Global Power Transmission Report

The Italian power system has a sole transmission operator, Terna, managing an extensive network across voltage levels of 150 kV, 220 kV, and 380 kV. Terna’s extensive infrastructure is organised and maintained through six key transmission departments (North-West, North, North- East, Centre-North, Centre, South) and two transmission districts (Sicily, Sardinia). There is over 30GW of power exchange capacity between the various power market zones. A rapid change in the power system profile due to renewable energy integration and the overall demand is making network expansion an important area of focus.

The long-term trend in the Italian transmission capacity points to a near-stagnant position. Between 2018 and 2023, the total transmission line length grew at a compound annual growth rate (CAGR) of just 0.2%. The emphasis on grid expansion is not yet reflected in the trend. By the end of 2023, about 230 km of line length was added, which is similar to the increment achieved in 2019. With delayed capacity addition, the requirements may just keep mounting. There is, for instance, a rising need to connect the northern and southern regions through long-distance transmission links – most of the renewable power project pipeline is concentrated in the southern region, whereas the demand load is in the northern part.

Cross-border trade is a key segment of the network. Presently, the power exchange involves about 30 interconnector lines with seven countries (Terna, 2024). Several of the existing links are in stages of capacity augmentation as Italy must comply with EU guidelines of maintaining interconnection capacity at 15% of the total generation capacity. Some of the country’s interconnector links are also valuable in the goals of an integrated European energy market. An example in point is the planned link with Tunisia (Terna, 2024) which can position Italy as an energy hub of the Mediterranean.

A significant source of grid support has been hydropower generation, which has risen in recent years due to better rainfall and resulting reservoir capacity. However, its uncertain contribution, as observed during the drought of 2022, has been a dampener. Instead, pumped hydropower storage plants may play a bigger role. In 2023, about 100MW of pumped hydropower capacity was added after several years of stagnancy in this segment (IRENA, 2024). The grid operator has been separately engaged in the grid-scale storage capacity auction process to secure flexible generation resources.

The need for grid-supportive, flexible resources also drives gas-based power in the system. Other reasons include resource availability and the strong gas infrastructure. Also, with the phaseout of coal-based power (expected within 2025), gas presents a better replacement option in terms of emission profile. The continued role of gas-based power may limit the scope of renewable energy. The recent approvals for four new gas-based power plants worth 3.4GW suggest that the reliance on natural gas may not subside significantly in the near to medium- term (Reuters, 2024).

Under its 2024-2028 Industrial Plan, Terna has allocated a total capital expenditure of €16.5 billion over the next five years to enhance and expand Italy’s transmission grid, including cross-border interconnection capacity. This plan emphasizes a transition towards a more decentralized grid to accommodate the increasing volumes of intermittent renewable energy from distributed sources (Enerdata, 2024).

Despite a slightly challenging environment, Terna has made notable progress in aligning with the Industrial Plan. In the first quarter of 2024, Terna’s capital expenditure reached €482.7 million, a substantial 53.3% increase compared to the same period in 2023. Throughout the first nine months of 2024, Terna continued advancing major projects to improve the efficiency of high and very high voltage grids, alongside ongoing renewal efforts for overhead lines and substation equipment (Terna, 2024).

Climate change is increasingly shaping the design of power distribution grids, particularly in Italy, where record-breaking heatwaves in 2024 have highlighted the severity of shifting weather patterns (Montel News, 2024). These climatic changes are also expected to impact the power transmission sector, emphasizing the need for urgent investments to manage the rising integration of renewable energy sources and enhance resilience against extreme weather events.

Lengthy authorization processes present a significant barrier to advancing grid development projects. In addition to streamlining these procedures, achieving renewable energy targets requires an accelerated approach to finalizing contractual mechanisms that ensure timely construction and lower development costs. To address these challenges, Terna intends to strengthen its collaboration with the administrative bodies responsible for renewable energy system authorizations, aiming to expedite approvals and support project implementation (Terna, 2023).

Terna is receiving public funding from the National Recovery and Resilience Plan and RepowerEU to improve the safety and resilience of Italy’s National Transmission Grid. This funding supports efforts to reinforce 1,500 km of transmission lines against extreme weather and initiate grid digitization for enhanced operational security and reliability. Additionally, Terna is working closely with European counterparts to advance shared decarbonization objectives across the region (Terna, 2024).

Italy’s energy transition increasingly depends on building efficient, digitized grids to manage the technical and operational challenges it brings. The transmission network faces rising congestion as renewable energy sources expand. Therefore, targeted investments in transmission infrastructure are crucial to support the changing energy mix and maintain grid reliability.