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Energy transition strategic supply chains

Energy transition strategic supply chains


September 2, 2023

The "Energy transition strategic supply chains: Industrial roadmap for Europe and Italy " Study has just been presented at the Cernobbio Forum held at Villa d'Este (September 1st-3rd). The study analyses the development and strengthening of European and Italian supply chains in the sectors of photovoltaic, batteries and heat pumps as a fundamental factor to achieve energy transition targets, secure strategic autonomy and enhance socio-economic development in Europe and Italy, in the lights of the goals set out by the European Commission through the Net Zero Industry Act (NZIA).


The key findings of the Study, conducted by Enel Foundation and The European House Ambrosetti, in collaboration with Enel, are:

1.     Europe and Italy have set ambitious targets for renewable energy sources’ deployment and electrification of end uses. However, the supply chains for the key decarbonization technologies needed are heavily concentrated outside of the European continent, mainly in China (65% of the total on average). For Europe and Italy, this represents both a risk of energy-technology dependence and an opportunity to develop strategic value chains and thus reap the related socio-economic benefits.

2.     The Study focuses on photovoltaic (PV), batteries and heat pumps (HP), the decarbonization technologies which will have the largest growth by 2030 in the sectors of energy production, distribution, and consumption respectively, and which value chains are either not robustly present (PV, and batteries) or which market is at an early stage of development (HP) in the EU and Italy.

3.     Producing photovoltaics and batteries in EU and Italy is currently more expensive than in China, due to higher investment costs (CAPEX and OPEX), higher lead times, higher cost of energy, lack of specialization (competences and adjacent industries) and integration (raw materials extraction and refining) in the upstream phases.

Despite heat pumps technology is mature and well established, the related market is at an early stage of development, presenting some uncertainties about how growth expectations will turn into actual market demand, and a shortage of specialized installers. These factors tend to slow down the boiler value chain reconversion.

4.     Effective use of available funds, environmentally and socially sustainable production processes, boosting of recycling capacity, R&D and innovation are the main levers that EU and Italy can activate for the development of PV, batteries, and HP local value chains. A transparent, stable, and favourable fiscal and regulatory framework for all these levers at EU and national level is crucial. Exploiting these opportunities and realizing in time the announced projects can allow Italy and EU to cover >50% of 2030 needs for PV, ~90% for batteries and >60% for HP, reaching the NZIA targets.

5.     The achievement of integrated and coordinated European and Italian value chains requires the implementation of policy actions aimed at supporting competitiveness. On the supply side by: incentivizing CAPEX, OPEX, and value chain conversion; establishing nimble permitting procedures; creating green finance mechanisms. On the demand side, by: reducing the price differential of Italian and EU products vs. Chinese ones by distributing (for example with a fiscal mechanism) the strategic value generated by the increased reliance on a local supply chain. An enhanced governance to support coordination and integration of EU and national value chains is needed.


To this end, the Study identified 11 policy proposals (7 at the Italian level and 4 at the European one).

At the Italian level it is suggested to:

1.     Applying streamlined and predictable permitting procedures at all levels of the value chain, giving priority status at national level to ensure rapid administrative processing and strengthening (skills and headcount) the offices in charge of authorization procedures.

2.     Favoring the realization photovoltaic and batteries gigafactories by providing competitive incentives both in terms of CAPEX and OPEX for the entire value chains, to reduce the competitiveness gap between Europe and China and proving additional resources that can cover 100% of the funding gap.

3.     Promoting decarbonization through efficient electric technologies such as heat pumps, by putting in place guaranteed contracts for the installation of heat pumps and targeted incentives for building construction and renovation

4.     Creating a system of incentives to promote the conversion of boiler value chain.

5.     Implementing a clear strategy to ensure critical raw materials supply, facilitating agreements with supplier countries with which good economic, commercial and diplomatic relations are already in place, and, in the medium-long term, setting up a recycling capacity adequate for the amount of end-of-life key decarbonization-related industrial value chains’ components that will be present in Italy and in the EU in the coming years.

6.     Creating dedicated green finance mechanisms (e.g., SACE green guarantees) – to develop key decarbonization-related industrial value chains – that provide funds also with premium mechanisms based on non-price criteria, facilitating access for national firms that follow ESG standards in designing and manufacturing components.

7.     Promoting upskilling and reskilling activities, both quantitatively and qualitatively for example by creating specialization courses with professional institutes, using tax credits to support investments in training activities and the acquisition of certifications, tax breaks for new hires, etc.


At the European level it is suggested to:

1.     Favoring the distribution to companies and citizens of the strategic value generated by the development of local supply chains, defining financial mechanisms, such as, for example, VAT exemption on technologies produced in Europe, that would make domestic products cheaper precisely because of the benefits they generate.

2.     Fostering greater cooperation among EU Member States on R&D and industrial innovation, to consolidate a coordinated approach in these areas and promote higher competitiveness of European industries. In addition, it is essential, on the one hand, to invest more in existing and more widespread technologies (as in the case of lithium batteries and LFP batteries) and, on the other hand, to launch pilot projects on the most disruptive technologies (as, for example, it is the case with sodium batteries).

3.     Providing specific financial tools to ensure that all the clean technology products (e.g. photovoltaic, batteries and heat pumps) installed and imported in the EU are designed, manufactured and delivered following binding ESG criteria.

4.     Establishing a common frame for the governance by creating mechanisms aimed at guaranteeing coordination and integration in the realization and implementation of European and Member States policy actions to develop European key decarbonization-related industrial value chains.



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Executive summary - ita

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Complete report

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Conceptual map

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Conceptual map - ita

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