G7 POWER SYSTEMS SCORECARD
COUNTRY PROFILE: ITALY1
May 2024

Synopsis
OVERALL COUNTRY SCORE: 164/400

The Italian power sector is to this day heavily dependent on fossil resources, as
more than 50% of electricity is generated by burning fossil gas, oil or coal. While
there is a phase-out date for coal, at the latest in 2028, a phase-out plan for fossil
gas is still missing. It strongly depends on the policy framework and in particular
the way investments in renewables will be mobilised in the near future.
The recent energy crisis sheds a new light on the need to accelerate RES
deployment. In its draft National Energy and Climate Plan (NECP), Italy
committed to install additional RES capacity of about 70 GW. Although the 2030
goal for renewable energy share is aligned with the EU Green Deal, it is lower
than that suggested by IEA to reach at least 80% electricity generated from lowcarbon sources. In 2022 and 2023 Italy manged to increase its RES installation
rate, which is getting closer to what is required to achieve the 2030 goal.
When it comes to the 2035 net zero power ambition, Italy needs to define a clear
delivery roadmap to be adopted in national policies. Specifically, there is a lack ofa strategy and specific actions for implementing flexibility technologies anddeveloping a smarter power system. Gas still plays a disproportionate role in the
country’s decarbonisation agenda – both domestically and in its diplomacy.
Headline message – Benchmarks 1–2 (Section 1: Infrastructure/Energy mix)
SCORE: 40/120

Italy ranks insufficiently in some indicators particularly around ramping up RES,
due to the low RES installation rate over the last ten years. Although thegovernment has repeatedly confirmed its commitment to speed up therenewables rollout and Italy installed 6 GW in 2023, delivery of RES targets islagging due primarily to issues with permitting processes and delays in the

1 To see the whole Scorecard, including the scoring methodology, visit https://www.e3g.org/g7-power-systems-scorecard

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALYpublication of implementing decrees that should define RES supporting schemes(e.g. FER 2, FER X, Decreto Aree Idonee).
Headline message – Benchmarks 3–5 (Section 2: Policies/Targets)
SCORE: 124/280

While Italy scores quite well on some energy efficiency indicators, it does nothave a clear strategy to build up flexibility technologies, including demand side
measures, short-term or long-term storage (lack of actions on seasonal storage,
which is clearly an issue in terms of deep power decarbonisation), and flexible
tariffs. In some cases (such as storage capacity) a target has been identified but
the implementation remains unclear.
Italy is involved in some international leadership efforts / supporting the energy
transition (PPCA, friend of BOGA, Mineral Security Partnership), but its energy
diplomacy is still more focused on fossil fuels than clean energy.

Benchmark 1: Reducing fossil fuel reliance
TOTAL SCORE 15/60

The share of fossil fuel capacity in the power mix is 47% (corresponding to about
57 GW). Italy is strongly reliant on gas capacity, and less on coal capacity(5.7 GW). In the past it has realised the switch from coal to gas. The remaining
coal capacity will phase out by 2025 in the peninsula and by 2028 on Sardinia.
According to government evaluations, in a scenario of high-RES share gas
capacity is considered essential for balancing the electricity grid.
1.1 New unabated coal and gas power plants in planning or construction?
SCORE: 4/15

Italy has no coal pipeline, but 4.2 GW of new gas power plant capacity inplanning or construction.
1.2 Share in electricity generation: fossil fuels
SCORE: 3/15

In 2022 the share of fossil fuel generation in the power mix was 64%, which
dropped to 56.2% in 2023.2

2 Ember, May 2024, Electricity Data Explorer

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALYAccording to the NECP, in 2030 fossil fuel capacity will reduce to 54–55 GW:
5.7 GW of coal capacity will be phased out and 3 GW of new gas capacity will be
installed. The share will decrease to 29% by 2030.
1.3 Share in electricity generation: non-renewable low-carbon tech
SCORE: 0/15

Italy has no low-carbon technologies, such as nuclear plants.
1.4 Carbon intensity of power index
SCORE: 8/15

In 2023 Italy’s carbon intensity of power generation was 330.7 gCO2/kWh.3
According to the NECP, it should decrease by 50% in eight years, corresponding
to 145.7 gCO2/kWh by 2030.

