This is a best prospect industry sector for this country. Includes a market overview and trade data.
Italy is an attractive market for both natural gas and renewable-energy technologies. Based on a report from the Ministry of Ecological Transition (MET, now Ministry of Environment and Energy Security), nearly 80% of total energy consumption in Italy was satisfied by fossil fuels in 2021: natural gas made up 43% of all sources of energy (used mostly for heating, electrical power generation, transportation, and cooking), oil accounted for 32%, and coal for 4%. Renewable sources accounted for nearly 20% of the total energy mix and a higher percentage of the electrical power generation mix, satisfying 36% of total electricity demand in 2021.
Due to the conflict in Ukraine, Italy is seeking to improve domestic energy security and expects to become independent of Russian gas by the second half of 2024. In the near term (2022–2023), Italy is focused on preparing for the 2022–2023 winter by filling its gas storage facilities, diversifying its gas supplies (e.g., pipeline imports from Algeria and Azerbaijan to replace those from Russia), and improving energy savings. In September 2022, the government published a “National Plan for Containment of Natural Gas Consumption” which outlined measures to reduce gas consumption. For the medium term (2023–2024), Italy is seeking to further diversify gas supplies, bring new floating storage and regasification units (FSRUs) for liquefied natural gas (LNG) on board, and accelerate the development of renewable energy and energy savings measures. The Italian and U.S. governments’ energy policies are aligned, recognizing the importance of natural gas for energy security and, at the same time, fostering a transition to cleaner energy sources. Opportunities exist for U.S. firms in Italy in the two complementary areas of natural gas and clean energy technologies.
Liquefied Natural Gas
In 2021, Italy produced only 3 billion cubic meters (bcm) of natural gas, i.e., 4% of total gas supply, and imported the remainder (73bcm), of which LNG imports of 9.8bcm made up 13%. About 70% of the LNG came from Qatar, 14.5% from Algeria, 8% from the United States, and 7.5% from other countries. Three regassification terminals are in operation in Italy and are located in Panigaglia, near La Spezia (onshore, owned by Snam), Livorno (FSRU, owned by Snam, Igneo Infrastructure Partners, and Golar), and Rovigo (offshore platform, owned by Adriatic LNG, which in turn is 71% owned by ExxonMobil, with the remainder owned by the Qatar State Petroleum Company and Snam). Gas network operator Snam procured three additional FSRUs on a mandate from the government. One will be located in Piombino (expected to start operations in spring 2023), one in Ravenna (expected to start operations in 2024), and one is expected to be in Portovesme, Sardinia (an LNG carrier to be converted into an FSRU, start of operations is to be confirmed).
Italy ranks third in Europe for both power consumption and generation from renewable resources and is one of 14 EU countries to reach their 2020 target of renewables as a percentage of total energy consumption (18.2% versus a 17% target). Total installed power from renewables in Italy is 58 GW. In 2021, renewable power satisfied 36% of total electricity demand; production from solar power increased slightly (2.1%), peaking at 25,068 GWh (highest ever PV production), representing 21.7% of annual electricity demand from renewables. Wind power grew 10.8% at 20,619 GWh, representing 17.8% of the total demand from renewables. Hydroelectric power fell 5.4% compared to 2020 and amounted to 46,317 GWh, corresponding to 40% of total generation from renewables. Biomass produced in Italy amounted to 18,232 GWh or 15.7% of total renewable energy demand and geothermal power made up the remaining 4.8% of renewable energy production.
Liquefied Natural Gas
MET expects that the country will become independent of Russian gas by the second half of 2024. LNG from the United States can help diversify the Italian natural gas import mix and bring down prices. In the first six months of 2022, U.S. LNG shipments to Italy tripled. However, due to the high worldwide demand for U.S. LNG, Italian firms are encouraged to secure supplies from the United States through long-term contracts to avoid future supply disruptions. There is also demand for technologies that can reduce methane and CO2 emissions in LNG plants and for technologies that can contribute to the overall functioning of LNG regasification plants.
In the National Resilience and Recovery Plan (NRRP), Italy has devoted €59 billion to incentivize renewables between 2021–2026. Specifically, Italy plans to eliminate coal by 2025 and to bring renewables’ share of final gross electricity production to 72% by 2030 and to 95%–100% by 2050. More specifically, Italy will have to add 70 GW of electric renewables, which, when added to the current 58 GW, will reach a total of 128 GW by 2030, meeting the above-mentioned 72% quota. To integrate new renewable power, it will also be necessary to install at least 60 GW of new, large-sized reserves, in addition to strengthening electric networks.
Thanks to generous incentives, energy-storage systems are booming in Italy. By the end of June 2022, Italy had almost 122,000 storage systems linked to renewable energy power plants. These storage systems have a combined power of 720 MW and a maximum storage capacity of 1,361 MW. The number of units installed during the first six months of 2022 grew by 346% over the same period in 2021. Power and storage capacity grew 500% and 480%, respectively, over the same period. Nearly all units are connected to a photovoltaic plant, of which 97% are residential, and 98.5% of the installed storage systems are based on lithium-ion technology. Growth is expected to continue through 2022.
In November 2020, Italy launched a national hydrogen strategy to help decarbonize the economy and meet European climate targets. The NRRP confirms the strategy and earmarks €3.19 billion for hydrogen, transforming abandoned industrial areas into “hydrogen valleys,” piloting projects for hard-to-abate sectors, advancing transportation and technology R&D. The objective is to install 6 GW of electrolysis capacity by 2050, and to produce and transport one million tons of renewable “green” hydrogen. The government’s objective also includes producing 700,000 tons of hydrogen by carbon capture, or “blue hydrogen,” in the next ten years. Renewable production through solar plants in northern Africa could increase production of green hydrogen that could be transported to Italy and the rest of Europe through Snam’s network. U.S. technologies that relate to the development of hydrogen are welcome in the Italian market, both for the supply of clean hydrogen and ammonia and for infrastructure necessary to transport them, which should be complementary to the infrastructure needed for LNG.
Ministry of Environment and Energy Security
ARERA (Italian Regulatory Authority for Energy, Networks and Environment)
Snam (Italian gas infrastructure operator – 31.4% government-owned)
Federico Bevini, Commercial Specialist
U.S. Commercial Service, U.S. Consulate Milan
Tel: +39 02 6268 8520