Italy is set for a rapid expansion in renewable energy, with total generation capacity projected to reach 223 GW by 2040, more than half of which will come from solar power, according to a new report from Aurora Energy Research.

However, Aurora warns that the country’s power grid is struggling to keep pace with this growth, creating a growing risk for renewable investors. Transmission bottlenecks are expected to sharply increase energy curtailment, with losses forecast to rise to 2 TWh by 2030 and 4.4 TWh by 2035.

“In 2024, 338 GWh of renewable energy was curtailed in the Italian power system. Despite upcoming flexibility investments and TSO-planned grid upgrades, our forecasting model—which replicates the Italian grid with TSO-level accuracy—indicates that curtailment will continue to rise, increasing sixfold by 2030,” said Magdalena Cerreto, Lead Expert at Aurora.

Aurora highlights that curtailment risk is highly localized, driven by bottlenecks that vary even within the same region. For example, by 2060, the report projects that over 75% of solar growth in Southern Italy may be concentrated in Foggia, while more than half of Sicilian wind expansion will pass through critical nodes around Trapani, creating localized oversupply that the network cannot absorb. In some areas, renewable plants could lose up to 10% of annual revenues if curtailed energy is not compensated.

The problem is partly structural: roughly half of Italy’s electricity demand is concentrated in the North, while most renewable generation is built in the South, leading to nation-wide imbalances. Local congestion further amplifies curtailment risks, making grid limitations a central consideration for investors.

“While assessing curtailment risk is complex, it is rapidly becoming a critical factor in renewable energy investment decisions,” Cerreto added.

The report concludes that grid upgrades and flexibility measures are crucial for Italy to achieve its renewable energy targets, particularly in Southern regions where the risk of curtailment is highest. Investors and policymakers alike will need to address these network constraints to ensure that Italy’s renewable ambitions are not undermined by its own transmission system.