Energy, long-term contracts increase in Italy

Power purchase agreements (PPAs) are on the rise in Italy: long-term power supply contracts with agreed prices outside the power exchange. "2025 has proven to be a particular year for PPAs," explains David Battista, analyst in charge of renewable energy and electrochemical storage at Pexapark, a Switzerland-based clean energy data analytics platform. "In the European markets that we consider mature, such as Germany, the UK, and the Netherlands, there has been a sharp reduction in contracted volumes, as much as 70-80%. The trend we saw at the end of last year has consolidated. There are, however, two exceptions: Spain and Italy'.

"Spain," Battista continues, "due to issues of scale: the Ppa market was already stabilised, the more than 3 GW contracted this year between January and September are in line with the numbers for 2024. Italy, on the other hand, recorded a significant increase in the number of contracts announced, with 723 MW in Q1 for 14 Ppa, 465 in Q2 for 6 agreements and 369 MW in Q3 for 10. The total is 1.55 GW in the first nine months of the year, with 30 contracts, compared to 1.05 GW for the whole of 2024, with 39 contracts. The size has also increased and one of the largest PPAs ever, of 420 MW, was signed in Italy this year, announced by Enfinity Global with a US technology company. It looks like a real turnaround, despite the slowdown between quarters'.

Italy is therefore reaching the market levels of other European countries. 'Among the reasons for this growth, on the demand side we see that in Italy we have energy prices that are among the highest in Europe, and therefore the Italian business fabric needs to find solutions to reduce its exposure to wholesale market risk: this creates a strong demand,' underlines Battista, who adds: 'There is also the push from the data centre sector in Italy, the only one with positive demand at this time in Europe. On the supply side, the unblocking of permitting has brought new capacity into the market, and with more supply comes lower prices. Fer X also acts in this direction'.

'These are all dynamics,' the analyst continues, 'that are bringing supply and demand in PPPs closer together in terms of price. According to the Pexapark model, the fair value in September was around EUR 58 per MWh for solar. I also expect demand for Ppa to increase due to a parallel effect to Energy Release, given the high demand for capacity for this measure, which is higher than what is available: what has not come in is likely to be covered with Ppa.

Pexapark's latest report on Italy, covering the third quarter of 2025, notes that sentiment among traders remains cautious, with the expectation, however, that activity will pick up once the results of Fer X, the public support mechanism for renewables whose ranking lists of winning projects will be published by 11 December, are announced. It is expected that those that will not be included will turn to the PPA market. The wait is also on, as Battista pointed out, for the effects of the Energy Release, the mechanism that allows electricity to be advanced at a capped price of 65 euros per MWh to energy-intensive companies for three years, in exchange for a commitment to build plants from renewable energy sources through which it will be paid back over the following 20 years. The operating rules were approved by the Ministry of the Environment on 19 November.