The European Commission has approved a €23 billion state aid scheme in Italy designed to bolster the nation’s renewable energy sector. By facilitating the addition of 37.15 GW of new capacity—nearly half of Italy’s current renewable output—the initiative aims to accelerate the country’s decarbonization efforts. The program focuses on solar, onshore wind, hydropower, and sewage gas projects. Through the use of 20-year, two-way Contracts for Difference (CfDs), the government intends to provide long-term revenue stability for developers, helping Italy reach its target of sourcing 39.4% of its gross final electricity consumption from renewables by 2030.
Under the framework, which aligns with the Clean Industrial Deal State Aid Framework, most large-scale projects exceeding 1 MW will be selected through competitive auctions. These bidding processes are designed to ensure cost efficiency and transparency. To further support the transition, applicants must adhere to eligibility criteria established by the EU’s Net-Zero Industry Act. Smaller solar and wind installations under 1 MW are exempt from the auction process, allowing them to access support directly with strike prices determined by the Italian energy regulator, ARERA.
The two-way CfD model functions by guaranteeing a fixed strike price for electricity fed into the grid. If market prices drop below this threshold, the state covers the shortfall; conversely, if market prices exceed the strike price, developers must return the surplus to the government. While the total budget is set at €23 billion, the European Commission noted that actual expenditure may be lower depending on future market price fluctuations. This financial structure is intended to mitigate regulatory risks and encourage sustained investment in clean energy infrastructure.
Italy’s energy agency, Gestore dei Servizi energetici (GSE), is tasked with managing these auctions. The agency has already successfully concluded two rounds of bidding under the FER-X Decree, awarding significant capacity for solar PV projects. Looking ahead, GSE plans to allocate 10 GW of solar PV and 16 GW of wind energy across upcoming auctions scheduled for 2026 and 2027. By reducing reliance on fossil fuel imports and scaling up domestic renewable generation, the scheme serves as a cornerstone of Italy’s strategy to meet its climate commitments and enhance national energy security.