Benchmark 2: Ramping up renewables
TOTAL SCORE: 25/60

Italy started to ramp up wind and solar capacity two decades ago, reaching amaximum installation rate of 10 GW/year in 2010.4 New installations thenslowed down over the last ten years. Due to the gas crisis, Italy recognised therole of RES in reducing its gas dependency and simplified the permitting process
to accelerate new RES installations. In 2023 Italy installed more than 5 GW5 of
RES and aims to double this volume in 2024. 10–11 GW/year is the adequate rate
for reaching 2030 targets.
2.1 Share of variable RES in electricity generation
SCORE: 5/15

In 2022 the share of variable RES (solar and wind) in electricity generation was
17%. In 2023 it increased to 21%.6

3 Ember, May 2024, Electricity Data Explorer
4 GSE, 2023, Energia e clima in Italia – Rapporto periodico, primo semestre 2023
5 Terna, December 2023, Rapporto mensile del 31/12/2023
6 From relevant Terna monthly reports: Terna, Rapporto mensile

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALY2.2 Share of other RES in electricity generation
SCORE: 6/15

In 2023 the share of geothermal, bioenergy and hydro production in the powermix was 23%.7 Hydropower is the dominant source (14.45%), followed bybioenergy (6.33%) and geothermal and other renewables (2.18%).
2.3 Variable RES pipeline capacity vs country’s announced target
SCORE: 7/15

In 2023 Italy installed almost 6 GW of new RES capacity. To reach its 2030 RES
target of 131 GW, it should install 10–11 GW per year. Current RES capacity is
67 GW.
As of 2023, Italy’s utility-scale solar and wind project pipeline up to 2030 was ca.
45 GW, which is not sufficient to deliver the 2030 renewable target, particularly
given that over half of these projects have only been announced and have notyet entered a pre-construction stage.8
2.4 Average permitting time for VRE
SCORE: 7/15

According to the observatory R.e.gions 2030 the permitting time is 43 months forwind and 22 months for solar.9
Although the government has tried to speed up the regulatory framework for
authorisation of RES, the process continues to show issues. The decree aimed atdefining “suitable” areas for RES installations is still not published. Furthermore,according to operators and associations the circulated draft is an additional
barrier, as it burdens areas with other constraints instead of reducing as much as
possible the authorisation requirements.

7 Ember, May 2024, Electricity Data Explorer
8 Global Energy Monitor, updated December 2023, Global Solar Power Tracker, and Global Wind Power

Tracker
9 R.e.gions2030, October 2023, Rinnovabili all’italiana. La morsa degli stop and go

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALYBenchmark 3: Adapting the power systems to highRES share
SCORE: 35/120

Italy has no clear strategy to build up flexibility technologies, including demandside measures, short-term or long-term storage (there is a lack of action onseasonal storage, which is clearly an issue in terms of deep power
decarbonisation), and flexible tariffs. While the process for transmission griddevelopment is transparent and efficient, issues on local grid development are
unclear and not well addressed.
3.1 Policies to limit curtailment to a minimum that ensures optimal RES
capacity utilisation
SCORE: 3/15

Curtailment is not a serious issue currently in the national grid: in 2022 according
to Terna10 the non-dispatched wind energy amounted to 300 GWh, over a third
less than in the previous year. However, zonal bottlenecks are a reason why
Terna is proposing a delay in the coal power phase-out in Sardinia, and they havelong been a reason for having a large oil power plant in operation in Sicily,
despite the interconnection between Sicily and Calabria having been repoweredin the last two decades.
Much more unknown and most probably severe are the curtailments in the
distribution networks, both in terms of delayed connection of new plants and interms of timely response to outages. There is no detailed public data on
effectiveness of distribution networks in terms of connections and reliability withrespect to distributed renewables.
3.2 Active steps by the national grid operator to plan for short spells of 100%
RE power
SCORE: 0/15

