Utilities Scenario 
Through the Cottarelli Plan, in 2014 the Government showed that there is a clear, substantial surplus of operators in the local public services, entailing major efficiency / rationalization margins as well as growth opportunities for the largest and most efficient operators in the industry.
Irrespective of some perimeter variances, a recent study by Utilitatis confirms the size of the industry (about 1,100 providers) as well as the current rationalization margin. Surveyed companies generate a global turnover of about € 50 billion and employ more than 200,000 direct and indirect resources. In view of the consolidation expected from the gas bids and from channelling water cycle and urban sanitation into provincial ambits, the streamlining is estimated to involve about 800 operators. Assuming an eventual alignment of current underperformers to best practices, a 1.5 billion € overall benefit is estimated.
This excessive fragmentation opens significant room for changes leading to company grouping in all public utility sectors, with benefits coming from the economies of scale, efficiency and improved service quality gained .
The scenario outlined by Snam in its forecasts for gas supply and demand from 2018 to 2035 is based on an assumption of GDP growth expected to reach 0.9% over 2018-2035. In this context, gas demand in Italy will likely decrease by an average of roughly 0.3% per year in between 2018 and 2035, due to energy efficiency investments in the residential sector and to the development of renewable energy that will reduce the use of thermal power plants.
In the gas distribution sector, concessions have expired across the country and tenders are currently being held, called by the Authority ARERA, for reassigning local monopoly concessions. The newly defined areas concerned by the concessions are larger than the previous ones, with the aim of increasing the average size of operators. The process involved in the tenders is thus expected to lead to a reduction in the number of operators, because the most efficient company, that wins the tender, is expected to acquire all activities from the losing companies. This process will thus offer opportunities for growth for the most efficient and largest operators.
From a linear expansion of recent trends in electric intensity, which take into account the impact on the past of recently introduced measures in energy efficiency, Terna has developed two scenarios for future changes in demand:
- “Basic scenario”, which begins with an estimated 0.5% growth in GDP and takes into account the effect of a full implementation of energy efficiency policies, leading electric intensity to be increased by 0.5% in the 2017-2040 period;
- “Development scenario”, which corresponds to a high estimated growth in GDP (+1.3%) and takes into consideration both a different degree of application of energy efficiency policies and a gradual spread of e-mobility, leading electric intensity to be reduced by 2.5% in the 2017-2040 period.
In the period from 2017 to 2040, the development scenario foresees trends in energy demand to reach an average annual increase of +1.1%, corresponding to 412.7 billion kWh (TWh) in 2040.
The basic scenario, obtained through estimates of a more modest electricity demand, expects an average annual growth of +0.5%, with electricity demand coming to 361 billion kWh in 2040.
On 1 January 2022, a complete liberalisation of the electricity sales sector is expected to begin. The market currently consists in 36 million customers, of which 20 million still have protected types of contracts, regulated by ARERA. Doing away with these contracts will require higher competition (currently blocked) and no operator will be able to begin with a dominant market position (above 50%), according to the Antitrust rules. This scenario represents an opportunity for growth for smaller operators, who will be able to compete in acquiring “formerly protected” customers, who will no longer be able to be served by the current incumbent player.
In the environment industry, Italy is still burdened with severe infrastructure shortages against European benchmarks, and the way to recovery is still very uncertain. The downward trend in the use of landfills for municipal waste disposal is ongoing Europe-wide; in the EU-28, the value equals 23.7%. Landfills are instead the main method of disposal in Italy: 25.7% of municipal waste disposed of in 2017 was landfilled, whereas 20.9% was channelled into waste-to-energy.
To reduce the gap that has Italy ranking behind the rest of Europe, the government adopted a number of key measures, aimed at an optimal use of the existing infrastructure system. Article. 35 of L. Decree no. 133/2014, which was converted - through amendments to Law 164/2014 - into the so-called "Unlock Italy" decree, aims to achieve an adequate, integrated system of solid waste management nationwide, as well as to meet all of the waste collection and recycling targets.
It also aims to ensure national security in terms of self-sufficiency and, as a result, to overcome and to prevent further infringement procedures ensuing from failure to implement European industry standards. C urbing waste landfilling is another key target. In this scenario, the use of waste-to-energy as an alternative to landfill disposal ensues from several sanctions imposed to the Italian State by the European Court of Justice. The latest –December 2014 - amounted to 42.8 million euros for every 6 months of non-compliance and was due to a protracted failure to comply with the European directive on authorization, for 198 landfills in the Italian territory.
