Italy, more renewables and nuclear to slow prices and volatility

Italy is preparing to experience a decisive decade for the decarbonization of the electricity system , squeezed between medium-term objectives for 2030 and uncertainties about long-term strategies. This is what emerges from the report by Aurora Energy Research – “Here Comes the Sun, the Wind (and the Atom?)” – which outlines complex scenarios for prices, investments and technology mix for 2060. In the short term, electricity prices will still be tied to commodity trends, with gas expected to fall by 30% by 2030 and CO2 to rise slightly. The activation of the new FerX and Macse support schemes expected in 2025 will boost the growth of renewables, regulating auctions for solar and onshore wind with 20-year CfD contracts. Aurora estimates an increase of around 40 GW of installed renewable capacity by 2030, with a strong focus on Southern Italy, where most of the plants will be solar. Electricity demand will grow by 10% in the same period, confirming the trend of electrification and new consumption.

Looking beyond 2030, electricity prices will tend to decouple from gas , driven by the growing impact of renewables and a demand expected to grow by 40% to 2050. However, after 2025 a path of continuous support for renewables is not yet defined, increasing uncertainty for investors. Aurora expects new Res capacity to reach +90 GW by 2050 , also supported by the market economy. Particular attention is paid to the FerX mechanism , which will regulate auctions until the end of 2025. Innovative features – such as dynamic demand and differentiated premiums by area – should stimulate competition. However, Aurora simulations indicate that in high participation scenarios auction prices could fall below the minimum expected price caps (65 €/MWh nominal). For solar tracking in Sicily , the expected revenues with incentives are lower than those obtainable on the free market in scenarios with high inflation, while onshore wind remains more attractive but with reduced margins if the auctions are very competitive.

Another important chapter of the analysis concerns the potential return of nuclear power in Italy . Aurora has modeled a scenario based on the entry of small modular reactors (SMR) starting from 2040, with a five-year delay on the Pniec. Nuclear capacity could rise to 7.6 GW by 2060, with plants located mainly in the North and in the Center-South. The inclusion of nuclear power would reduce gas consumption and price volatility, with an average base price (Pun) estimated to be 11% lower in 2050 compared to the scenario without nuclear power. However, to be economically sustainable, nuclear power would require strong public support : in the case of a base investment cost (Capex) of €5 million/MW, the required net subsidies would amount to approximately €21 billion by 2060. If, instead, scenarios with high Capex (€10 million/MW) were to be realized, the cost of subsidies would rise to €79 billion.

Despite the costs, Aurora estimates overall savings for the system of around 49 billion euros, resulting from lower prices and fewer volatility peaks. In summary, the report highlights how the Italian transition is now underway, but still uncertain beyond 2030, requiring clear strategic choices on incentives, auctions and technologies such as nuclear to maintain sustainable prices and reduce emissions.