Electricity prices - Italy South

Italian Electricity Market

Primary Electricity Sources and Production

Italy’s electricity generation mix in 2025 is characterized by a growing share of renewables and a declining reliance on coal, with natural gas remaining the single largest source. Natural gas fuels a significant portion of Italy’s power plants – roughly 35–40% of total generation in recent years. In 2024 (the latest full-year data available), gas-fired thermal plants produced on the order of ~120 TWh, accounting for about 37% of Italy’s electricity consumption. This share has been trending downward as renewable capacity expands and coal is phased out. Coal generation in Italy has been almost completely eliminated: it fell by 71% in 2024 and now provides only around 1–2% of electricity. In fact, Italy remains committed to phasing out coal by the end of 2025 (with a slight extension for Sardinia until 2028). Most coal-fired plants on the mainland have closed or converted, leaving only minimal coal use (largely in Sardinia) by 2025.

Meanwhile, renewable energy sources have reached record levels. In 2024, renewables covered about 41% of Italy’s electricity demand, up from 37% in 2023. This was driven by strong growth in solar and a rebound in hydropower production. Italy’s solar photovoltaic (PV) generation hit an all-time high of 36 TWh in 2024, a ~19% increase year-on-year. Solar alone contributed roughly 11% of total demand. Hydropower output, which can vary with rainfall, saw a significant recovery – increasing ~30% in 2024 after previous drought-affected years. Hydro provided on the order of 50 TWh (about 16% of demand) in 2024. Wind power in Italy contributed roughly 7% of electricity (around 22 TWh). Wind generation actually dipped slightly (−5.6%) in 2024 due to less favorable wind conditions, but Italy continues to expand wind capacity. Geothermal power (a steady source in regions like Tuscany) supplies under 2% (around 5–6 TWh annually). Bioenergy (biomass and waste-to-energy) adds roughly another 5% (≈15 TWh) to the mix. In total, Italy’s domestic renewable generation (hydro, solar, wind, geothermal, biomass) was about 128 TWh in 2024, and this figure is expected to grow further in 2025 as new plants come online.

Notably, electricity imports make up the balance of Italy’s supply. Italy is typically a net importer of electricity, sourcing about 15–16% of its needs from neighboring countries via cross-border interconnections. In 2024, domestic generation met ~84% of demand while ~16% was met by net imports. Italy imports power from countries like France (often nuclear-generated), Switzerland, and Slovenia, especially when domestic demand peaks or when foreign prices are lower. However, 2024 saw a slight decline in net imports (−0.5%), as Italy even increased its exports by 48% during periods of high renewable output.

Italy’s Electricity Supply by Source (Approx. 2024 data)

Key trends: The data above reflect 2024, which serves as a baseline for 2025. The trend in 2025 is a continued shift toward renewables. Italy added approximately 7.48 GW of new renewable capacity in 2024 alone (solar capacity reached 37.1 GW, wind 13.0 GW), and similar growth is expected in 2025. This rapid expansion is boosting the renewable share of generation. Hydropower remains weather-dependent, but solar is steadily increasing its contribution each year. Thermal generation (mostly gas) is gradually declining in share as renewables grow and coal is virtually gone. Italy’s policy to replace coal with new efficient gas plants (about 3.4 GW of new gas capacity approved, plus 0.7 GW in upgrades by 2026) means gas will continue to play a balancing role, especially to ensure grid stability and supply security as intermittent renewables fluctuate. By the end of 2025, Italy is on track to have nearly zero coal-fired generation nationwide, fulfilling its decarbonization target (aside from the Sardinia exception where a few coal units may run until 2028 for local supply).

In summary, Italy’s 2025 electricity mix can be described as predominantly gas and renewables, with renewables (solar, wind, hydro, geothermal, biomass) providing roughly 40–45% of generation, natural gas providing on the order of 45–50%, and imports around 15%. Coal’s contribution is negligible by 2025, marking a significant milestone in Italy’s energy transition.

