Italy has put in place one of its most significant new frameworks for renewable electricity investment, opening the way for up to 37.15 GW of additional renewable capacity under the definitive FER X support mechanism.
The scheme, backed by a €23 billion State-aid framework approved by the European Commission, covers solar PV, onshore wind, hydropower and plants using gas residues from purification processes. It is designed to support technologies whose generation costs are considered close to market competitiveness, while providing greater revenue visibility for developers and investors.
The final decree was signed by Italian Environment and Energy Security Minister Gilberto Pichetto Fratin on 18 June 2026. Following publication and the required approval process, the framework has now entered into force, moving FER X from a transitional arrangement towards a longer-term mechanism operating through the end of 2030.
37.15 GW across multiple renewable technologies
The headline capacity is divided between two access routes.
A total of 27.15 GW will be allocated through competitive procedures for larger projects, while 10 GW is reserved for renewable plants of up to 1 MW that can access the mechanism directly. Competitive procedures will be organised by the Gestore dei Servizi Energetici (GSE).
The competitive capacity is divided as follows:
- 16.5 GW of onshore wind
- 10 GW of solar PV
- 630 MW of hydropower
- 20 MW of gas from purification processes
The allocation makes FER X significant across the Italian renewable market rather than for any single technology. Wind represents the largest individual allocation, while the 10 GW solar quota creates a substantial pipeline for utility-scale PV. Hydropower and smaller renewable projects are also incorporated into the framework, giving the mechanism a broader role in Italy’s generation strategy.
A 20-year two-way CfD
At the centre of FER X is a two-way CfD.
Under the mechanism, the producer receives support when the relevant electricity market price is below the awarded strike price. When the market price rises above the strike price, the producer returns the difference. The contracts have a 20-year duration, providing a long-term revenue framework intended to improve the bankability of new renewable projects.
This is important for project finance. FER X does not simply replace wholesale-market exposure with a fixed subsidy. Instead, it establishes a mechanism for transferring part of the market-price risk between producers and the support system.
For investors and lenders, the key question will therefore be the relationship between the competitively determined strike price, project costs, expected capture prices and the cost of capital.
Competitive auctions will determine the price
Projects above 1 MW will compete in GSE auctions, with separate capacity quotas for each eligible technology.
The definitive decree maintains technology-specific reference prices. The upper exercise price serves as the auction starting point, with developers required to bid below it. Current values are:
- Solar PV: €95/MWh auction ceiling
- Onshore wind: €95/MWh
- Hydropower: €105/MWh
- Gas from purification processes: €100/MWh
The underlying exercise prices are €80/MWh for solar, €85/MWh for wind, €90/MWh for hydropower and €85/MWh for gas from purification processes. Lower exercise-price thresholds are also defined for each technology.
These figures should not be interpreted as guaranteed tariffs. The final award price will be determined through competitive bidding, meaning developers will have to balance the value of long-term revenue certainty against increasingly competitive auction pricing.
That creates a central challenge for the market: how low can developers bid while still delivering projects that are financeable and capable of meeting construction and operational requirements?
The small-project market has a different route
FER X is not limited to utility-scale projects.
The 10 GW direct-access allocation for projects up to 1 MW provides a separate route into the support mechanism. For these projects, prices will be established administratively by ARERA, rather than through the GSE’s competitive auctions. ARERA is required to define the relevant prices within 90 days of the decree entering into force.
This segment is particularly relevant to distributed generation and smaller solar projects, including installations associated with commercial, industrial and agricultural sites.
The two-track structure therefore allows FER X to address both large-scale generation investment and a substantial volume of smaller renewable installations.
From transitional mechanism to long-term framework
FER X does not represent a completely new market mechanism.
The definitive scheme follows the FER X Transitory regime established in December 2024. The transitional framework was intended to provide support while the permanent mechanism was being developed.
The basic architecture has been retained: technology-specific support, competitive procedures for larger plants and two-way CfDs. The definitive framework, however, significantly expands the available capacity and extends the mechanism through 31 December 2030.
