A more competitive Italy driven by renewables, storage, and stable regulations
The cost of energy in Italy is too high.
The recent Energy Decree (the so-called Decreto Bollette or Bills Decree) attempts to address this problem with specific interventions, such as the measure on the ETS (Emissions Trading System), aimed at containing the cost of electricity through the marginal price formation mechanism. However, it does not intervene on structural factors such as the excessive dependence on fossil fuel generation, the supply of which—predominantly imported—exposes the country to strong price fluctuations and energy security risks.
The signatory companies of this letter represent national and international investors and independent electricity producers committed to the development of new renewable and storage capacity in Italy. Their work represents the solution for the structural reduction of long-term energy costs, as highlighted by the results of the recent RES (Renewable Energy Sources) and MACSE auctions, where the average award price was less than half of the market price and where independent operators obtained the prevalent share of allocations. These allocations trigger new investments that strengthen the country’s energy independence, while simultaneously supporting a strong national and European industrial supply chain.
Today, some short-term measures envisaged in the aforementioned Bills Decree will weaken investor confidence, slowing down the development of new investments and hindering the consequent lowering of energy prices. The signatory companies therefore ask the Government—in particular the MASE, MIMIT, and the Presidency of the Council of Ministers—for a clear and coordinated direction to support the sustainable growth of the electricity system from an economic perspective as well.
Our proposals for a more competitive Italy:
- RES and BESS auctions planned and consistent with the PNIEC and PNRR Renewables and storage are mature technologies and already represent the most economical solution for electricity production today: recent auctions confirm this. But to attract the substantial private capital necessary for the energy transition, a stable, long-term, predictable regulatory framework consistent with the objectives of the PNIEC and PNRR is needed. The immediate definition of a multi-year and stable calendar, with defined volumes and dates for renewable and storage system tenders, is essential to plan, mobilize investments, and guarantee competitive prices for businesses and families. The latest tenders also demonstrate that competition between projects is a key factor in reducing award prices. For this reason, regulatory certainty and speed in permitting and grid access become fundamental to ensuring lower prices.
- Extend the MACSE to the entire national territory and promote real competition in storage systems To develop storage capacity throughout the country, the upcoming MACSE auctions must be effectively contestable and, where possible, extended to the entire national territory—including the regions of Northern Italy—by introducing mechanisms that ensure equal opportunities for new operators. This is particularly relevant at a time when the ETS rule contained in the decree significantly reduces spot market revenues, making it even more important to support the development of storage through competitive auction mechanisms. Furthermore, the new rules proposed by Terna for the Capacity Market, through the definition of derating factors, favor gas plants over storage, contravening the principle of technological neutrality.
- Market PPAs, accessible to all Italian companies The PPA (Power Purchase Agreement), or long-term contracting, is a fundamental bilateral and flexible tool for promoting the development of renewables and managing the volatility of energy prices. To make the benefits of PPAs accessible to businesses, including SMEs, it is necessary to develop an advanced energy purchasing culture. Regulation should encourage purchasing consortia, without imposing obligations, but providing the possibility for the GSE to facilitate SME access to this tool, allowing their participation as additional demand in the tenders themselves. In this context, the role of the GSE as a guarantor of last resort would strengthen the bankability of projects, increasing investor confidence and fostering further investments in renewables.
- Avoid distortions of the ETS mechanism that penalize renewable energy consumers We share the intention of the Government’s action to improve overall market efficiency, including through an intervention on the ETS mechanism aimed at reducing the impact of CO₂ costs on energy prices and correcting some distortions of the marginal price formation mechanism, which bring no benefit to newly built plants. However, the currently envisaged measure risks redistributing the cost of the ETS indiscriminately across all end consumers, including those who have already chosen to procure supply from renewable sources. We believe that the cost of the ETS should instead be allocated proportionally to the actual emissions content of each energy supply, reflecting the real environmental impact of the different sources. This would make renewable energy more attractive and the allocation of the ETS more aligned with actual costs, underscoring the competitive advantage of clean supplies and further stimulating the spread of long-term contracts from renewable sources, including PPAs. This would support the structural reduction of energy costs, stimulating electricity demand and the electrification of consumption, with a consequent boost to the competitiveness of the industrial system and national energy independence.
A commitment to the Country
The high electricity prices in Italy stem primarily from a heavy reliance on fossil fuel generation and the high tax burden on household and business energy bills. The solution to structurally reducing the cost of energy and strengthening energy sovereignty is renewables and storage, not an increased use of gas, which exposes the country even more to market volatility and dependence on third countries.
It is possible to combine the reduction of electricity costs, price stability for Italian families and businesses, and the country’s energy security through action complementary to the Bills Decree, in line with the points outlined above.
Private operators and their shareholders are ready to support significant investments in new renewable and storage capacity in exchange for certain, lasting, and coherent rules. Investors in new renewables are not seeking rent-seeking opportunities or high prices: they ask, however, for clear and certain conditions that allow them to safeguard the investments made to date and enable them to continue investing to structurally reduce the cost of tomorrow’s energy.
