The European Commission Approves a €23 Billion Italian Plan to Accelerate Renewable Energy Production

The European Commission has given its approval to an important state aid scheme presented by Italy, amounting to a total of €23 billion, aimed at supporting electricity production from renewable sources. The initiative aligns with the goals of the Clean Industrial Deal and the European policies for the transition to a zero-emission economy.

The Italian program includes the construction of new facilities for energy generation through various technologies, including onshore wind, solar, hydroelectric, and biogas from wastewater treatment. According to estimates, the new installations are expected to contribute approximately 37.15 gigawatts of additional capacity, which is almost half of the current installed renewable power in the country.

This intervention is considered significant for achieving the national goal of covering 39.4% of gross final energy consumption with renewable sources by 2030. Furthermore, the plan should promote a reduction in energy prices and decrease the European Union's dependence on energy imports.

Renewable Energy and the New Support Mechanism

The chosen support mechanism is based on two-way contracts for difference, through which producers receive a variable compensation based on the difference between the market price of electricity and a set reference price. If the market price is lower, the state covers the difference; if it is higher, the producers return the excess. The expected duration of these contracts is twenty years.

The allocation of aid will occur through competitive and transparent bidding procedures, where operators will submit bids on the price level necessary to carry out individual projects. Specific criteria linked to European regulations on industrial transition and net-zero production capacity will apply for large-scale facilities.

Small-sized plants will, however, be able to access support without participating in a bidding process, with a price directly set by the Italian energy authority. The overall budget is based on market assumptions and could result in a lower net cost if energy prices were to rise. The Commission found the measure consistent with state aid rules, deeming it proportionate and necessary to accelerate the energy transition.