European Commission Approves €23 Billion Italian Renewable Energy Support Scheme

The European Commission has approved a €23 billion Italian State aid scheme aimed at accelerating electricity generation from renewable energy sources, supporting the European Union’s Clean Industrial Deal objectives and renewable energy targets for 2030.

Approved under the Clean Industrial Deal State Aid Framework (CISAF), adopted by the Commission on June 25, 2025, the scheme is designed to facilitate Italy’s transition toward a net-zero economy while strengthening energy security and reducing dependence on imported fossil fuels.

The initiative will support the development of new renewable energy installations utilizing onshore wind, solar, hydropower, and sewage gas technologies. The planned projects are expected to add approximately 37.15 GW of renewable electricity capacity, representing nearly 48% of Italy’s existing renewable energy capacity.

According to the European Commission, the scheme will play a significant role in helping Italy achieve its target of sourcing 39.4% of its gross final energy consumption from renewable energy by 2030. The measure is also expected to contribute to lower electricity prices and support broader EU decarbonization efforts under the Clean Industrial Deal and REPowerEU strategy.

Financial support will be provided through two-way Contracts for Difference (CfDs), under which renewable energy producers will receive compensation when electricity market prices fall below a predetermined strike price. Conversely, beneficiaries will repay the difference when market prices exceed the strike price. The contracts will remain in effect for a period of 20 years.

Funding under the scheme will primarily be allocated through transparent and non-discriminatory competitive bidding processes, where project developers will bid for the strike price required to implement their projects.

Italy will conduct a dedicated competitive procedure for solar and wind projects exceeding 1 MW in capacity. Applicants participating in these tenders must comply with additional pre-selection criteria established under the Net-Zero Industry Act and related implementing regulations.

Smaller renewable energy facilities with capacities below 1 MW will be eligible for direct participation in the scheme without undergoing competitive bidding. In such cases, strike prices will be determined administratively by Italy’s energy regulator, the Autorità di Regolazione per Energia Reti e Ambiente (ARERA).

The European Commission noted that the €23 billion budget is based on projected market conditions and that actual public expenditure could be significantly lower if electricity prices remain above current estimates.

Following its assessment, the Commission concluded that the Italian measure complies with CISAF provisions, including safeguards designed to maintain proper market functioning and prevent compensation during periods of negative electricity prices.

The Commission determined that the scheme is necessary, appropriate, and proportionate to support renewable energy deployment and facilitate economic activities essential to achieving the objectives of the Clean Industrial Deal, in accordance with Article 107(3)(c) of the Treaty on the Functioning of the European Union.

The approval forms part of the broader CISAF framework, which enables EU Member States to implement targeted support measures until December 31, 2025. These measures cover renewable energy deployment, industrial decarbonization, clean technology manufacturing, electricity price relief for energy-intensive industries, and initiatives aimed at mobilizing private investment in clean energy and circular economy projects.

The Commission stated that such measures are intended to accelerate Europe’s clean energy transition, strengthen industrial competitiveness, and support the development of strategic net-zero technologies across the region.