May 5, 2025
Italy's new subsidy program aims for 24 TWh of renewable energy per year.
Italy's new contracts for difference (CFD) mechanism may help stabilize energy prices and cover up to 24 TWh/year from non-subsidized wind and solar power, according to industry sources. This voluntary mechanism will be available to existing renewable energy plants without public funding.
Industries could request as much as 50 TWh, but since participation is optional, they will have to accept whatever is available, indicated an analyst. If only 1 TWh is accessible, it will be shared among all participants.
The state-owned GSE will manage the five-year CFDs as an intermediary to balance market and contracted prices and will conduct auctions for producers based on industrial demand.
A parliamentary document suggests that about 9-10 TWh of current solar and wind capacity could immediately join the mechanism, while plants leaving older power purchase agreements (PPAs) or those whose incentive periods end between 2030 and 2032 could bring total eligible capacity to 24 TWh annually.
Italy's energy ministry will provide guidelines for pricing and available volumes within three months, although the mechanism began on Wednesday.
Market experts predict prices between EUR 65-75/MWh, influenced by potential new US tariffs affecting industrial demand. One expert noted that if US tariffs reduce industrial demand, locking in a price of EUR 75/MWh might be appealing compared to fluctuating markets; Italian power prices have recently decreased due to an increase in renewables.
As of Friday, Italy’s spot power price was EUR 79.91/MWh, considerably lower than the EUR 127.19/MWh average for 2025 so far. Increased stability for energy-intensive consumers might justify higher costs compared to the volatile prices of 2022, which peaked at around EUR 543/MWh.
The mechanism may particularly attract plants in low-price regions like Sardinia and Sicily, where limited interconnections and the absence of PPA deals enhance its appeal.
Earlier in March, Italy ended its previous green energy incentive scheme and is preparing to launch a new program called Fer X, which will utilize CFDs to advance new renewable energy projects. The inaugural auction for this scheme is expected in the spring, with Fer X projected to represent around 50% of Italy's installed capacity by 2030, aiming for 131 GW of renewables, up from the current 77 GW.
Industries could request as much as 50 TWh, but since participation is optional, they will have to accept whatever is available, indicated an analyst. If only 1 TWh is accessible, it will be shared among all participants.
The state-owned GSE will manage the five-year CFDs as an intermediary to balance market and contracted prices and will conduct auctions for producers based on industrial demand.
A parliamentary document suggests that about 9-10 TWh of current solar and wind capacity could immediately join the mechanism, while plants leaving older power purchase agreements (PPAs) or those whose incentive periods end between 2030 and 2032 could bring total eligible capacity to 24 TWh annually.
Italy's energy ministry will provide guidelines for pricing and available volumes within three months, although the mechanism began on Wednesday.
Market experts predict prices between EUR 65-75/MWh, influenced by potential new US tariffs affecting industrial demand. One expert noted that if US tariffs reduce industrial demand, locking in a price of EUR 75/MWh might be appealing compared to fluctuating markets; Italian power prices have recently decreased due to an increase in renewables.
As of Friday, Italy’s spot power price was EUR 79.91/MWh, considerably lower than the EUR 127.19/MWh average for 2025 so far. Increased stability for energy-intensive consumers might justify higher costs compared to the volatile prices of 2022, which peaked at around EUR 543/MWh.
The mechanism may particularly attract plants in low-price regions like Sardinia and Sicily, where limited interconnections and the absence of PPA deals enhance its appeal.
Earlier in March, Italy ended its previous green energy incentive scheme and is preparing to launch a new program called Fer X, which will utilize CFDs to advance new renewable energy projects. The inaugural auction for this scheme is expected in the spring, with Fer X projected to represent around 50% of Italy's installed capacity by 2030, aiming for 131 GW of renewables, up from the current 77 GW.