Structure of End-Customer Electricity Prices in Italy

Italian end-user electricity bills are composed of several distinct components. Understanding the breakdown of a typical residential electricity bill in Italy (as of 2025) is important, as each component covers different costs and responsibilities. The main elements of the bill include:

• Spesa per la materia energia (Energy Supply Cost): This is the cost of the energy itself and associated retail services. It includes the charges for producing or purchasing the electricity on the wholesale market and the supplier’s commercial costs (customer service, billing, etc.). In a free market offer, this is the part of the price that retailers compete on. In Italy, the energy component is often the largest portion of the bill – typically ranging from about 50% up to 65% of the total, depending on market prices. When wholesale prices are high (as seen during 2022’s energy crisis), this portion can climb to two-thirds of the bill, whereas in more stable times it may be around half. For customers under the regulated “Maggior Tutela” (vulnerable customers still on the protected tariff), this energy price is updated quarterly by ARERA (the regulator), but for free-market customers it is set by contract (either fixed or indexed).

• Spesa per il trasporto e gestione del contatore (Transportation and Metering Costs): These are the regulated network tariffs for transmission and distribution of electricity, as well as metering services. They cover the cost of delivering power from plants to homes (including maintenance of power lines and local distribution grids) and managing the electricity meter. All customers pay these charges, which are set by ARERA and are the same regardless of supplier. Network costs are generally in the range of 12% to 20% of the total bill. This portion may include a fixed monthly fee and a variable part based on consumption or peak power demand, and it ensures grid operators (like Terna for transmission and local DSOs for distribution) recover their costs.

• Oneri di sistema (System Charges): These are nationwide regulated levies that fund various public policy programs in the energy sector. In Italy, system charges are divided into component ASOS (which mainly covers incentives for renewable energy sources and cogeneration, pursuant to laws like CIP6/92) and ARIM (which covers other general costs such as nuclear decommissioning, research, bonus for vulnerable customers, etc.). Together, these system charges typically make up roughly 15%–20% of a household bill. For example, in recent years they have hovered around one-fifth of the bill (though the government temporarily eliminated or reduced certain oneri during 2022–2023 to alleviate bill spikes). As of 2025, those discounts have largely been removed, and system charges are again fully applied. Every customer contributes to these programs via the oneri, regardless of supplier. These charges are set in cents per kWh (and partly as a fixed annual amount) by ARERA.

• Imposte (Taxes): This category includes excise duties and value-added tax. Italy applies an accisa (excise tax) on electricity consumption – a small per-kWh tax that for residential users is actually zero-rated up to a certain consumption level for the primary home, then a modest rate beyond that (and subject to reduced rates if contracted power is ≤3 kW for the main residence). In addition, IVA (VAT) is applied on the entire bill amount (including on the energy, network, oneri, and excise) at the standard rate of 10% for residential electricity (note: businesses pay 22% VAT). Taxes are the smallest portion of the bill, typically around 10% (single-digit percent) of the total in normal circumstances. For instance, depending on consumption and exemptions, taxes might constitute anywhere from ~7% to 13% of a domestic bill. (During the height of the energy crisis, the government temporarily cut VAT on gas and removed some excise, but for electricity the VAT remained 10% for households.)

In summary, the average breakdown of an Italian electricity bill in 2025 might be roughly: about 55–60% for energy supply, 15–20% for network costs, 15–20% for system charges, and around 10% for taxes. These percentages can vary each quarter as energy prices fluctuate (the energy component grows when power prices rise, while the regulated network and oneri parts are more stable).

To illustrate, ARERA’s data for a reference household often showed the energy component dominating the bill. For example, in early 2024, after wholesale prices fell from 2022 highs, ARERA estimated the energy share at around 55%, system charges ~20%, network ~17%, and taxes ~8% for a typical household. By 2025, with policy measures unwound, those shares remain in that ballpark (the energy portion will increase if market prices rise, as happened in Q1 2025 when ARERA announced an +18% adjustment for regulated customers due to gas price upticks).

Additional note: Italian power bills also include the Canone RAI (the national TV license fee) for households – €90 per year – charged in installments on electricity bills. This is not related to electricity supply but is a government fee using the power bill as a collection mechanism. It appears as a separate line item (usually 10 € installments over 10 months). Excluding this, the components listed above cover the actual electricity costs.

