Italy

Key facts

It’s Europe’s 6th biggest electricity producer in Europe (271 007 GWh) and 2nd biggest energy importer (54,572 GWh) [1]

Italy imports 18% of its electricity consumption.

Italy is 22% electrified

 

The Italian electricity to gas price ratio is 3.1 for industry and 2.4 for households. [2]

Italy’s electricity mix is composed of
  • Natural Gas
  • Hydropower
  • Solar PV
  • Wind
  • Biofuels
  • Oil
  • Other

Current state of electrification

Residential buildings in Italy

Buildings

  • The majority of Italy’s national electricity consumption is used in buildings (56,2%), disaggregated in residential building (22.7%) and commercial (33.5%) [3]
  • Italy is Europe’s second biggest heat pump market (after France) with a total of 4.6 million heat pumps installed [4]
  • Heat pump sales in Italy averaged around 420,000/year over the last five years (2020–2025), 2022 being the peak with ~675,000 units installed.  [5]

Industry

  • Industry represents 38,3% of Italy’s electricity consumption [6] [7] [8] [9] [10] [11]
    • Basic metals and steel production: 18 to 21 TWh | 24% to 27% of industrial electricity
    • Machinery, equipment, and metal products: 15 to 17 TWh | 20% to 22% of industrial electricity
    • Non-metallic mineral products (cement, glass, and ceramics): 9 to 11 TWh | 12% to 14% of industrial electricity
Transport — from the design

Transport

  • Transport represents 2% of the nation’s electricity consumption [12]
  • The data for the total number of vehicles comes from the Automobile Club d’Italia [13]
  • The electric fleet is composed of
  • 396,811 electric cars (+86 739 year on year) — this represents 0.98% of the ~40.3 million passenger cars on Italian roads
  • 3492 electric busses (+204 year on year) — this represents roughly 3.49% of the ~100 000 buses on Italian roads
  • 33 197 light commercial vehicles (+3 799 year on year) — this represents roughly 0.77% of the ~4.3 million light commercial vehicles on Italian roads
  • 84 730 light vehicles (+9 000 year on year) — this represents roughly 1.18% of the ~7.2 million motorcycles, mopeds, and light vehicles on Italian roads
  • 807 electric trucks (+90 year on year) — this represents roughly 0.12% of the ~650 000 heavy trucks on Italian roads

Grid and flexibility

Transmission & Distribution

The core problem of the Italian grid is geographic mismatch. Most of Italy’s renewable generation sits in the south, while demand is concentrated in the industrialised north, creating chronic congestion, curtailment, and regional price gaps that are now considered structural rather than marginal. [14]
Terna’s response is a major transmission investment push. €16.6 billion is planned for 2024-2028, a sharp step-up in spending aimed squarely at relieving north-south congestion and expanding cross-border links. [15]
Distribution faces a parallel, similarly sized challenge. ~€6 billion/year is needed over the next decade for digitalisation, resilience, and distributed-generation integration; e-distribuzione (Enel) dominates this layer with an 85.1% share of energy distributed across ~1.29 million km of network [16]
Despite the scale of the challenge, Italy’s grid starts from a relatively strong position. It ranks 1st in Europe on investment effectiveness and smart-meter penetration, and a new output-based regulatory model (“Full ROSS,” ARERA Resolution 390/2025) takes effect in 2026 to better incentivize forward-looking investment. [17]
Italy was an early mover on smart-meter and grid digitalization (starting in the late 1990s/early 2000s), partly a legacy of its postwar grid nationalization, and its digital communications architecture, encrypted, authenticated VPN links between substations and control centers, is notably more cyber-resilient than legacy systems still used elsewhere in Europe. [18]

Storage

Italy’s storage sector is growing fast at a national scale. In 2025, Terna recorded 16,411 MWh of storage capacity across ~815,000 systems nationally – a 69.3% year-on-year increase.
Growth is policy-anchored via Terna’s new Macse auction mechanism (launched 30 Sept 2025), targeting 71 GWh and 9+ GW of storage by 2030, backed by €17.7 billion in support, essential to reaching Italy’s PNIEC target of 131 GW renewables by 2030.
Italy is one of Europe’s leading storage markets: together with Germany and the UK, it accounted for ~70% of total EU installed storage capacity in 2024, and is projected (with the UK) to drive nearly half of Europe’s storage capacity growth through 2030. [19]