Italy’s NECP aims to reach a RES share of 65% of power production by 2030 – along way off 100%.11 This is despite Italy having committed to 100% renewableelectricity by 2035 within the G7. Terna, Italy’s transmission system operator

10 Terna, Adeguatezza (webpage, accessed May 2024)
11 European Commission, July 2023, Italy – Draft updated NECP 2021–2030

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALY(TSO) is aiming in its development plan12 to dispatch RES energy volumes
consistent with the Fit for 55 objectives, which are short of the 2035 target.
3.3 Effective policies to ramp up electricity storage
SCORE: 9/15

Italy is not taking specific actions on seasonal storage at the moment, which isclearly an issue in terms of deep power decarbonisation. However, general
storage capacity procurement is addressed by a procedure (Meccanismo diApprovvigionamento di Capacità di Stoccaggio Elettrico – MACSE) which should
lead by 2024 to put storage capacity consistent with the objectives of the NECP
for auction.13
3.4 Effective policies to increase end use flexibility
SCORE: 5/15

End user flexibility in Italy has not been implemented in a satisfactory way so far,neither in terms of passive flexibility induced by dynamic pricing (most electricity
users in Italy aren’t even billed an hourly price), nor of active flexibility bycollection of distributed resources (aggregators will be fully enabled only withthe reform of the dispatching code to be enforced in 2025).
So far, flexibility is procured by Terna through the ancillary services market(MSD), from eligible interruptible industrial customers and through UVAMs,14
which rely mainly on auxiliary power production systems installed within thepremises of some industrial energy users.
Local flexibility markets (MLF) are finally about to be experimented with, but are
not yet operational.15
3.5 Effective policies to accelerate grid development
SCORE: 6/15

While transmission grid development is transparently proposed by the TSO andapproved by the government, plans in terms of local grid development are
patchy and don’t go through a centrally led assessment.

12 Terna, Piano di sviluppo della rete (webpage, accessed May 2024)
13 MACSE consultation documents: Terna, Consultations (webpage, accessed May 2024)
14 Terna, Progretto pilota per unità virtuali abilitate miste – UVAM (webpage, accessed May 2024)
15 GME, Mercato locale flessibilita (webpage, accessed May 2024)

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALYGrid development in cities is slowed down by authorisation issues for theconstruction sites. Special rules to authorise grid construction in towns should be
evaluated.
3.6 Effective policies to enable the required digitalisation of power systems
SCORE: 6/15

Despite a second generation of smart meters16 being widely deployed already(over 30 million meters installed), little or nothing is done to foster digitalisationof energy consumption control, nor is any infrastructure to allow aggregation of
distributed demand response being supported. Demand side flexibility is noteven eligible for capacity payment under the capacity market scheme17 – flexible
demand is simply exempted from paying the capacity payment fee.
3.7 Effective mechanisms or frameworks to prevent preferential treatment forfossil fuel-based generation over RES on the market
SCORE: 6/15

Priority dispatching is granted to RES in Italy, which is not very significant sincedispatching is based on order of economic merit under the day ahead market.
RES aren’t sufficiently favoured in Italy for the following reasons:> They have been recently requested to pay taxes on windfall profit18 from highenergy prices, while subsidies to fossil fuels in Italy are much larger than theoverall amount of subsidies to environmentally favourable forms ofgeneration.
> They get no advantage in the authorisation process based on their lower
environmental impact. On the contrary, getting utility-scale RES approved in
Italy is extremely hard.
> RES that join Contracts for Difference programs to reduce theunpredictability of their earnings aren’t allowed to also join the capacity
market scheme for the share of statistically expected capacity.

