The Italian data centre market is undergoing a period of accelerated expansion, and the renewable energy sector is turning its attention to this highly electro-intensive industry. In just three years, the country has gone from being a marginal player to becoming a magnet for international investment, with the aim of consolidating its position as a strategic hub within the European digital ecosystem.

Currently, installed data centre capacity in Italy is around 300 megawatts, but projections indicate sustained annual growth of 30% for at least the next five years. This expansion, driven by an active pipeline of projects under development and recently announced, generates strong expectations for the renewable energy sector and reinforces the urgency of accelerating the incorporation of clean energy sources to ensure growth aligned with decarbonization goals.

“Italy will likely reach between 1 and 1.5 gigawatts within five to seven years. We expect strong demand and extremely strong growth, so the challenges surrounding energy consumption will multiply,” estimates Luca Venturelli, co-founder of the Italian Data Center Association and founder of Grezya, a consulting firm specializing in the sector in an interview with Strategic Energy Europe.

Renewable demand from these installations is growing not only locally but also globally, putting pressure on the energy system, especially with regard to clean sources. Venturelli estimates that 80% of the energy consumed by these centers in Italy comes from renewables.

According to a report by the International Energy Agency (IEA), in 2024 the data centre sector contributed significantly to the increase in global electricity consumption, which grew by 230 TWh compared to the previous year, driven by the rise of these centers, the increase in cooling due to heat waves, and the electrification of transport. Installed capacity from these installations grew globally by 20%, or 15 GW, mainly in the United States and China, according to the IEA.

Strategies to Ensure Renewable Supply

Data centre operators are adopting solutions that allow them to meet sustainability goals. Leading companies, such as Digital Realty and Equinix, already operate with 100% renewable energy across Europe, according to Venturelli. However, not all have the same level of progress.
The main mechanism adopted in Italy is PPAs (Power Purchase Agreements), due to their flexibility and availability. “It’s the preferred way to access renewables,” says Venturelli.

Data4 recently signed a 10-year PPA with Edision Energia for 500 GWh. This is a 148 MW solar energy park, located in Lazio, in the province of Viterbo. The contract will cover 10% of its energy consumption in Italy.

Meanwhile, Equinix signed a ten-year agreement with Neoen for 53 MW of energy from seven solar projects in northern Italy. The company will use the energy to supply 100 percent of the electricity demand of its IBX data centres in the country.

On the other hand, the representative of the Italian association points out that despite the preference for signing power purchase and sale agreements, some operators opt for direct connections to renewable sources, provided the location allows it.

A notable case is that of Aruba, which installed a data centre on the outskirts of Bergamo, repurposing a textile plant that included a 10 MW hydroelectric plant. While this capacity does not cover the entire demand, it represents a substantial portion, which is complemented by PPAs.

The problem, according to Venturelli, is that in Italy, regulatory hurdles and administrative slowness remain the main obstacles, in addition to high energy prices. “Unclear legislation and slow authorization processes prevent many projects from coming online as planned,” he warns.

Energy Infrastructure Under Pressure

The Italian high-voltage grid operator, Terna, is facing a critical situation: the number of data centre connection requests has increased 24-fold since 2021, accumulating a total of 30 GW, according to the operator’s own data. The magnitude of this demand represents a structural challenge for a system that has only one high-voltage grid operator, unlike other countries such as Germany, which has four Transmission System Operators (TSOs).

“Terna is doing a great job, but it’s overloaded. All requests go through them,” Venturelli explains. “Sometimes the timeframes are extended simply because they need to find land for new substations,” he explains. Therefore, some companies are starting to offer their own land to speed up connection times.

Furthermore, the implementation of new regulations could unblock part of this bottleneck. Bill 1928, currently under discussion in the Italian Parliament, seeks to create a specific framework for the deployment of data centres, differentiating them from other infrastructure such as power plants. This would streamline both the permitting process and energy and territorial planning.

Technological Innovation to Decarbonize

Faced with exponential growth in electricity demand, other technologies are gaining prominence. “There’s a lot of innovation coming in the data centre sector, which will drive the energy sector. More innovation, research, and therefore, greener alternatives. I believe that, when there’s demand, innovation can generate the solutions the market needs,” Venturelli analyzes.

“Given that we’re looking for sustainable solutions, I’m confident and optimistic about the future: demand will help us identify new sustainable energy sources to ensure the continuity of data centres. I think this will be the direction we’re going,” he adds.

Among them, green hydrogen appears to be a promising option, although it still has challenges to overcome. The specialist points out that tests are currently being conducted to power generators with hydrogen, but that the main problem is the supply chain.

“We need a high demand for hydrogen to ensure the development of a supply chain and infrastructure that allow data centres to contribute and be part of this demand,” he warns.

In this regard, he states: “I’m not sure data centres alone can justify investing in a hydrogen pipeline, but if the technology proves viable, the EU could incentivize hydrogen generators over the next decade. The sector’s uptake would help build the demand needed to make the infrastructure viable.”

In parallel, other technologies such as fuel cells or hydrotreated vegetable oil (HVO) generators are joining the range. “Digital Realty, for example, already operates with HVO, which reduces CO₂ emissions by 90% and NOx by 35%, although it has not yet achieved complete neutrality,” notes the Grezya representative.

On the other hand, energy storage also plays a relevant role. “Batteries are used as a first stage of continuity, but they cannot yet replace generators due to the autonomy they offer,” clarifies Venturelli. One of the challenges of this technology is the space it takes up, as the more space devoted to batteries, the less usable surface area there is to offer customers, which reduces profitability.

Europe’s Role and the Future of the Sector

The European Union is promoting initiatives such as the Climate Neutral Data Centre Pact and common regulations through the European Data Centre Association, of which Italy is a member.

However, significant regulatory fragmentation still persists. “Today, there are different laws in different countries. For foreign investors, this is confusing and creates uncertainty,” warns Luca Venturelli, who emphasizes that one of the main contributions Brussels can make is to facilitate a uniform legal framework that allows for predictable investment planning throughout the region.

When asked which countries can serve as examples in terms of decarbonization and the use of renewable energy in the sector, he points out that Spain stands out for having achieved an “incredible” penetration of renewables, which has allowed it to have a much broader energy spectrum than Italy. “I would suggest that Italy look at what Spain has done, because it has provided many more options in terms of energy,” he emphasizes.

The Nordic countries are also notable, where the combination of favorable climates and adapted fiscal frameworks has facilitated the intensive use of clean energy sources in data centres. Austria and Switzerland are other leading examples, with projects such as those developed by Digital Realty, under the leadership of Lex Coors.

Venturelli is optimistic. “The growth of data centres can drive innovation in the energy sector,” he asserts. “The demand for sustainability will lead the market to identify new energy sources and cleaner solutions.”