European Commission approved on 8 June 2026 an Italian State aid scheme with an estimated maximum value of €23 billion to support electricity generation from renewable sources. The measure, notified by Italy under the Cisaf framework, the State aid framework supporting the Clean Industrial Deal, is aimed at energy producers seeking to develop new onshore wind, photovoltaic and hydroelectric plants, as well as facilities powered by waste gas and sewage sludge. Funding is provided through 20-year two-way contracts for difference, awarded through competitive auction procedures.
The scheme is based on the Cisaf framework (Climate, Energy and Environmental Aid Framework), adopted by European Commission on 25 June 2025 as part of the Clean Industrial Deal, which allows member states to introduce clean energy support schemes until 31 December 2025. European Commission found that the Italian scheme meets the conditions set out in sections 3 and 4.1.2 of Cisaf, with particular reference to the competitive structure of the auctions, the limited duration of the aid and the two-way contract for difference mechanism, which reduces the risk of excessive returns for operators during periods of high prices.
How does the support mechanism work? For every kilowatt-hour fed into the grid by a selected plant, the producer receives variable remuneration based on a "strike price" set during the auction. If the market price of electricity falls below that threshold, the state covers the difference; if the market price rises above the strike price, the producer must pay back the difference. The two-way structure therefore provides a form of clawback that limits public transfers during periods of high prices, in line with the proportionality requirements imposed by Cisaf.
The €23 billion figure does not represent a guaranteed disbursement fund, but the estimated maximum volume of potential support, calculated on the basis of expected developments in wholesale energy prices. Actual expenditure may be lower if market prices remain high, while it will increase to the extent that prices fall below the strike prices awarded in the auctions.
Four technologies are eligible: onshore wind, photovoltaic, hydroelectric and plants powered by waste gas and sewage sludge. Technologies already covered by other national schemes approved by European Commission, such as offshore wind and biomethane, are excluded. Projects are selected through competitive, transparent and non-discriminatory auctions, in which operators submit bids indicating the minimum strike price required to build the plants. The operational objective of the scheme is to reach around 37 gigawatts of new installed renewable capacity in Italy, a target consistent with the trajectory set out in the Piano nazionale integrato per l’energia e il clima (Integrated National Energy and Climate Plan, Pniec) and with European targets for 2030.
The 20-year two-way contracts for difference give energy and industrial operators a long-term price signal that reduces tariff risk for both producers and end consumers, thanks to the repayment mechanism. Revenue certainty over 20 years could support access to credit and investment planning across the renewable energy supply chain, including manufacturing segments linked to plant installation and maintenance.
European Commission assessed the scheme’s compatibility with State aid rules on the basis of four key criteria: the proportionality of the aid in relation to the objective pursued, the need for public intervention, the incentive effect of the measure and the absence of excessive distortions of competition in the European internal market. The competitive auction structure is regarded as the main tool for ensuring that support is calibrated at the minimum level necessary, limiting the possibility that operators capture returns above the actual costs of developing the plants.
The Italian scheme forms part of a wider set of national renewable energy measures, including other schemes approved by European Commission in previous years, among them those for biomethane and renewable self-generation. Its financial scale and expected capacity target make the new scheme one of the largest national renewable energy support packages currently approved in the European Union. The unresolved issue is whether the national and local authorisation system can quickly turn this support framework into construction sites and operational plants, a factor regarded by many analysts as the main bottleneck in recent years in Italy’s progress towards its renewable energy targets.
Antonio Illariuzzi
