Market Overview

The Italy power market size was 136.80 GW in 2024 and is expected to grow to 252.00 GW by 2033. This expansion is driven by increased adoption of renewable energy sources, government incentives, and advancements in power infrastructure such as smart grid technologies and battery storage projects. The market will exhibit a growth rate of 6.30% during the forecast period of 2025-2033. Key contributors to growth include substantial government subsidies, infrastructure upgrades, and rising energy efficiency initiatives. For more details, visit the Italy Power Market.

How AI is Reshaping the Future of Italy Power Market

  • AI facilitates optimized management and integration of renewable energy sources such as solar, wind, and hydro, enhancing grid stability and energy security.
  • Advanced data analytics powered by AI improve the implementation of government incentives like feed-in tariffs, tax credits, and grants, leading to higher adoption rates of clean energy technologies.
  • AI-driven smart grid technologies and demand response systems enable real-time energy management and consumer engagement, improving power distribution and efficiency.
  • AI supports infrastructure projects, exemplified by Enel Green Power's 1.6GW battery storage construction plans, by optimizing project execution and energy storage operations.
  • Predictive maintenance powered by AI reduces downtime and operational risks in power plants, increasing overall market reliability and supporting continuous growth.
  • AI-enabled digital technologies enhance energy efficiency and support business expansions, contributing to Italy's economic growth and power market development.

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Market Growth Factors

According to ambitious national targets and policies, Italy's power market is rapidly expanding its renewable energy supply. For 2024, renewables satisfied a record 41.2% of electricity demand within Italy Europe's third largest electricity market. Solar energy produced 19.3% more, while hydroelectric energy generated considerably again. The government hopes to increase capacity through modernization of permitting under Legislative Decree 199/2021 and through corporate PPAs. Start auctioning grid-scale battery storage from 2025 targeting 9 GW by 2030 to smooth the variability of wind and solar generation, reduce reliance on imported gas, and improve energy security. This will also help achieve EU climate targets and support innovation and investment in solar, wind and hybrid solar and wind projects.

The future phase-out of coal-fired generation further shapes the generation mix. Nearly 7 GW has been shut down by 2025 (some plants in Sardinia extended to 2026-2028), resulting in coal's share declining to 1.3% in 2024. Natural gas is the main dispatchable back-up to balance variable generation. Over 4 GW of combined cycle gas turbine (CCGT) plants under construction will fill this gap from fossil fuel diversification. Gas imports are high though, so utilities are incentivized to invest in renewables and storage, for they lower long-term carbon emissions and short-term adequacy risks from the rise in demand due to industry and transport electrification.

Market reforms along with infrastructure modernization make the Italian power system more flexible and efficient. The TIDE reform is scheduled to introduce 15 minute settlement periods from 2025. This accommodates variable renewables and reduces balancing costs. High wholesale gas prices through 2025 will support managing demand and distributing generation. Residential demand growth until 2030 will be strongest with rooftop solar, heat pumps, and energy communities enabled by billions of dollars in incentive programs and rebates. These changes aim to decouple prices from volatile gas markets, modernize and digitalize the grid, promote competition, and transition to a sustainable and resilient energy system.

The market report offers a comprehensive analysis of the segments, highlighting those with the largest Italy power market share. It includes forecasts for the period 2025-2033 and historical data from 2019-2024 for the following segments.

Market Segmentation

Generation Source Insights:

  • Thermal
  • Hydro
  • Renewable
  • Others

Regional Insights:

  • Northwest
  • Northeast
  • Central
  • South
  • Others

Recent Development & News

  • March 2025: The Italian Transmission System Operator Terna announced a substantial investment of up to €16.5 billion (USD 17.9 billion) to accelerate the twin transition of digital and energy sectors, boosting decarbonization efforts and modernizing grid infrastructure.
  • July 2025: Iris Ceramica Group partnered with Edison Next to establish a new production plant in Castellarano, Reggio Emilia, utilizing green hydrogen derived from renewable energy, supporting sustainable industrial growth.
  • April 2025: Enel Green Power commenced the construction of 1.6GW of battery storage projects, enhancing Italy's utility-scale battery storage capabilities and improving grid resilience and renewable energy integration.

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