16 ARERA, Smart metering (webpage, accessed May 2024)
17 Terna, Mercato della capacità (webpage, accessed May 2024)
18 Reuters, 14 December 2022, Italy collects around 2.8 billion euros from 2022 energy windfall tax

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALY3.8 Electrification rate target and roadmap to support delivery
SCORE: 0/15

There is no target for electrification rate.

Benchmark 4: Governance / International leadership
SCORE: 27/80

Italy is involved in some international leadership efforts / supporting the energy
transition (PPCA, friend of BOGA, Mineral Security Partnership), but its energy
diplomacy is still more focused on fossil fuels than clean energy. The strategy fordeveloping complementary technologies to renewables is biased in favour of
new gas infrastructure.
4.1 2035 carbon neutral power system commitment adopted in national
legislation
SCORE: 0/10

There is no legislated commitment for 2035.
Neither has the G7 commitment for a fully or predominantly decarbonised
electricity sector by 2035 has been transposed into the adjusted NECP (publishedin July 2023). Furthermore, in the period 2024–2030 the latter plans to build newgas capacity alongside renewable deployment19 to ensure security of supply inphasing out coal capacity. 2030 is an interim milestone for full decarbonisation of
the energy sector by 2050.
4.2 Global leadership on supporting power systems decarbonisation indeveloping countries
SCORE: 4/10

Italy is involved in several international leadership efforts, but its energy
diplomacy is still more focused on fossil fuels than clean energy.
Italy is supporting the Just Energy Transition Partnerships of Indonesia20 and
Vietnam.21 As part of the G7 initiatives, Italy supports the G7 Partnership for
19 Ministry of the Environment and Energy Security, June 2023, National Energy and Climate Plan, p.206
20 European Commission, November 2022, The EU and international partners launch ground-breaking Just

Energy Transition Partnership with Indonesia
21 European Commission, December 2022, International agreement to support Viet Nam’s ambitious

climate and energy goals

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALYGlobal Infrastructure and Investment,22 with a strong focus on sustainableenergy, and the G7 Clean Energy Economy Action Plan.23 At the European level,in 2023 Italy reaffirmed its support for the EU Global Gateway,24 Europe’s
external investment plan.
The Italian Climate Fund, launched in 2022 with an endowment of €840 million
per year from 2022 to 2026, aims to finance climate action, including clean
energy, in emerging economies.25 About 70% of it – or €3 billion by 2026 –should go to African countries and underpin the “Mattei Plan for Africa”, theItalian investment Plan for Africa.26 A substantial amount will be dedicated toclean energy projects, including renewables, grid sand hydrogen.
As of January 2024, Italy’s bilateral cooperation on sustainable development,
including clean energy, has 37 active cooperation agreements and 27
agreements under renegotiation and new negotiations, for a total of 81
developing and least developed countries.27 The Italian Development Agency
AICS spent almost €5 million for energy projects in 2023.28 At COP26 in 2021,
Italy signed the Glasgow statement to end fossil fuels support internationally.29
However, Italy’s guidelines to phase out fossil fuels support through its Export
Credit Agency SACE contradict the timelines agreed at COP26.30
4.3 International commitments on power systems decarbonisation throughalliances or networks such as the PPCA, Glasgow Coal to Clean Power Initiative
etc.
SCORE: 4/10

Italy is involved in several alliances and networks, but a clear commitment for
unabated gas phase-out is still missing.

22 G7 2023 Hiroshima Summit, 2023, Factsheet on the G7 Partnership for Global Infrastructure andInvestment
23 G7 2023 Hiroshima Summit, May 2023, G7 Clean Energy Economy Action Plan
24 Decode39, 27 October 2023, Italy backs EU’s Global Gateway – and readies its own
25 Italian government, last updated July 2023, The Italian Climate Fund
26 Italian government, 29 January 2024, President Meloni’s opening address at the Italia–Africa Summit
27 Italian government, last updated April 2024, Bilateral collaboration agreements – geographical areas
28 Open Aid AICS, Energy (webpage, accessed May 2024)
29 UN Climate Change Conference UK 2021, November 2021, Statement on international public support forthe clean energy transition
30 Recommon, March 2023, National Approaches on implementation of the COP26 Statement on the Clean

Energy Transition Partnership (website, last visited May 2024).

