buffer zones narrowed, boosting application volumes in 2024. Northern regions clear projects fastest because of higher administrative capacity and greater availability of certified installers. The August 2024 FER2 decree complemented the reform by introducing two-way contracts-for-difference for offshore wind, targeting 4.6 GW by 2028. Remaining bottlenecks revolve around environmental impact assessments for projects exceeding 30 MW, yet the overall framework is lowering investor barriers and accelerating the Italy power market transition.
Grid-scale Battery Capacity Market Auctions (Terna)
Terna’s MACSE mechanism is Europe’s first dedicated storage capacity market, aiming to contract 9 GW by 2030 through 15-year pay-as-bid auctions. Battery additions reached 2.1 GW in 2024, representing over half of new grid connections. The inaugural September 2025 auction will award 10 GWh, attracting international developers seeking revenue certainty. Southern Italy offers superior arbitrage spreads due to high renewable curtailment, whereas industrialized northern zones require storage for peak-shaving and frequency support. The auction design complements Italy's power market needs by monetizing capacity, energy, and ancillary services, enabling storage to act as the critical enabler for higher renewable penetration.
Coal Phase-out by 2025 Creating Capacity Gap
Italy will shutter nearly 7 GW of coal capacity by 2025, except for limited Sardinian units delayed to 2026-2028. Coal’s share fell to 1.3% of generation in 2024, leaving natural-gas turbines to bridge reliability gaps. Four new CCGT plants totaling 3.4 GW plus 0.7 GW of upgrades are scheduled before 2026. The strategy safeguards short-term adequacy but raises stranded-asset risks as renewables keep scaling. Rising electrification of industry and transport further widens the supply gap, reinforcing the need for accelerated solar, wind, and storage build-outs across the Italy power market.
REPowerEU-funded HVDC Projects (Tyrrhenian Link)
The EUR 1 billion Tyrrhenian Link will connect Sicily and Sardinia to mainland Italy via a 1,000 MW HVDC cable, commencing installation in February 2025.[3]Siemens Energy, “Tyrrhenian Link Press Release,” siemens-energy.com The project is part of Terna’s EUR 23 billion plan to raise cross-zonal transfer capacity from 16 GW to 39 GW by 2030. Enhanced north-south flows will cut regional price spreads and unlock southern renewables for national consumption. Parallel HVDC projects such as Adriatic Link and ELMED will integrate the Italy power market with Balkan and North African grids, cementing the country’s role as a Mediterranean energy hub.
Restraints Impact Analysis
Restraint | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
---|---|---|---|
Grid Congestion in Apulia & Sicily (≥36-month Delays) | -1.1% | Southern Italy, particularly Apulia and Sicily | Medium term (2-4 years) |
Offshore Wind Tender Under-realisation (Adriatic) | -0.6% | Adriatic coastal regions | Long term (≥ 4 years) |
Gas-Import Exposure to Geopolitical Shocks (≈90%) | -0.8% | National | Short term (≤ 2 years) |
Landscape-related Permit Litigation for Wind Farms | -0.4% | National, concentrated in protected areas | Medium term (2-4 years) |
Source: Mordor Intelligence
Grid Congestion in Apulia & Sicily (≥36-month Delays)
More than 348 GW of renewable projects await interconnection, dwarfing the current 137.53 GW system. Apulia and Sicily suffer the longest queues, with developers waiting over 36 months for grid access. The bottleneck stems from weak north-bound transmission corridors and complex environmental approvals for new lines. Terna’s EUR 16.5 billion five-year plan allocates significant funding to relieve southern congestion, yet construction lead times remain protracted. Delays raise capital costs, erode PPA competitiveness, and slow solar and wind build-outs, constraining the Italy power market growth outlook.
