From Stagnation to Partnership through Energy Communities

Roberto Gambini, Co-Founder - Co-COE of Geological Engineering Network srl.

Introduction

An Italian leader could well echo Deng Xiaoping: The Middle East has oil, China has rare earths, and “Italy has geothermal power”.

From a geological perspective, Italy enjoys an enviable position that places it among the most prospective and favorable countries for the development of geothermal resources. Historically, Italy was the first nation in the world to exploit geothermal energy on an industrial scale and, for many decades, it remained the undisputed global leader in this sector. The country also benefits from a highly qualified supply chain, composed of capable and professional companies and consultants, one of the most skilled operators worldwide, and a number of internationally renowned research institutions. Yet, despite these uniquely favorable conditions, the development of new geothermal capacity has been languishing and continues to struggle to take off.

But what are the causes of this paradox?

Roots of the Paradox

The paradox between Italy’s extraordinary geological endowment and its limited development of new geothermal capacity can be traced to a complex set of interrelated causes.

Regulatory Frame

At the regulatory level, the country suffers from a fragmented and slow permitting process, further complicated by overlapping national, regional, and local competences. The coexistence of different legislative layers, each with its own procedures and requirements, generates redundancies, ambiguities, and in some cases even conflicts of jurisdiction. This creates an unpredictable regulatory environment in which developers are obliged to navigate a complex web of authorizations, environmental impact assessments, and public consultations, often with limited coordination among the responsible authorities. The consequence is that permitting timelines can extend far beyond those of other European countries, sometimes lasting several years before a project reaches the drilling phase. Such uncertainty not only discourages private investment but also undermines the ability of public institutions to plan and implement coherent long-term energy strategies. Moreover, the absence of a streamlined “one-stop-shop” authority for geothermal projects means that developers face higher transaction costs and increased exposure to legal disputes, both of which weaken competitiveness and slow down innovation in the sector.

Social Acceptability

On the social side, opposition from local communities has often represented a decisive barrier to project implementation. Such opposition is frequently rooted in concerns over induced seismicity, potential impacts on groundwater and surface ecosystems, noise, and landscape alteration. In many cases, however, resistance is not solely based on scientific or environmental arguments but rather on broader socio-cultural dynamics, including perceptions of risk, lack of trust in institutions or developers, and the well-known “not-in-my-backyard” (NIMBY) effect. Even when objective environmental impacts are minimal or can be effectively mitigated, communities may mobilize against geothermal projects because they feel excluded from the decision-making process, inadequately informed, or insufficiently compensated for the perceived risks. Social acceptability, therefore, becomes a complex interplay between technical evidence, institutional credibility, and community perceptions. In this respect, transparent communication, early stakeholder engagement, and the development of local benefit-sharing mechanisms (e.g., district heating access, reduced energy tariffs, or community funds) are increasingly recognized as essential strategies to foster a climate of trust and reduce opposition. Without addressing these dimensions, even technically and economically sound projects risk encountering delays, legal disputes, or outright cancellation.

Lack of a Stable Incentive Scheme

From an economic standpoint, the absence of a stable, predictable, and long-term incentive framework has significantly undermined the competitiveness of geothermal energy. Unlike solar photovoltaic and wind power, which in many countries—including Italy—have benefitted from consistent and generous subsidy regimes, geothermal has been subjected to fragmented, short-lived, and often uncertain support mechanisms. This regulatory instability has made it difficult for investors and developers to build robust financial models, as the expected cash flows are exposed to abrupt policy changes and discontinuities in support. The long lead times and high upfront capital requirements typical of geothermal projects exacerbate this vulnerability: without assurance of sustained incentives over the multi-year development horizon, the perceived financial risk increases, discouraging private investment. Moreover, the lack of alignment between policy design and the specific characteristics of geothermal—such as exploration risk, resource uncertainty, and longer payback periods—has further reduced its attractiveness compared to technologies with lower risk profiles and shorter investment cycles. In this sense, the Italian geothermal sector has suffered from a policy gap that has constrained its growth despite its geological and industrial advantages.

Lack of Strategy

The absence of a coherent and coordinated strategic vision at the national level represents one of the most significant barriers to geothermal development in Italy. The country has failed to articulate a long-term plan that integrates geothermal resources into its broader energy and climate policy objectives. This lack of strategy has led to fragmented initiatives, inconsistent regulatory frameworks, and frequent policy reversals, which in turn have discouraged investment and delayed the implementation of projects. Moreover, without a clear roadmap defining priorities, incentives, and responsibilities across governmental institutions, Italy has been unable to capitalize on its leadership potential in the renewable energy transition. The result is a paradoxical situation in which geological advantages coexist with political and institutional inertia, thereby preventing geothermal energy from contributing at the scale required to meet decarbonization targets and enhance national energy security.

The Critical Absence of Competent and Well-Capitalized Operators

The absence of operators possessing both adequate financial resources and robust technical–operational capabilities has constituted a major constraint. In the most prospective areas of Tuscany and Lazio, the licenses awarded following the liberalization of 2011 have failed to generate any concrete development, and no exploration wells have been drilled to date. Although the factors previously discussed have undoubtedly contributed to this outcome, it is equally evident that, in the sole instance where the permitting process was successfully concluded, the licensee—despite having obtained all necessary authorizations—ultimately surrendered the concession to the State without initiating field development.

From Paradox to Partnership: Unlocking Geothermal Potential through Energy Communities

To overcome such a paradox, a major step change is required, whereby the key stakeholders find a way to cooperate and establish a genuine win–win framework. One promising avenue for this transformation could be represented by the model of Energy Communities. These have been strongly promoted by the European Union and implemented in the field of solar technologies. However, they have not yet been adapted to geothermal energy, where tailored regulatory frameworks and specific rules remain to be developed.

An Energy Community can be understood as a formal and commercial joint venture between producers and consumers. The development costs are shared by both parties, ensuring balanced participation. Consumers are not merely external stakeholders but become shareholders, directly benefiting from the economic advantages of the project while also exercising internal oversight and influence over its governance. Producers, on the other hand, gain the ability to plan their investments with greater certainty, unlocking the expected value of geothermal resources.

Public authorities, at both regional and national levels, have a decisive role in enabling such solutions. By introducing appropriate incentives, streamlining and accelerating the permitting process, and ensuring regulatory clarity, they can facilitate the wider deployment of geothermal projects. In doing so, they also advance national decarbonization goals while contributing to a reduction in energy costs.

This model thus represents a true win–win solution, aligning the interests of consumers, producers, and policymakers within a shared pathway toward the energy transition.

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