The Italian supply chain for renewable and smart energy towards 2030
February 8, 2023
The energy transition, an industrial opportunity for Italy.
The increase of renewable generation capacity needed to meet the EU decarbonization and energy independence 2030 targets together with the further development of the Italian supply chain can bring economic benefits of up to 361 billion € and create up to 540.000 new jobs.
Italy already relies on a valuable national supply chain of successful businesses operating in this sector, with significant growth potential that can be unlocked taking advantage of the opportunities of the transition and leveraging on the innovation potential of Italian areas of technology excellence.
To unlock this potential and achieve the maximum benefits from the investments to be deployed in the next 7 years, Italy must rapidly implement a clear, concrete national strategy aimed at boosting the installation of additional renewable generation power and at creating the conditions for the further development of an even more competitive industrial capacity.
These are the principal conclusions of the study "The 2030 Plan for renewable and smart energy: benefits for the Italian supply chain" carried out by Enel Foundation in collaboration with Elettricità Futura and Althesys presented in an event in Rome on February 8, 2023, organised by Elettricità Futura and Enel Foundation.
The National Recovery and Resilience Plan and the European 2030 targets set ambitious objectives and provide substantial resources for the acceleration in decarbonisation by means of the development of renewables, increased end-use efficiency and the electrification of consumption in areas such as heating and mobility, previously implemented using fossil fuels. These challenges go hand in hand with the need to ensure a robust and lasting recovery, economic growth, and a rapid increase in energy independence.
The most effective tools to tackle the ongoing energy crisis are a further acceleration in the energy transition, the growth of renewable electric power and the electrification of consumption. The energy transition can bring significant environmental benefits, but it also has positive effects on the country’s renewable and smart energy technology chain. In addition, its impact on Italy’s industrial sector and its ability to compete internationally can be positively assessed.
A limited national industrial capacity in certain basic renewable technologies (such as photovoltaic modules and wind turbines) may reduce the economic benefits of the energy transition for Italy. However, the country has many operators in fields including componentry, O&M services, engineering, EPC, smart energy solutions and energy efficiency, with many internationally competitive examples of excellence and innovation. The transformation of the electricity system has also influenced the electrical technology and components industry, bringing certain products, such as photovoltaic panels, to virtually commodity status, and it has opened up market segments for innovative and quality products and services, with new prospects for the national manufacturing infrastructure. Examples include components for home automation systems, compact and easy to install recharging stations for electric vehicles, innovative photovoltaic modules, and components for wind turbines.
In this context, the Italian smart energy technology supply chain can benefit from the notable development opportunities offered by the energy transition. In several segments, Italian companies possess skills, expertise and industrial capabilities that make them competitive in the international arena. What is needed, however, is a systemic vision, a national industrial policy that enhances Italy’s intrinsic talent and utilises all the opportunities for economic and employment development.
Towards 2030: Italy’s renewable and smart energy technology supply chain
This study is intended as a contribution to this strategic vision, by providing an analysis of the renewable and smart energy technology supply chain in Italy, assessing its potential and prospects in the light of EU 2030 objectives and proposing policies to foster its growth.
Considering different development scenarios, the study assesses the economic and occupational benefits connected to the strengthening of the supply chain itself and to the deployment of the renewable generation capacity needed to achieve the 2030 decarbonization objectives.
The study estimates that at least 790 companies attributable to the renewable and smart energy supply chain are in operations in Italy today. Out of these, almost 400 are specialized on this sector. Overall, the value of the production of these companies accounts for 12.4 billion € accruing for 0,7% of Italian GDP, offering a good presence on network technologies, components for power generation, geothermal, heat pumps, but still a limited one on basic elements of the energy transition like PV modules, wind turbines and batteries.
The study is divided into four parts:
1. The current framework, and developments in the supply chain. This first section examines the current state and future development of the renewable technology and smart energy industry in Italy, analysing the industrial structure and strategies by means of a detailed review of the companies currently operating in the field.
2. The need for investment in technology up to 2030. This section assesses the need for technology, components and services introduced by the 2030 targets in order to realise the growth potential of Italy’s industrial resources in future energy scenarios.
3. The development potential of Italian industry. In the light of proposed technology investments, this section considers the benefits made possible by reaching 2030 goals, in accordance with the ˝Fit for 55˝ and REPowerEU targets, for supply chain development in the Italian industrial system, in terms of social and economic impact.
4. An Italian strategy for the technology supply chain. Analysing development potential enables the formulation of policy proposals to encourage the growth of the smart energy supply chain in Italy, increasing awareness amongst policy makers, institutions and consumers as regards the opportunities for Italy’s industrial structure and economy resulting from the development of renewables and smart energy.
Scenarios leading up to 2030: matching renewable capacity growth and supply chain expansion can deliver the highest benefits
The most ambitious scenario to 2030 considered in the second part of this study is essential to reduce environmental impact and to endow Italy with a significant and unprecedented energy independence. In the RePowerEU scenario, 85GW of additional renewable generation capacity are needed. To capture the maximum possible benefit from this growth it is necessary to match it with a robust development of the Italian smart energy supply chain.
This twofold strategy – renewable capacity growth and supply chain development – can unlock up to 361 € billion of economic benefits and create up to 540.000 jobs.
Both the renewable expansion and the growth of the supply reach are ambitious yet well within reach. The energy industry is ready to invest to develop the much-needed generation power and the Italian supply chain can flourish leveraging on several areas of excellence and on its potential for innovation.
However, to make this possible, Italy must rapidly implement a clear, concrete and forward-looking national strategy aimed at creating the conditions for both the implementation of the necessary investment and for the development of a competitive industrial capacity. This requires the urgent reform and modernisation of national infrastructure, in terms of digitalisation and bureaucratic streamlining. Also essential is precise, well-calibrated and unequivocal planning for the energy transition that gives the market the certainty that it needs. This is the only way to support the emergence of innovative business initiatives and increase interest in the country for investors, both Italian and international. Electrification, circularity, human resource skills, support for research, technology transfer and entrepreneurship are other fundamental elements in the design of a strategy for the Italian renewable and smart energy technology supply chain.
Conclusion: a new industrial sector for environmental sustainability
In conclusion, what lies ahead is not simply the possibility of encouraging growth of a specific sector or incentivising the development of a few companies, but the possibility of jump-starting a whole new field of industry that will ensure environmental sustainability and energy independence for Italy.
Download the report here.