Dynamic Electricity Tariffs in Italy (Real-Time Pricing)

Dynamic electricity tariffs – known in Italy as “offerte a prezzo variabile indicizzato” or contratti a prezzo dinamico – are plans where the energy price paid by the end customer fluctuates in step with wholesale market prices. In practical terms, a dynamic tariff passes through the hourly price of electricity from the power exchange to the consumer. Italy’s wholesale market, managed by GME (Gestore dei Mercati Energetici), operates a day-ahead exchange (MGP) that yields an hourly clearing price for each hour of the next day. Historically, Italy had a Prezzo Unico Nazionale (PUN) – a single national reference price calculated as the demand-weighted average of zonal prices each hour. Retail offers often indexed to the PUN. As of 1 January 2025, however, the market design is evolving to give more granular price signals: the Italian government (MASE) has decided to move from a unified PUN reference to zonal wholesale prices as the benchmark for consumers. This means that dynamic tariffs may reference the specific wholesale price in the customer’s zone (North, Center-North, etc.), reflecting local supply/demand conditions, rather than a national average. The change aims to improve efficiency and transparency, ensuring prices more closely reflect the actual cost of energy in each area.

How dynamic tariffs function: With a dynamic (indexed) tariff, the energy component of the bill varies each hour based on the market price. Consumers with a smart meter (contatore intelligente) are billed for the actual consumption each hour multiplied by that hour’s price (plus any fixed markup). For example, if the wholesale price at 3:00 AM is €0.05/kWh and at 6:00 PM is €0.20/kWh, a household on a dynamic plan would pay a low rate for any kWh used at night and a higher rate for kWh used in the early evening. This creates an incentive to shift consumption to cheaper hours, such as running appliances at night or midday (when solar generation can cause low prices), and to reduce usage during expensive peak hours. The overall bill will reflect the real-time market trends: in months when the market price spikes (e.g. during a heatwave or gas supply crunch), the customer’s rate spikes accordingly; when prices drop (e.g. windy and sunny days with abundant renewable supply), the customer benefits from low rates. Typically, suppliers calculate the bill by taking the official hourly zonal prices (published by GME) and adding their spread.

Because of this variability, dynamic tariffs are best suited for customers who have flexibility and are engaged in managing their consumption. To enable these contracts, Italy has nearly ubiquitous smart metering. Italy was one of the first countries in Europe to roll out smart electricity meters to all residential customers (the first generation by around 2011, now being upgraded to second-generation meters). These meters record hourly usage and communicate it to the distributor, allowing retailers to bill based on actual hourly data. By 2025, virtually all Italian households have meters capable of supporting dynamic pricing.

Relation to the electricity market: The Italian Power Exchange (IPEX) provides the price signals used in dynamic tariffs. The day-ahead market sets hourly prices (which feed into the PUN or zonal PUN index). Some dynamic offers may also incorporate the intra-day market or other ancillary services prices, but the standard is day-ahead pricing. The retail contracts usually specify a formula, commonly “PUN (or zonal price) + spread”. The spread is a fixed markup per kWh (in euro cents) that the supplier charges for providing the service. This covers their cost of trading, imbalance risk, and margin. For instance, a contract might say the price is “PUN + €0.02/kWh”: if the wholesale price is 10 c€/kWh in a given hour, you pay 12 c€/kWh for that hour with the 2 c€ margin included. There is often also a fixed monthly fee to cover administrative costs.

Regulation and legal framework: Dynamic pricing for consumers is encouraged by EU energy legislation. The EU Electricity Directive (2019/944) requires Member States to ensure that customers with smart meters have the option of choosing a dynamic price contract from their supplier. Italy implemented this in its national law (Legislative Decree 210/2021) and through ARERA’s regulations. ARERA (Autorità di Regolazione per Energia Reti e Ambiente) has issued rules to facilitate dynamic offers and protect consumers. From 2024 onward, all major electricity suppliers in Italy (typically those with more than 200,000 customers) are expected to make at least one dynamic pricing offer available to consumers. The regulator has worked on standardizing pre-contractual information so that if you sign up for a dynamic tariff, the supplier must clearly explain how the price is determined (e.g. “indexed to hourly PUN”), the need for an appropriate meter, and how the bill may vary. ARERA launched consultations in 2022–2023 to increase transparency of these contracts. The aim is to ensure customers are aware of the risks and benefits: while dynamic tariffs can yield savings, especially when wholesale prices are stable or falling, they also expose consumers to price volatility. Thus, suppliers must inform customers about potential cost swings and offer tools (like apps or alerts) to track daily prices.

