Market Insight-Clean Energy-Italy

This is the first in a series of Hummingbird Insights, providing a snapshot of the clean energy sector across different jurisdictions, today we look at Italy.

The Italian clean energy sector remains one of the most promising in Europe due to its national energy strategy, ambition to achieve climate targets, EU policy alignment and growing consumer demand, the time is right to drive the sector forward.

Market Snapshot

In 2025, renewable sources continued the trend in recent years of supplying about 41% of Italy’s electricity demand[1] (although some estimates suggest this might be slightly lower)[2]. Hydropower and solar have been the dominate contributors. 

In terms of geographic contribution, Southern Italy leads on solar and wind resources, with projects now becoming available to scale, although the continued development of grid connections remains vital. While Northern Italy dominates with hydropower, benefitting from stronger grid connections.

Italy’s energy market is highly fragmented compared to most major European countries. While a few large players such as Enel, Eni, A2A, and Edison hold national significance, the sector is dominated by a long tail of small and medium-sized companies, making it somewhat similar to Spain and Greece, but unlike the more consolidated markets of Germany, France, and the UK.

Solar power is likely to drive growth in the sector, with significant new capacity added in 2024 and strong prospects into the 2030s due to technological advancements and public confidence in the sector.

Wind and hydro remain core components of the generation mix, although growth rates vary by region.

Battery energy storage and grid integration technologies are coming online and will be vital to address intermittency, with the first battery storage auction having taken place in October 2025.

Policy & Strategic Targets 

Italy’s National Energy and Climate Plan (updated in 2024) has had ambitious targets, it aims for climate neutrality by 2050: extending renewables’ share of total generation, with coal all but phased out as a form of power generation by the end of 2025. Projections suggest renewables will outpace thermal generation by 2030 and account for over 55% of the power mix by 2035[3].

Government auctions (e.g., FER X) are securing large solar portfolios and corporate PPAs, signalling growing commercial demand for clean power, particularly from industrial consumers seeking power cost certainty and decarbonisation credentials.

Early in 2026, Italy formally transposed the European Union’s Renewable Energy Directive III (RED III) into national law, reinstating binding targets for renewable fuels of non-biological origin (RFNBO), including renewable hydrogen, in both industry and transport, give a clear framework and support for the energy transition.

Takeaways 

Generally speaking Italy is moving in the right direction; it has the natural resources and political will for the sector to thrive. In the short term it is still likely to contend with grid and connection issues, as well as regulatory complexity. The long tail of small and medium-sized companies means that investment from well-funded investors will likely be the key to pushing smaller projects to operation or scale.

For foreign investors, establishing local partnerships and joint ventures with key stakeholders is vital to navigate regulatory frameworks and secure supply chain efficiency.

[1]Terna.it

[2 LowCarbonPower

[3] GlobalData