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The data centre market in Italy is experiencing a paradigm shift, driven by the country's commitment to achieving the climate objectives established by the European Union. In this sense, the National Integrated Energy and Climate Plan (PNIEC 2023) has, in fact, been successful, with wind and solar energy in the spotlight. However, the question of stable energy sources remains as yet, unresolved.
There is no doubt that Southern Italy is destined to play an important role in these changes, with significant plans for the development of renewable plants in the area. This represents a unique opportunity for data centre operators to consider building hyper-specialized facilities here. Whilst it is still the Greater Milan area that currently dominates the Italian market, the South offers a glimpse of promising growth opportunities.
The South will attract those organisations focusing on sustainability.
There are four fundamental factors supporting this. Firstly, brownfield sites are on the South as well; and secondly cities such as Bari, Palermo and Catania are well connected. The third aspect to consider is that the planned development of these renewable plants in the region will provide a reliable source of energy; and finally, Southern Italy boasts several excellent technical universities, capable of supporting the training and growth of talent in the sector.
It is worth considering that the authorization processes and implementation phases could be cumbersome and, understandably, not all operators will be willing to face them. However, for those investors and developers whose focus is on sustainability and the proximity to renewable energy sources, regions such as Puglia and Sicily offer the potential to become the new Milan.
Turning a rescue plan into an opportunity.
Let’s put this into context. Italy is faced with the unique opportunity to transform the area surrounding the ILVA steel plant in Taranto, following the decision by Arcelor Mittal that it no longer considers it economically viable to continue operations so the government is drawing up another rescue plan. One idea could be to use the company's existing power plants in combination with the renewable sources planned for the new data centres instead. The less contaminated areas of ILVA could be used to create a cluster of facilities, similar to certain areas in London or Frankfurt, offering the region greater centrality and a more European dimension.
Getting the (energy) mix right.
It is worth noting that Italy is also adapting its energy mix to achieve the objectives of the European Sustainability Policy, with a 55% reduction in CO2 production by 2030 compared to 1990. The country aims to achieve this result through various measures, including the use of renewable sources for energy production, in line with the 2023 PNIEC update which sets the objective of 65% of energy from electricity consumption obtained from renewable sources.
Italy remains, however, the largest importer of electricity in the EU, with a negative trend in recent years and an increasing dependence confirmed by recent forecasts. The current installed electricity production capacity is approximately 100GW, with a share of installed renewables equal to 43%. A significant drop in production from Italian gas power plants is also expected, with an increase in imports especially from France and Switzerland.
We are therefore faced with a unique opportunity to transform the energy mix and embrace sustainable practices. The South offers opportunities for data centre operators, while the transformation of the ILVA site could make it one of the main European hubs. By embracing renewable energy sources and reducing dependence on imports, Italy will be able to achieve its climate goals and secure a more sustainable future, nevertheless the power accumulation remains a challenge.
Bridging the digital divide.
And that's not all. The transition to renewable energy sources represents an opportunity for Italy to create jobs and stimulate economic growth. The development of plants in the South will require skilled labour and the presence of technical universities in the region will mean that local talent can be trained to meet this demand. The construction of new data centres will also create jobs and attract investment in the region, helping, amongst other things, to bridge the digital divide with the North. As previously mentioned, the majority of data centres are located in the North, leaving the South at a disadvantage in terms of connectivity and access to digital services. By building hyper-specialized data centres throughout the country, Italy can guarantee all regions of the country equal access to digital infrastructures and services.