Legally, there is no regulated cap specific to dynamic tariffs – they are governed by market prices – but general consumer protection laws (for example, the right to switch suppliers with no exit fees for domestic clients, as guaranteed in Italy) apply. ARERA’s oversight ensures that even in dynamic contracts, billing is accurate and based on actual metered data. Additionally, Italy’s offer comparison website (Portale Offerte), run by ARERA, includes filters for dynamic price offers so consumers can compare them easily. Starting in 2025, with the new zonal pricing regime, ARERA and the government will monitor how dynamic tariffs perform and whether they contribute to demand-side response (shifting consumption to off-peak times) as envisioned.

In summary, dynamic tariffs in Italy function as real-time pricing options tied to IPEX’s outcomes. They are a relatively new addition to the retail market toolbox, backed by EU directives and implemented through ARERA’s regulations for the free market. These contracts harness Italy’s advanced metering infrastructure and give consumers an active role in responding to price signals – effectively bringing the Italian end-user closer to the wholesale market. As of 2025, dynamic tariffs remain optional, and consumers can choose between fixed, traditional time-of-use, or dynamic rates according to their preference and risk tolerance.

Major Electricity Providers Offering Dynamic Pricing

By 2025, virtually all major electricity suppliers in Italy offer some form of dynamic or indexed pricing plan. Below is a list of prominent providers and examples of their dynamic tariff offerings (typically indexed to the PUN or wholesale price):

• Enel Energia: Enel Flex Luce (and related plans like Flex Web Luce) – A dynamic pricing offer from Italy’s largest supplier. These plans charge the hourly wholesale price (PUN) plus a small markup (around €0.022 per kWh). For example, Enel Energia’s Flex offer in 2025 was advertised as “PUN + €0.02226/kWh” with a fixed monthly fee. It is often biorario (two-rate) or fully hourly, meaning the price follows wholesale market fluctuations, allowing customers to benefit from lower prices at night and weekend. Enel’s dynamic contracts typically require e-billing and automatic payments, and they emphasize the ability to use more power when it’s cheapest (Enel provides an app to monitor hourly prices). These offers make Enel’s retail margin transparent and lean (just a couple of cents on top of wholesale). Enel Energia also guarantees 100% renewable source energy in many of its contracts, including dynamic ones.

• Plenitude (Eni Gas e Luce): Trend Casa Luce – Plenitude (the retail arm of ENI) offers this indexed electricity plan where the energy cost is tied to the PUN. A representative pricing is PUN + €0.022/kWh markup. Plenitude’s Trend Casa (or similar named offers) usually come with a fixed monthly charge and a variable energy rate reflecting wholesale trends. As a major operator, Eni/Plenitude must offer at least one dynamic option; it markets these to savvy consumers who want prices aligned to the market. The contract terms outline that if the wholesale price changes, the consumer price changes proportionally, with the small fixed spread (for example 2.2 cents) covering Plenitude’s costs.

• Edison Energia: Edison Dynamic Luce – Edison (one of Italy’s largest electricity companies, part of the EDF group) has a product literally named “Dynamic”. The Edison Dynamic Luce offer indexes the price to the wholesale market with a very modest spread. In recent offers, the pricing was PUN + €0.0240/kWh for the energy component. Edison Dynamic is often a time-of-use formula (biorario) where the rate follows the PUN in peak and off-peak hours. Edison emphasizes that the more you can shift consumption to hours of lower PUN, the more you save – “più controlli i tuoi consumi più ti conviene”. They also have given promotions such as a bonus on the first bills or discounts on their fixed charges to encourage new signups.

• Sorgenia: Next Energy Sunlight – Sorgenia (a prominent renewable-oriented energy retailer) offers Next Energy Sunlight as a 100% green energy plan indexed to market prices. It features pricing at PUN + €0.008/kWh (only 0.8 cents above wholesale). This extremely tight spread makes it one of the most competitive dynamic tariffs. Sorgenia likely uses digital tools (its online portal and app) to keep customers informed of prices. The plan name “Sunlight” hints that it encourages use when solar is abundant (daytime) and overall uses renewable sources. As a fully digital offer, it requires online billing and has no physical mail. Sorgenia’s dynamic tariff is attractive to tech-savvy users, with the company often advertising potential savings vs the regulated tariff if market prices stay low.