The transition is therefore important for developers already holding projects in Italy’s pipeline. The market now has a longer-term framework against which projects can be structured, financed and brought through permitting.
Permitting could determine how much capacity is actually delivered
The headline 37.15 GW should not be confused with 37.15 GW of guaranteed construction.
The critical issue is how much eligible, sufficiently mature project capacity can actually reach the auctions.
For utility-scale projects, developers must satisfy requirements relating to project development, authorisation, grid connection and delivery. The definitive framework also introduces a more demanding position for utility-scale solar: projects above 1 MW are required to have full authorisation for participation, rather than relying solely on a favourable environmental assessment. Industry analysis suggests this could significantly reduce the immediately eligible PV pipeline.
This creates an important distinction between theoretical auction capacity and investable project capacity.
Italy can allocate 10 GW of PV capacity through auctions, for example, but that does not mean 10 GW of fully permitted projects will necessarily be ready to compete when the procedures open.
For developers, therefore, the value of FER X will depend as much on permitting and grid readiness as on the headline support volumes.
Grid capacity becomes the next constraint
The scale of FER X also brings the Italian power system into focus.
Adding tens of gigawatts of renewable generation will require corresponding investment in transmission and distribution infrastructure, grid connections, flexibility and system balancing. The issue is particularly important for solar and wind, whose output is weather-dependent and whose generation profiles can increasingly coincide during periods of high renewable production.
FER X therefore needs to be considered alongside Italy’s wider investment in electricity networks and system flexibility.
For developers, securing a grid connection is already a fundamental component of project development. For the system operator, the challenge is ensuring that new renewable capacity can be integrated without increasing congestion and curtailment faster than the network can accommodate it.
This is where storage, demand-side flexibility, forecasting, balancing markets and improved network management become increasingly relevant to the economics of new renewable projects.
Supply chains are becoming part of the auction equation
FER X also reflects the European shift towards linking renewable deployment with industrial policy.
Italy has been incorporating non-price criteria connected with the EU Net-Zero Industry Act (NZIA) into renewable support procedures. The objective is to strengthen the resilience of clean-technology supply chains alongside the deployment of new generation capacity.
This could have implications for equipment manufacturers and project developers across solar, wind and other eligible technologies.
Developers are increasingly required to consider not only the cost and performance of equipment, but also the origin and resilience of the supply chain when structuring projects for competitive support mechanisms.
For OEMs and technology suppliers, that makes Italy’s renewable procurement programme relevant beyond the country’s generation targets.
The first definitive FER X auctions are now the key milestone
The next stage is operational rather than legislative.
The decree requires MASE to approve, on the basis of a proposal from GSE, the operational rules for access within 60 days of the mechanism entering into force.
Those rules will determine the practical conditions under which developers can participate, including application procedures, documentation, guarantees and other technical requirements.
The market is therefore moving from policy design to execution.
Italian industry sources have reported expectations of the first definitive FER X competitive procedure in the second half of 2026, but GSE’s formal auction calendar should be treated as the definitive reference once published.
A major test for Italy’s renewable investment market
FER X gives Italy a substantial new framework for bringing renewable generation into the market. Its importance lies not only in the 37.15 GW headline, but in the combination of long-term CfDs, competitive price discovery, technology-specific capacity and a framework extending to 2030.
For developers, the opportunity is substantial but increasingly selective. Projects need to be permitted, grid-ready and economically competitive. For investors and lenders, the focus will be on achievable strike prices, construction risk, capture prices and the durability of the revenue framework. For technology suppliers, the programme offers a major pipeline while simultaneously increasing the importance of supply-chain requirements.
The decisive question is now no longer whether Italy has created a mechanism to support new renewable capacity. It has.
The question is how quickly the market can convert 37.15 GW of allocated potential into financeable, permitted and grid-connected projects.
That will determine the real impact of FER X on Italy’s electricity system — and whether the €23bn framework succeeds in turning a large policy commitment into a substantial new wave of renewable investment.
