In this scenario Italy is unfortunately trailing in Europe with the highest percentage of foreign dependency at 74.8% (unlike France which, through nuclear power as well, can boast the lowest share at 44.8%)1.
While awaiting a clearer definition of the national debate on nuclear energy, the diversification of the energy mix appears central in both raw materials and electricity production sources, with the aim of increasing energy security and reducing current exposure to foreign policies.
In 2024 Italy’s net national electricity production reached 264 TWh, remaining stable compared to 2023. In this regard, production from renewable sources increased by 13.4%2 compared to previous year – also considering higher levels of rainfall – confirming the trend toward decarbonization of the national energy system, which saw the share of renewable energy sources (RES) in total gross production rise from 25,5% in 2010 to 44% in 20233.
However, over the past fifteen years, the various renewable sources in Italy have followed diverse development paths. Among them all, solar power has recorded the most significant growth, increasing from an annual production of 1.9 TWh in 2010 to 30.7 TWh in 2023. In comparison, wind energy and bioenergy have also shown considerable progress, increasing respectively from 9.1 TWh to 23.6 TWh and from 9.4 TWh to 16.0 TWh. Hydroelectric power, historically the main renewable source in our country, has seen additional strengthening of installed capacity, although the actual energy generated has been affected by varying precipitation levels over the years.
In this context, geothermal energy stands out as a unicum, with an infrastructure setup that has not registered significant variations compared to fifteen years ago.
Indeed, unlike in the past, with Italy at the forefront as a leading country with pioneering plants like those in Larderello (Tuscany), today the traditional geothermal sector only has 771 MW of electric power capacity, and 1,317 MW of thermal power capacity installed.
In Italy there are 34 geothermal-electric plants all located in the Tuscany Region and managed by Enel Green Power; these contribute only to 2% of the gross national electricity production, which is residual if compared4 to the other RES (hydroelectric, photovoltaic, and wind, contribute respectively to 5%, 12% and 9% of the country’s electricity production).
Even moving abroad, the situation doesn’t change; geothermal energy meets only 0.8% of the world’s energy needs. Yet, thanks to the high geothermal potential at high temperatures today we are the 8th country in the world and the first in the EU for installed capacity5.
In the European context, there has recently been renewed attention towards the potential contribution of geothermal energy to the race towards decarbonization; this refers, in particular, to the conclusions published by the European Council on December 16th, 2024, emphasizing the need to develop a European action plan on geothermal energy by implementing measures aimed at facilitating investments and promoting a rapid spread of this type of installation.
National targets: bureaucratic burdens and next perspectives
At the national level, the PNIEC foresees 1 GW of additional geothermal capacity by 2030, including traditional geothermal and zero-emission (i.e., with binary cycle technology that allows the utilization of geothermal resources even at lower temperatures).
However, when looking at the FER2, a clear discrepancy emerges compared to the national targets, given that the incentivized quotas foresee just 160 MW, of which 100 MW are dedicated to traditional geothermal and 60 MW to zero-emission geothermal.
Moreover, the current incentive rates of 100 €/MWh for traditional geothermal and 200 €/MWh for zero-emission geothermal appear to be significantly lower than those set by our European “neighbors” (Germany, for example, offers an incentive of 252 €/MWh - +26% compared to the Italian one, France 250 €/MWh - +23% compared to the Italian one, and the United Kingdom 230-263 €/MWh - +25% compared to the Italian one), which also include a mechanism for inflation indexing.
As is well known, geothermal resources are mineral resources and, as such, belong to the inalienable assets of the State or the Regions (depending on whether they are high, medium, or low enthalpy) and, consequently, specific administrative regimes must be followed for their exploitation, which essentially consist of:
- obtaining a positive environmental impact assessment for exploratory purposes;
- obtaining a specific permit for the research of resources for energy purposes (so-called research permit) with a maximum duration of four years, extendable for no more than an additional two years;
- in the event of positive identification of geothermal fluids, obtaining an additional environmental impact assessment geared towards the granting of a concession for the development of geothermal resources, granted for a duration of thirty years;
- in obtaining the single authorization as redefined by the recent Legislative Decree 190/2024 (known as the “Renewables Consolidated Act”).
Such brief list is enough to understand that among the reasons underlying today’s skepticism towards geothermal energy is certainly included the considerable complexity and fragmentation of the permitting sector aimed at the development of this resource.
Indeed, the aforementioned are solely the primary permits to which must be added the ancillary opinions and clearances to be obtained in the context of individual procedures, including the opinions and authorizations from the Superintendence and local authorities which, even at the urging of the so-called “No Committees”, often prove, as widely observed in the photovoltaic and wind sectors, to be obstructive or considerably delay the “green light” for the implementation of the projects at the stake.
In this context, it would firstly needed to reduce the time and bureaucratic burdens on investors by limiting the discretionary power exercised during the granting of concessions in the event of positive results from exploratory drilling authorized with the exploration permit; for example, by streamlining the additional Environmental Impact Assessment process and identifying a single administrative point of contact responsible for the governance and coordination of the entire sector.