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALYItaly joined the Powering Past Coal Alliance in 2017, when it committed to phaseout domestic coal by 2025. This target has been confirmed by the current
government for the peninsula,31 however it has been moved to 2028 for theisland of Sardinia. Italy is member of the Clean Energy Ministerial and a numberof initiatives to support clean power implementation.32 In 2023, Italy joined theMinerals Security Partnership to bolster sustainable and secure supply chains.33
At COP28 in 2023, Italy signed the COP28 declaration on tripling renewables anddoubling energy efficacy.34
4.4 Net zero power system roadmap to drive delivery of 2035 commitment
SCORE: 0/10

In 2021, Italy committed to reach a nearly decarbonised power sector by 2035 aspart of the G7. Nevertheless, a delivery roadmap has not been identified and it isstill missing. To reach this target Italy needs to accelerate RES deployment andachieve a 72% share of RES in electricity generation by 2030.35
There is a long-term strategy for 2050 climate neutrality.
4.5 Critical role of renewables, interconnection, and demand side measuresreflected in country’s energy security framework
SCORE: 4/10

The strategy for developing complementary technologies to renewables, mostly
planned in the NECP,36 is biased in favour of new gas infrastructure. The capacity
market scheme clearly favours new gas fired power plants over existing ones andover demand response. Central procurement of storage capacity is planned, but
not performed yet, and there will probably be a lack of long-duration storage
procured due to its higher cost over transacted energy.
A dynamic retail energy price has never been introduced despite the widespread
deployment of electronic smart meters.

31 Ministry of the Environment and Energy Security, June 2023, National Energy and Climate Plan
32 Clean Energy Ministerial, Italy (webpage, accessed May 2024)
33 U.S. Department of State, September 2023, The Minerals Security Partnership continues to expand with

Norway, Italy, and India
34 COP28 UAE, December 2023, Global renewables and energy efficiency pledge
35 Ecco, June 2023, Scenario of a decarbonised Italian power system by 2035
36 European Commission, July 2023, Italy – Draft updated NECP 2021–2030

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALYThere is ongoing development of interconnection capacity, and the firstinterconnection with northern Africa has been included in the TSO’sdevelopment plan.37
4.6 Unabated coal phase-out date and roadmap to support delivery
SCORE: 10/10

In the 2019 NECP, Italy committed to phase out coal capacity by 2025.
Nevertheless, in the 2023 NECP draft Italy postponed this date to 2028 for theisland of Sardinia on the grounds of changing conditions in the energy systemand security of supply due to the geopolitical crisis. The new trajectory is:>

1,480 MW to be phased out by April 2024.

> 1,655 MW to be phased out (445 MW in Sardinia) by April 2025.
> 1,845 MW to be phased out by January 2026.
> 480 MW to be phased out in Sardinia by January 2028.
> 265 MW to be phased out in Sardinia by January 2029.
4.7 Unabated gas phase-out date and roadmap to support delivery
SCORE: 0/10

There is no gas phase-out date in the power sector.
4.8 2030 target for share of total RES in electricity generation
SCORE: 5/10

According to the NECP, in 2030 the share of total RES in the power mix will
increase to 65%. There is no roadmap in place to support delivery.