• Engie Italia: Energia Pura Casa “VedoChiaro” – Engie (the Italian branch of the French multinational) has a dynamic tariff which in recent listings was PUN + €0.02/kWh. The offer’s name “VedoChiaro” implies transparency – the customer “sees clearly” the wholesale price component. Engie often bundles services for those who opt in (for example, a discount on an EV charging device or green energy certification). The dynamic pricing lets customers with perhaps an electric vehicle or heat pump schedule their usage when the PUN is cheap. Engie’s plan is typically monorario (single rate indexed) with that 2 euro-cent markup and a fixed monthly cost. Engie also provides an all-fixed option called “PuntoFisso,” but VedoChiaro is its answer for dynamic pricing demand.

• Iren Mercato: Iren 10x3 Variabile Luce – Iren, a multi-utility serving northern Italy (Turin, Genoa, etc.), markets a variable offer that passes through wholesale prices. The naming “10x3” refers to a bonus scheme, but the rate itself is PUN + €0.055/kWh as the energy price. While the markup (5.5 cents) is higher than some competitors, Iren sometimes includes other benefits (like a welcome bonus of €30 on the first bill or green energy guarantees). The contract is indicizzato, so customers pay based on PUN; Iren likely sets this higher spread to cover renewable certificate costs and the bonus payout. Still, it is a dynamic contract where users can leverage low market prices. Iren also offers fixed-price options, but this Variabile plan is the one aligned with hourly market trends.

• A2A Energia: A2A Smart Casa+ – A2A (utility for Milan, Brescia and other areas) provides indexed offers such as Smart Casa Plus, where energy is priced at PUN + ~€0.029/kWh and a fixed fee. A2A’s marketing often highlights “pay electricity at wholesale price, just like we do”. The Smart Casa plan usually comes with an assistenza casa package (some home services or insurance bundled) and requires direct debit. A2A also has PLACET Variabile offers (regulated-format contracts) which are PUN-indexed with a fixed spread determined by ARERA rules. For instance, the A2A PLACET Variabile for domestic users might be PUN + 0.04 €/kWh with a standard fixed charge. All these give consumers exposure to the wholesale price.

• Other Providers: Many other suppliers offer similar dynamic pricing options. E.ON Energia (Italian branch of E.ON) has had “ValoreMercato” type offers where electricity is at wholesale cost (PUN) plus a small contribution. Hera Comm (utility in Emilia-Romagna) and Acea Energia (Rome’s utility) have also introduced indexed plans or at least two-tier time-of-use tariffs reflecting market costs. Newer entrants and online-only energy companies, such as Wekiwi and NeN, also have dynamic or semi-dynamic plans. For example, Wekiwi’s Standard offer is PUN + €0.07/kWh (with an interesting prepaid “carica” system for billing), and NeN (an A2A-backed startup) ran promotions like “NeN Energia” with fixed monthly fees and underlying wholesale index (though NeN often fixes the rate for a year upfront). Even Octopus Energy (a UK-based supplier that entered the Italian market) was offering an indexed option alongside fixed tariffs – one Octopus Italy offer in 2025 was a 12-month fixed, but they are known for dynamic pricing technology in other countries and could introduce it in Italy as well.

All these examples show that indexed offers have become quite common in the Italian retail market by 2025. They often include a tagline about “energy at wholesale price” (“prezzo all’ingrosso”) to attract consumers. The competition among suppliers has driven the additional per-kWh fees down – as seen, some charge as little as 0.8–2 cents on top of the PUN. Typically, the major utilities (Enel, Eni/Plenitude, Edison, A2A, Hera, Iren, Acea, Sorgenia, Engie, E.ON) each have at least one dynamic pricing plan in their lineup, alongside fixed-rate plans. This was spurred not only by market competition but also by regulatory nudges: Italy’s transposition of EU rules essentially mandates big suppliers to offer dynamic contracts. Consumers can find and compare these offers on ARERA’s Portale Offerte by filtering for “prezzo variabile indice PUN”.

It’s worth noting that dynamic tariffs require an active approach from consumers: one must be comfortable with fluctuating bills and ideally adjust usage to maximize savings. To help, many providers supply tools like mobile apps showing next-day hourly prices or gadgets that turn on appliances when electricity is cheapest. As Italy continues integrating renewables, dynamic pricing is expected to play a growing role in balancing the grid by incentivizing demand response. In 2025, we are already seeing the early impacts of this: households on these plans tend to consume more electricity during sunny midday hours (when solar generation is high and prices can dip), and reduce consumption in the evening peak, contributing to a more stable and efficient electricity system.

Peak and Off-Peak Hours

Italy South 2024 – Average Hourly Wholesale Electricity Price (GME)