Grid curtailment of renewable generation in Italy reached 802 GWh in 2025, up 132% year-on-year, as the country’s rapid renewable build-out increasingly encounters limitations in the electricity network, according to a new analysis by Aurora Energy Research.
Source: Aurora Energy Research
The increase significantly outpaced the growth in renewable generation, which rose by 12.5% during the year. Aurora points to this divergence as an indication that grid infrastructure is facing increasing pressure from the expansion of intermittent renewable capacity.
The risk is also highly concentrated geographically. In 2025, 78.6% of all solar PV and onshore wind grid curtailment occurred in Italy’s South and Centre South zones, highlighting significant differences in exposure depending on where projects are connected.
Source: Aurora Energy Research
Renewable deployment outpaces grid development
Aurora identifies several structural factors behind the increase, including rapid renewable deployment, particularly solar PV, alongside delayed or uneven grid reinforcements within Italy’s market zones.
Renewable generation is also heavily concentrated in southern areas, which are often located far from the country’s main demand centres and where grid infrastructure can be less able to accommodate additional generation.
Battery storage deployment is expanding, but Aurora notes that BESS capacity is largely concentrated in a limited number of hubs and large-scale assets. As a result, batteries can help address system-wide overgeneration but do not necessarily resolve local network congestion.
This combination is increasing the risk of curtailment at individual connection points where renewable development has progressed faster than the local grid’s ability to absorb and transport electricity.
Projects kilometres apart can face different risks
One of the main conclusions of Aurora’s analysis is that curtailment risk cannot be assessed solely at national, regional or even zonal level.
Grid conditions can vary substantially between individual nodes within the same area, meaning that two renewable projects located only kilometres apart can face very different curtailment levels and long-term revenue outcomes.
Aurora cites Sicily as an example, where intra-zonal curtailment rates can vary by as much as 39 percentage points, depending on the year.
The company argues that this makes the precise grid connection point increasingly relevant when assessing new renewable investments, as provincial or zonal averages may not accurately represent the exposure of an individual project.
Curtailment becomes a financial risk
The impact extends beyond the amount of electricity that renewable plants are unable to deliver to the grid.
Curtailment can affect merchant revenues and capture prices, PPA revenue forecasts, P50 and P90 net generation profiles, portfolio cash flows and expected project returns.
Aurora illustrates the potential impact with a hypothetical 1 MW solar tracking project located at a high-risk Italian node. In its forecast for April 2036, the asset records a 24.5% grid curtailment rate, equivalent to 46.2 MWh of curtailed generation.
At a weighted average curtailment price of €14.3/MWh, this would result in €662 in lost revenue for that month, leaving final revenues at €3,515.
Aurora also warns against applying uniform curtailment assumptions across projects. According to its modelling, using flat assumptions rather than incorporating nodal grid constraints and price dynamics could lead to a 58% difference in estimated revenues in 2030.
PPAs and financing increasingly exposed
Growing congestion is also becoming relevant for PPA negotiations, project valuation and financing.
In PPAs, the allocation of curtailment risk determines whether lost generation is compensated, shared between the parties or fully borne by the generator. Aurora says contract structures also need to consider whether agreed prices adequately reflect the specific risk associated with the project’s grid node.
The issue can also affect financing conditions. Projects located in congested areas may face lower leverage, tighter covenants, higher equity requirements and more extensive sensitivity analysis.
According to Aurora, lenders are increasingly looking for asset-specific curtailment forecasts when evaluating projects, making grid congestion an increasingly important variable in due diligence and investment decisions.
Italy maintains compensation, but uncertainty remains
Italy currently provides compensation for some grid curtailment, although renewable plants must meet specific technical requirements.
Since April 2025, wind and solar installations can receive compensation if they qualify for the “Modulazione Straordinaria” service. Eligible assets must have remote deactivation and monitoring equipment or an approved remote-control system.
Curtailed electricity is compensated according to zonal Day-Ahead market prices, adjusted by a reliability factor based on the asset’s previous response to curtailment instructions.
From December 2026, utility-scale assets connected to medium-voltage stations without remote-control equipment will no longer be eligible for compensation.
Aurora nevertheless notes uncertainty over the longer-term application of the mechanism, which was introduced in 2025 as an emergency measure while Italy’s transmission system operator worked on grid connection reform.
Against this backdrop, the firm identifies site selection, battery co-location, PPA structuring and node-specific modelling as increasingly important considerations for developers and investors seeking to quantify the impact of congestion on renewable project revenues in Italy.
In the Centre South zone alone, 42.4% of Italy’s onshore wind curtailment and 62% of solar curtailment took place during the year. The South, meanwhile, accounted for more than 40% of national onshore wind curtailment.