Offshore Wind Tender Under-realisation (Adriatic)
Italy holds 157.32 TWh/year of offshore wind potential, but limited capacity cleared auctions because of environmental litigation and protracted maritime concessions. Adriatic tenders repeatedly undershoot targets, diverting capital to the United Kingdom and Spain. Supply-chain constraints for floating foundations and grid connection. The FER2 decree introduced two-way CfDs, yet permitting clarity and seabed rights remain unresolved. Under-realisation of offshore wind curtails diversification and forces heavier reliance on onshore renewables and imported gas within the Italy power market.
Segment Analysis
By Power Generation Source: Gas Dominance Amid Solar Acceleration
Thermal power generation controlled 59% of Italy's power market size in 2024, supplying flexible baseload and balancing services.[4]Politecnico di Torino Energy Center, “Italy’s Gas Dependency Update 2024,” energycenter.polito.it Renewable, while accounting for roughly 41% of generation, is expanding fastest at a 5.32% CAGR through 2030 under declining module prices and streamlined permitting. Hydroelectric contribution rebounded to 35% of renewable output after wetter 2024 conditions, and wind reached 20% of renewable capacity with significant offshore upside. Coal slipped to 1.3% of total production and will exit by 2025.
Solar’s growth owes much to corporate PPAs and utility-scale projects, yet price cannibalization drives Enel to tilt its new-build mix toward 5.7 GW of wind versus 3.2 GW of solar by 2027. Biomass and geothermal provide baseload renewable capacity, which is increasingly valuable as coal retires and gas costs rise. The Italy power market share of dispatchable gas may decline beyond 2028 as storage and demand-response scale, but its role remains pivotal until HVDC links and batteries neutralize intermittency.
Note: Segment shares of all individual segments available upon report purchase
By End-User: Utilities Leadership with Residential Momentum
The utilities segment held 68.12% Italy's power market share in 2024, reflecting control of large generation fleets and regulated distribution franchises. Residential demand, however, is forecast to post a 12.89% CAGR between 2025 and 2030, the fastest among customer classes. Distributed rooftop solar, community energy schemes, and electrified heat pumps drive this surge. Corporate PPAs exceeding 4 GW by 2025 illustrate commercial-industrial appetite for direct renewable procurement.
Market liberalization moved 4.5 million regulated customers to competitive supply in 2024, opening share gains for digital multi-utilities. The Superbonus 110% incentive ended in February 2023, but left a legacy of 1 GW of residential storage installations that enhance self-consumption. Energy Release 2.0 allows energy-intensive firms to secure 36-month 65 EUR/MWh contracts, boosting industrial competitiveness while mandating renewable additions. Utilities are responding with vertical integration and smart-meter rollouts to defend margins in an increasingly prosumer-centric Italy power market.

Note: Segment shares of all individual segments available upon report purchase
Geography Analysis
Southern Italy possesses abundant solar irradiation and onshore wind resources, generating surplus renewable electricity yet facing transmission bottlenecks that widen regional price spreads. Sicily and Sardinia rely on the Tyrrhenian Link to evacuate excess generation and import mainland support during low-output periods, a step that should cut curtailment once the cable becomes operational by 2030. Apulia hosts Italy’s densest cluster of utility-scale solar and wind projects, but grid congestion defers commissioning by at least 36 months, diluting developer returns.
Central Italy benefits from legacy hydro reservoirs that provided stability during the 2022-2023 drought and boosted output by 30.4% in 2024. These plants support frequency regulation essential for integrating more intermittent generation across the Italy power market. Northern regions remain consumption-heavy due to industrial clusters in Lombardy, Veneto, and Emilia-Romagna. Administrative efficiency enables faster permitting, explaining why rooftop PV adoption under the Superbonus program skewed north. Nonetheless, limited land availability and stricter landscape constraints slow large-scale renewables north of the Po River.
Coastal zones along the Adriatic and Tyrrhenian seas show emerging offshore wind pipelines such as Med Wind’s floating project. Delays in maritime spatial planning and EIA procedures hinder near-term capacity, but successful FER2 CfDs could accelerate build-out post-2027. Cross-border interconnections with France, Switzerland, Slovenia, and Tunisia will raise import-export flexibility from 16 GW to 39 GW, positioning the Italy power market as a Mediterranean trading hub and lowering reliance on pipeline gas.