Furthermore, in line with the provisions of the recent Renewable Consolidated Text, identifying suitable areas or acceleration zones could be particularly important with the aim of providing interested parties in advance with a mapping of the areas potentially attributable to research activities, with a view to safeguarding the considerable investments related to the drilling activities functional at the identification of geothermal fluids.
In other words, the granting of the research permit should automatically (and reasonably) lead to the issuance of the subsequent concession, providing a parameter of certainty regarding the timing and outcomes of the related proceedings so as not to invalidate the significant investments made by operators already at the research stage.
Economic profiles: a comparative analysis with the other RES
Moving from the regulatory level to the economic side it is also noted how the geothermal source is the more costly compared to the more widespread renewable energies. Indeed, although the cost of geothermal energy (LCOE) is highly dependent on the characteristics of the specific site, it averages around twice that of solar and wind sources (77$/MWh versus 44$/MWh for utility-scale solar and around 33$/MWh for onshore wind)6.
The high cost of geothermal generation is mainly attributed to the initial investment, which alone accounts for 80% of the levelized cost of energy. Additionally, the pre-development phase of the plant is characterized by high risks, due not only to the complexity and duration of the authorization procedures but also to the availability of reliable geological data and the number of test wells required before proceeding with the construction of the plant. This uncertainty leads to a high cost of capital, which significantly reduces the competitiveness of geothermal generation compared to other sources.
In this regard, to support the development of geothermal energy, it is essential to establish, in addition to incentive mechanisms that ensure long-term revenue certainty, measures to mitigate the risks related to the initial phase of project development.
In this direction, several European countries are implementing incentives and de-risking measures to support the development of geothermal projects.
France, for instance, has established a guarantee fund to protect drilling operations of exploratory wells and support developers in case of failure by allocating 195 million euros. Similarly, Spain, in 2023, launched a 120-million-euro financing program for deep well investments in geothermal projects, offering up to 80% reimbursement if the geothermal resource is absent. Inspired by the French model, these tools should provide compensation for geothermal project developers conditioned on the success or failure of drilling the first exploratory well.
Such incentive mechanisms appear more necessary today than ever to support the experimentation of innovative geothermal technologies such as enhanced geothermal systems and closed loop/advanced geothermal systems (EGS and CLGS/AGS7). These technologies, unlike the “traditional approach”, enable the production of clean energy regardless of the presence of natural hydrothermal deposits, paving the way ford their potential universal application in the future.
Despite the significant technical constraints not yet completely overcome and the high costs of new geothermal technologies (LCOE above 230 USD/MWh), the prospects for geothermal energy are promising, also thanks to potential synergies with the ‘oil industry. The application of technologies and expertise developed in the oil sector could indeed allow for a significant reduction in geothermal costs, both traditional and next generation. In this regard, it is estimated that the LCOE could drop to about 50 USD/MWh by 2035 and to about 30 USD/MWh by 2050, making geothermal applications among the most competitive. In this scenario, next-generation geothermal, thanks to its versatility of application, could contribute up to 15% of the world’s electricity production by 20508.
Technological innovations and synergies with the oil industry could therefore provide the opportunity to overcome current economic and technical challenges, making geothermal energy one of the most competitive and versatile sources in the renewable market.
Conclusions
The challenge, however, is not only decarbonization but also addressing issues related to industry and technology. Geothermal energy, as evidenced by the push for investments especially in the United States with Meta and Google leading the way, can indeed be a crucial tool for meeting the significant demands of data centers, thus reconciling digital transition and climate sustainability. Both targets, however, will not materialize without an equally important and complex bureaucratic and political transition through the introduction of appropriate authorization simplifications, incentive policies, and risk mitigation measures that will enable a renewed impetus for a resource that, unfortunately, remains insufficiently explored.
[1] Eurostat 2023 data “Energy imports dependency”, i.e., ratio between net imports and gross available energy understood as the total energy supply for all activities within the eurozone/country considered.
[2] Data sourced from Terna press release dated 16/01/2025: “Terna: in 2024, electricity consumption increased by 2.2%”.
[3] Data sourced from GSE Statistical Report dated 23/01/2025 “Renewable Energy in Italy - year 2023”.
[4] Provisional 2023 data sourced from the “ARERA Annual Report 2024”.
[5] Data sourced from “Renewable Capacity Statistics 2024” by IRENA (International Renewable Energy Association).
[6] Data sourced from “Renewable power generation costs 2023” by IRENA (International Renewable Energy Association)
[7] EGS: “Enhanced/Engineered Geothermal Systems”; CLGS/AGS: “Closed-Loop Geothermal Systems”, also known as “Advanced Geothermal Systems”
[8]Data taken from “The Future of Geothermal Energy” – International Energy Agency (IEA).