37 Terna, Piano di sviluppo della rete (webpage, accessed May 2024)

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALYBenchmark 5: Reducing energy waste
SCORE: 62/80

Italy has invested a lot in buildings efficiency (Superbonus 110%) but more
efforts are needed, especially in reducing buildings’ emissions. A clear
commitment for the electrification of heating consumption is lacking.
5.1 Efficient policies to retrofit / renovate buildings
SCORE: 15/20

Incentive schemes for improving energy efficiency in buildings have been in placesince 2007, but the pace and scale of rollout needs to be improved. A greater
focus on implementation is needed, particularly for buildings with very low
energy efficiency (e.g. F/G rated) and for deep renovation (an upgrade of at least
2–3 energy labels should be required). Fossil-based technologies (such as gas
condensing boilers) should no longer be subsidised. Furthermore, the gas andelectricity tariff framework encourages gas consumption and represents a barrier
to end user electrification.
The status of EPBD transposition into national law is unclear. There are a rangeof different funding schemes available for building requalification: including
Bonus Casa, Superbonus, Ecobonus, Conto Termico, Bonus for home appliances,
National Energy Efficiency Fund, and The Programme for the Energy
Requalification of Central Public Administration Buildings (PREPAC).
The government is planning to reform these incentive schemes. The most
discussed is the one concerning the residential sector: the timeframe should be
at least ten years and it should primarily target low energy efficient buildings,
provide deduction rates aligned with the energy performance achieved, and beaccompanied by supporting financial instruments, such as low-interest financing
and loan origination, with favourable conditions for people in energy poverty.
5.2 National energy/power savings target
SCORE: 15/20

In line with European legislation and climate goals, and specifically the EU Energy
Efficiency Directive, Italy has targets for reducing final energy consumption inbuildings, transport, and industry.38 There is no target for reducing transition anddistribution losses.
38 European Commission, July 2023, Italy – Draft updated NECP 2021–2030

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALY5.3 Sufficient spending on energy efficiency programmes
SCORE: 16/20

In 2022 total investments in energy efficiency interventions in buildings wereabout €68 billion, of which about 80–90% was public spending.39
5.4 High-quality appliance and equipment standards and labelling
SCORE: 16/20

Minimum energy performance standards for buildings are in discussion andthere are energy labels for a wide range of products.
Energy labels were introduced in 1998. The legislation has been changed over
the years, and today it implements the EU legislation corresponding to:> The Ecodesign omnibus is Regulation (EU) 2021/341 amending Regulations(EU) 2019/424, (EU) 2019/1781, (EU) 2019/2019, (EU) 2019/2020, (EU)2019/2021, (EU) 2019/2022, (EU) 2019/2023 and (EU) 2019/2024 with regard
to Ecodesign requirements for servers and data storage products, electricmotors and variable speed drives, refrigerating appliances, light sources andseparate control gears, electronic displays, household dishwashers,
household washing machines and household washer-dryers and refrigerating
appliances with a direct sales function.
> The Energy Labelling omnibus is Regulation (EU) 2021/340 amending
Delegated Regulations (EU) 2019/2013, (EU) 2019/2014, (EU) 2019/2015,(EU) 2019/2016, (EU) 2019/2017 and (EU) 2019/2018 with regard to energy
labelling requirements for electronic displays, household washing machinesand household washer-dryers, light sources, refrigerating appliances,
household dishwashers, and refrigerating appliances with a direct sales
function.

39 ENEA, December 2023, Rapporto Annuale sull’Efficienza Energetica 2023

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALYAbout E3G
E3G is an independent climate change think tank with a global outlook. We workon the frontier of the climate landscape, tackling the barriers and advancing thesolutions to a safe climate. Our goal is to translate climate politics, economics
and policies into action.
E3G builds broad-based coalitions to deliver a safe climate, working closely withlike-minded partners in government, politics, civil society, science, the media,
public interest foundations and elsewhere to leverage change.
More information is available at www.e3g.org
Copyright
This work is licensed under the Creative Commons Attribution-NonCommercialShareAlike 4.0 License. © E3G 2024

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G7 POWER SYSTEMS SCORECARD – COUNTRY PROFILE: ITALY