Italian PV & ESS Market: Key Insights for Businesses and Investors

The 18th KEY The Energy Transition Expo will be held in Romini, Italy from 5 to 7 March, 2025. The Italian photovoltaic and energy storage markets deserve special attention recently. On December 17, 2024, the European Commission approved the Italian FER X decree, which determined the competitive bidding process and long-term contract for difference (CfD) mechanism in the Italian energy market. At the same time, the European Commission also approved 9.7 billion euros in aid to Italy, which will be used to promote the construction of clean energy projects such as solar and wind power, and increase at least 17.65GW of installed capacity within 36 months.

Market Data

In 2024, Italy's installed energy storage capacity increased by 5.9GWh, mainly concentrated in the Lombardy region in northern Italy.

There are more than 730,000 energy storage power stations in operation. If divided by power range, most of them are concentrated in household systems below 20kW. With the support of favorable policies, the demand for industrial and commercial and large-scale energy storage systems above 20kW is expected to grow rapidly.

Household subsidies decline

According to Italy's latest comprehensive budget bill, tax incentives for building renovation and renewable energy equipment installation have been adjusted, and household subsidies will further decline.

In paragraph 3, regarding expenses eligible for benefits under Article 119 of Decree-Law No. 34 of May 19, 2020, related to the Superbonus, the deduction rate is reduced from 65% to 50% for expenses incurred for primary residences and from 65% to 36% for properties other than primary residences. For the years 2026 and 2027, the deduction rate is set at 30% if the interventions are carried out on properties other than the primary residence, while it remains fixed at 36% for interventions carried out in those years on the primary residence. The spending limit for the interventions is set at 96,000 euros.

But on the other hand, support for industrial, commercial and large-scale energy storage systems is being strengthened.

Commercial & Industrial subsidies strengthen

Italy's 5.0 Transformation Plan (Piano Transizione 5.0) provides a tax credit of up to 45% for renewable energy projects for small and medium-sized enterprises.

Tax credits are provided for innovative projects that reduce corporate energy consumption, with a minimum of 5% and a maximum of 45%. The policy aims to guide the popularization and promotion of renewable energy in corporate production activities. The total budget for the 2024-2025 plan is 6.3 billion euros. Energy storage systems can also enjoy subsidies if they meet the conditions, but they must be installed together with renewable energy power generation systems.

In early December 2024, the Italian Ministry of Enterprise and Manufacturing announced a 320 million euro allocation to support small and medium-sized enterprises in generating their own electricity from renewable energy. The aim is to incentivize photovoltaic power generation, small wind power generation and energy storage systems, ensure greater energy independence and have a positive impact on the environment.

The MACSE Auction

Italy’s MACSE Auction will deliver 50GWh of energy storage by 2030, advancing renewable energy goals and supporting the EU’s ‘Fit for 55’ agenda. It is anticipated that the inaugural auctions for the generation of new energy storage capacity will occur around the second quarter of 2025.

Supporting local manufacturing

The Italian government has increased subsidies for the use of EU-made photovoltaic modules under the Transizione 5.0 Tax Credit Scheme. The tax credit base for modules with a cell efficiency of more than 23.5% has been increased from 120% to 140%, and for modules with bifacial heterojunction or laminated cells with a cell efficiency of more than 24% has been increased from 140% to 150%.

Important Project News

• In January 2025, the European Investment Bank (BEI) invested 100 million euros in Iberdrola's photovoltaic project in Sicily, which is located between Enna and Catania. It is expected that the annual power generation will reach 400GWh after it is put into operation in 2025, which can meet the electricity needs of 154,000 households.
• In December 2024, the Italian Railway Company (Fs) announced that it would invest 1.3 billion euros to build the country's largest photovoltaic project, with an installed capacity of more than 1 GW by 2029 and expanded to 2.2 GW in 2034. The project will meet 19% of the company's annual electricity demand, and the coverage rate will reach 35-40% in 2034. The company is the largest electricity user in Italy, with an annual electricity consumption of about 7 terawatt hours.
• Italy, the United Arab Emirates and Albania signed a 1 billion euro submarine power interconnection project agreement in Abu Dhabi on January 15, 2025. The project will lay a 430-kilometer submarine cable in the Adriatic Sea, connecting the Puglia region of Italy and the Port of Flore in Albania. It is expected to be put into operation within three years and aims to promote the transmission of renewable energy and clean energy transformation in the Mediterranean region.

The upcoming KEY - The Energy Transition Expo will once again ignite the enthusiasm of the Italian renewable energy market. DOWELL ESS sincerely invites investors and project developers to work together to promote the vigorous development of the Italian energy storage market and contribute to energy transformation and a green future.