Smart meters

Italy is essentially at 100% smart meter coverage among households. [20] [21]
Italy is now mid-rollout on second-generation meters, with ARERA mandating all major distributors reach 95% coverage of 2G smart meters by 2026. [22]

Support schemes

Buildings
Conto Termico 3.0 [23]

€900 million/year (€400M reserved for public administrations); non-repayable grant covering up to 65% of costs for private entities, up to 100% for public buildings/schools/healthcare

Non-repayable, direct GSE payment (not a tax deduction) covers heat pump, solar thermal, biomass, and building-envelope efficiency work; existing heating system required (replacement only, not new-build); in force from 25 December 2025, replacing Conto Termico 2.0

Detrazioni fiscali (Ecobonus / IRPEF tax deduction) [24]

Deduction from income tax, spread over 10 annual installments, for expenses incurred 2025-2027 up to a set ceiling

Applies to heat pump and air-conditioning installations specifically; a slower-return alternative to Conto Termico’s direct grant, cannot be combined

CER - Comunità Energetiche Rinnovabili [25]

PNRR grant covers up to 40% of system cost (for municipalities under 5,000 residents; plants up to 1 MW), plus a GSE premium tariff of up to €120/MWh for shared energy, for 20 years

Requires the CER to be formally constituted before plants enter service; PMEs only eligible as members /investors, not large enterprises; funding window for new PNRR grant applications closed 30 November 2025 – remaining scheme now runs on the premium tariff + bill savings only, not fresh grants

Superbonus 110 [26]

Incentive measure introduced by the Decree Law (2020) which aims to make italian homes more efficient and safer. The initial mechanism provided that the interventions be carried out at no cost to the citizen.

The incentive consists of a 110% deduction that is applied to the expenses incurred from 1 July 2020 to 31 December 2023

Additional amendments to the original law have reduced the amount of the tax deduction like:

  • 70% for expenses incurred in 2023
  • 65% for expenses incurred in 2025

Mechanism phased out end of 2025 but was really important

Transport Transport
BEV purchase incentive (MASE Decree, Aug 2025) [27]

€597.3 million total, until mid-2026; up to €11,000 for private individuals (up to €20,000 total including additional bonuses) per vehicle

Requires scrapping an old Euro 5-or-earlier ICE vehicle; part of PNRR Mission 2/Component 2/Investment 4.5; targets ~39,000 vehicle replacements

Bonus Colonnine (home EV charger incentive) [28]

Reimbursement for home charging station purchase/installation costs (retroactive to installations completed in the funding year)

Available to Italian residents and condominium groups (via administrator or delegated resident); applied for via the Invitalia portal in defined application windows (e.g. April-May 2025 for 2024 installations)

Industry
Transizione 4.0 [29]

Automatic tax credit for capital goods, R&D, and Industry 4.0 training investments

Cannot be combined with Transizione 5.0 for the same investment; requires prior notification to MIMIT (since March 2024) before the credit can be offset

Transizione 5.0 [30]

Tax credit tied to qualifying capital investment; usable only via direct offset (F24 compensation), unused amounts carried forward up to 5 years

Focus shifts to advanced capital goods investment generally, more like a traditional depreciation-linked incentive.

Iperammortamento 2026 [31]

GSE-administered advance-financing mechanism for renewable self-generation, repayable over 20 years; separately, discounted gas purchasing access via GSE for ~1,000 gas-intensive firms (steel, paper, glass)

Targets ~3,800 electricity-intensive firms (chemicals, glass, textiles) specifically for renewable self-generation investment, introduced via the MASE “DL Energia” decree; distinct from Transizione 5.0, and can be combined with it depending on the specific measure

Targets

Buildings

  • Renewable heating/cooling target: 37% by 2030 (revised NECP 2024), with electrification of consumption – heat pumps as the main heating system – explicitly named as a core delivery mechanism, alongside building renovation and insulation. [32]
  • Energy efficiency target: real estate sector to contribute 3.3 Mtoe/year in final energy savings by 2030 (part of a national 39.7% final-consumption reduction target vs. the 2007 baseline), with all new buildings required to be “nearly zero-energy” since 2021. [33]
  • Renewal rate target: 2% annual building renovation by 2030, rising to 2.6% by 2050, a major acceleration from today’s actual rate of just 0.85%/year, against a housing stock where 81% of buildings predate 1990. [34]
  • Sector emissions target: -32% by 2030. [35]