Competitive Landscape
Italy's power market competition is moderate, with the top five generators holding roughly more than 50% capacity in 2024. Enel retained leadership despite a 17.4% revenue dip to EUR 78.947 billion, stemming from lower thermal dispatch and liberalized retail churn. Terna leverages its regulated-asset base to invest more than EUR 3 billion annually in grid upgrades, underpinning national energy security. Edison, A2A, and ERG pursue vertical integration and renewable expansion to offset margin pressure from volatile wholesale prices.
Digital entrants like eVISO apply AI-driven demand forecasting to win SME customers, projecting 40% CAGR in gross margins through 2027. Partnerships are reshaping strategy: Sosteneo and Enel agreed in June 2024 to deploy 1.7 GW of battery storage, underscoring storage as the next battleground. Italgas's EUR 5.8 billion purchase of 2i Rete Gas expands its gas-distribution footprint and highlights continued consolidation. White-space opportunities lie in hydrogen electrolysers, community energy management, and behind-the-meter storage, where regulatory incentives favor nimble developers over incumbents burdened by legacy assets.
Competitive intensity is also shaped by the January 2024 price-cap removal for 4.5 million households, prompting utilities to bundle broadband, EV charging, and rooftop-PV leasing into hybrid offerings that enhance stickiness. International oil majors like TotalEnergies entered through the EUR 1.57 billion acquisition of VSB Group to diversify away from hydrocarbons. These moves signal a pivot toward integrated, low-carbon portfolios in Italy's power industry.
Italy Power Industry Leaders
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Enel SpA
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Edison SpA
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A2A SpA
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ERG SpA
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Terna SpA
- *Disclaimer: Major Players sorted in no particular order

Recent Industry Developments
- February 2025: Cable laying began on the Tyrrhenian Link, the 1,000 MW HVDC project linking Sicily, Sardinia, and mainland Italy.
- December 2024: TotalEnergies bought VSB Group for EUR 1.57 billion, adding 3 GW managed Italian assets and 18 GW pipeline.
- December 2024: SUSI Partners acquired full control of Genera Group, deepening its renewable services presence.
- July 2024: Sosteneo and Enel signed a 1.7 GW battery storage partnership.
Italy Power Market Report Scope
The scope of the Italian power market report includes:
Power Generation by Source | Thermal Power (Natural Gas, Oil, Coal) |
Renewable Power (Solar, Wind, Hydro, Geothermal, etc) | |
By End-User | Utilities |
Residential | |
Commercial and Industrial |
Thermal Power (Natural Gas, Oil, Coal) |
Renewable Power (Solar, Wind, Hydro, Geothermal, etc) |
Utilities |
Residential |
Commercial and Industrial |
Key Questions Answered in the Report
What is the current size of the Italy power market?
Italy power market size reached 137.53 GW in 2024 and is projected to climb to 182.54 GW by 2030 at a 4.73% CAGR.
Which generation source holds the largest share of the Italy power market?
Natural gas is dominant with 45-50% Italy power market share in 2024, reflecting its role in balancing intermittent renewables.
How fast is solar growing in Italy’s power sector?
Solar photovoltaic capacity is forecast to grow at a 10-11.5% CAGR through 2030, the fastest among generation sources.
What infrastructure projects are critical for grid reliability?
Key projects include the 1,000 MW Tyrrhenian Link HVDC cable and Terna’s EUR 23 billion grid-modernization plan, both essential for north-south power flows.
How will the coal phase-out affect supply security?
Retiring 7 GW of coal by 2025 creates a short-term capacity gap filled by new gas turbines and accelerated renewable plus storage additions.
Who are the leading companies in the Italy power market?
Enel, Edison, A2A, ERG, and Terna are the principal players, together controlling roughly 55% of generation and transmission assets.
Page last updated on: July 4, 2025