Transport

  • Fleet target: 6+ million EVs on Italian roads by 2030, of which 4.3 million fully battery-electric – backed by up to €700 million in new subsidies to accelerate adoption (see BEV purchase incentive (MASE Decree, Aug 2025) in section about subsidies). [36]
  • Renewable energy in transport target: 31% by 2030 (revised NECP 2024) [37]

Industry

  • Energy efficiency target: industrial sector to contribute 1.0 Mtoe/year in final energy savings by 2030. [38]
  • Hydrogen target: ~42% renewable-hydrogen share for industrial use by 2030, with total hydrogen consumption estimated at ~721 ktoe – though implementation is lagging: MASE’s electrolyser tender allocated only €9 million of a €100 million budget. [39]

Gaps and Challenges

  • High electricity prices actively work against electrification. Italian industry paid ~€278/MWh in H1 2025, 30% above the EU average (€216), and far above Germany (€242), France (€183), and Spain (€171) → Switching from gas to electricity is a harder sell when electricity itself carries a structural price penalty versus EU peers [40]
  • Progress is falling behind the NECP’s pace. ENEA’s 2025 assessment found renewables growing just 1% year-on-year, leaving Italy roughly 20% short of its NECP targets, and flagged that hitting EU consumption-reduction standards would require ~3%/year cuts in energy use, far above what’s currently being achieved. [41]
  • Curtailment is a measurable, worsening cost of the north-south mismatch. 338 GWh of renewable energy was curtailed in 2024; without faster grid investment, this is forecasted to rise sixfold to 2 TWh by 2030 and 4.4 TWh by 2035, with some southern plants at risk of losing up to 10% of annual revenue to curtailment. Import dependency remains high. Terna’s own Development Plan targets cutting foreign energy dependency from ~60% today to 37% by 2030 [42]
  • Buildings: Incentives are getting less ambitious just as electrification needs to scale. The Superbonus 110 drove a heat pump boom but was phased out by end-2025, causing a rebound-and-decline pattern rather than sustained growth. The CER PNRR grant window also closed to new applications in November 2025.
  • Transport: The clearest underperformer relative to ambition. Against a 6+ million EV target by 2030, BEVs were just 6.2% of 2025 new registrations, among Europe’s lowest, versus a ~14% EU average. Part of the governing coalition has openly resisted diesel phase-out [43]

Assessment

Buildings

Lacking

Italy is Europe’s second-biggest heat pump market. Renovation rates remain the deeper problem: just 0.85%/year against a 2% (2030) / 2.6% (2050) target, in a housing stock where 81% of buildings predate 1990.

Transport

Lacking

BEVs reached just 6.2% of new registrations in 2025 (94,230 units, +46.1% y/y), good growth, but still far behind France (19.6%), Germany (18.8%), and the UK (22.8%) over the same period. Against a target of 6+ million EVs by 2030, current momentum implies a large gap. Part of the governing coalition has openly resisted diesel phase-out in favor of biofuels

Industry

Lacking

Industry consumes 38.3% of Italy’s electricity, but electrification is held back by high-temperature process heat. Italy has very high electricity prices for industry actively discouraging the switch from gas.

Power system

Lacking

Renewables covered ~41% of electricity demand in 2025, slightly down from 42% in 2024, with gas still dominant at 43.7% of the mix. Import dependency remains high (~60% today, targeted to fall to 37% by 2030), making Italy Europe’s second-biggest energy importer.

Grids

On track

The core problem is structural: renewable generation concentrated in the south, demand in the north, producing measurable curtailment. But the response is substantial: Terna’s €16.6bn transmission plan (2024-2028) targets the north-south corridor directly, and the network starts from real strengths, Italy is tied for 1st in Europe on smart meter penetration (effectively 100% coverage, a first-mover position dating to the early 2000s), and Italy’s digital grid architecture (encrypted substation-to-control-center links) is notably more cyber-resilient than legacy systems still in use elsewhere in Europe.

Policy framework

At risk

The revised NECP (2024) sets credible sector targets, but electrification isn’t clearly identified as the primary decarbonization lever, with the framework at times treating gas heat pumps and combustion engines as equivalent to electric alternatives. The current government has openly criticized EU Green Deal rules as risking “industrial desertification,” while separately reviving debate on a nuclear return.

  1. 1IEA, “Country profile Italy”, accessible here.
  2. 2European Commission, “Electrification Action Plan”, accessible here.
  3. 3IEA, “Country profile Italy”, accessible here.
  4. 4EHPA, “Market Intelligence - Italy ”, accessible here.
  5. 5Heat Pumping Technologies, “Italy, Heat Pump Market Report”, accessible here.
  6. 6IEA, “Country profile Italy”, accessible here.
  7. 7Eurostat, “dataset nrg_d_indq_n, Italy, NACE C10-C12, 2024”, accessible here.
  8. 8Eurostat, “dataset nrg_d_indq_n, Italy, NACE C17-18, 2024”, accessible here.
  9. 9Eurostat, “dataset nrg_d_indq_n, Italy, NACE C23, 2024”, accessible here.
  10. 10Eurostat, “dataset nrg_d_indq_n, Italy, NACE C24”, accessible here.
  11. 11Eurostat, “dataset nrg_d_indq_n, Italy, NACE C24”, accessible here.
  12. 12Alternative Fuels Observatory “Italy”, accessible here.
  13. 13ACI, “Open Parco Veicoli Portal’, accessible here.
  14. 14Institute for Energy Economics and Financial Analysis (IEEFA): “Terna’s grid upgrades can boost Italy’s energy security without raising electricity bills”, accessible here.
  15. 15IEEFA, “Terna: Financing Italy’s grid modernisation”, accessible here.
  16. 16Enlit, “Italy’s distribution grid needs €6bn/year over next decade”, accessible here.
  17. 17RAP, “ Italy: Step-by-step to modern revenue regulation”, accessible here
  18. 18Gridspertis, “The Italian Electrical Grid is Among the Most Advanced in the World: Gridspertise Explains Why”, accessible here.
  19. 1924 Ore, “Energy storage, how Italy secures renewables”, accessible here.
  20. 20Balkan Energy News: “Slovenia tops EU list for most smart power meters, Croatia among laggards” accessible here.
  21. 21Carlo Stagnaro, “Second-generation smart meter roll-out in Italy: A cost-benefit analysis”, accessible here
  22. 22ArthurDLittle, “How smart meters will contribute to changing the energy landscape?” accessible here.
  23. 23Nobis, “Conto Termico 3.0 Comment ça marche?”, accessible here.
  24. 24Biblus 25: “Ecobonus 2026: come funziona la detrazione per l’efficientamento energetico”, here.
  25. 25GSE, “COMUNITÀ ENERGETICHE RINNOVABILI E GRUPPI DI AUTOCONSUMATORI” accessible here.
  26. 26IEA, “Superbonus 110% for building renovation”, accessible here
  27. 27European Commission, “Italy launches new EV incentive programme offering up to €20,000”, accessible here.
  28. 28E-Charge 2026, “Home Wallboxes: grants of up to €8,000 for condominiums and private individuals”, accessible here
  29. 29Ministero delle Imprese e del Made in Italy, “Transizione 4.0”, accessible here.
  30. 30Ministero delle Imprese e del Made in Italy, “Piano Transizione 5.0”, accessible here.
  31. 31Ministero delle Imprese e del Made in Italy, “Nuovo Piano Transizione 5.0 Imperammortamento”, accessible here.
  32. 32Resource Hub, “Global Sustainable Buildings Guide Italy”, accessible here.
  33. 33Resource Hub, “Global Sustainable Buildings Guide Italy”, accessible here.
  34. 34Clean Energy Wire, “CLEW Guide – Italy moves on green transition, but fossil ties remain tight” accessible here
  35. 35Clean Energy Wire, “CLEW Guide – Italy moves on green transition, but fossil ties remain tight” accessible here
  36. 36Clean Energy Wire, “CLEW Guide – Italy moves on green transition, but fossil ties remain tight” accessible here
  37. 37Energy Trend, “Italy Boosts Renewable Energy Target”, accessible here
  38. 38Resource Hub, “Global Sustainable Buildings Guide Italy”, accessible here.
  39. 39Energy Trend, “Italy Boosts Renewable Energy Target”, accessible here
  40. 40Confindustria “Analisi dei costi energetici per l'industria italiana”, accessible here.
  41. 41ENEA, “Analisi Trimestrale del Sistema Energetico Italiano”, accessible here
  42. 42Renewable Energy Magazine, “Italy’s renewable expansion faces grid challenges aurora says”, accessible here
  43. 43Clean Energy Wire, “CLEW Guide – Italy moves on green transition, but fossil ties remain tight” accessible here