The critical situation described above has led to a strong rise in prices for waste treatment all across Europe, while in Italy prices have risen by 47% in the last 5 years, with an uninterrupted progression.
As regards urban waste collection and street sweeping services, the Authority ARERA has recently approved the first “national” tariff system, recognising a return on invested capital that is closer to the ones for other services regulated by ARERA. This will level out the differences between the nation’s various localities, and increase the visibility of regulation over the medium term.
The Italian water industry has inherited a very disjointed industrial scenario from the past, with large industrial companies coexisting with small and medium businesses, which are often in economic disruption and therefore unable to meet the necessary investment needs.
Furthermore, the failed coverage of the costs incurred over the years has generated low investment levels. For this reason, the rates in some areas of the country - whose values are among the lowest in Europe - indicate that service quality and stability are relatively poor (e.g. large network losses and low degree of purification).
Comparing the investment expense of other more compliant European countries, if we aim to improve service quality and boost the sector development, a national average investment totalling at least € 5 billion a year is estimated, equalling € 80 per inhabitant.
Transferring tariff accountability into AEEGSI in 2013 was a key turning point towards restoring credibility and perspective in the industry. The results achieved in the first six years are positive.
Concessions for this service in the Emilia-Romagna region are all close to expiry. In this region, tenders have taken place in Ravenna and Cesena (awarded to Hera) and Modena. The others are expected to begin within the next 4 years.
The Authority, ARERA, has approved a revision of tariffs for the Water service, confirming stability in the system, introducing a few changes whose effects are expected to be positive and giving higher visibility to return over the medium term.
may call for a revision of current models, broadly understood (Business models, consumer models, ...)
Technological advances
The evolution of technology will have an increasingly rapid effect on utilities as well, both directly, with the technical solution adopted by companies throughout the sector, and through changes in customers' habits and expectations.
Hera has an Innovation Department since 2014, constantly committed not only to Research and Development but also to bringing into the various business areas the use of the most sophisticated technologies selected from the world's best providers, such as Artificial Intelligence, Machine Learning, and other technological applications to provide ever higher quality services to customers, increase asset resilience, and optimize financial returns. The 2028 plan includes investments in innovation and technology amounting to approximately 1.3 billion euros, or 25% of the total.
Climate and resource scarcity
A growing awareness of the issues created by resource management models used in the previous millennium poses new challenges for utilities, who manage resources that are both scarce and essential for everyday life.
Thanks to a long track record of positive results and investments aimed at enhancing processes and infrastructure to enable the development of circular business models and, consequently, reduce natural resource consumption, Hera aims to further strengthen its leadership by planning to invest 2 billion euros in its 2028 plan, representing 39% of the total planned investments.
Demographic growth
The demographic explosion seen in some areas of the planet will lead to problems involving infrastructures and their ability to serve a large part of the population, providing opportunities, for development to those who prove able to rise to such challenges.
Thanks to the launch of sustainable market offers involving energy from renewable sources and CO2-free green gas, Hera is supporting the development of two important infrastructure projects for energy production in areas with strong demographic pressures. More information here: Hydro Alkumro and Solar Charanka (documents available in Italian only). To reduce emissions in highly populated areas, the Hera Group, in collaboration with Saipem, has developed a CO₂ capture project, the first industrial-scale example of CCS (Carbon Capture and Storage) applied to a facility of this kind in Italy. The project involves capturing carbon dioxide from the chimneys of waste-to-energy plants and storing it in depleted natural gas reservoirs, significantly reducing plant emissions and contributing to the decarbonization of the territories.
Evolving economic balances
The world’s economies now find themselves in a delicate phase of transition, and the balances yet to be created will impact the direction of new flows of capital, from flourishing economies to the most promising ones.
At this stage of transition towards economic models increasingly focused on environmental, social and governance (ESG) dimensions, capital flows will also play a fundamental role as facilitators of the process, rewarding the companies and initiatives that are best able to transfer the created value to all stakeholders. Hera has set itself ambitious targets to create shared value that by 2028 will reach over 1.100 million euro that represents about 66% of total Ebitda.
Rapid urbanisation
The world’s population is becoming increasingly concentrated in urbanised areas, which show a rising need for services tailored to these trends and able to optimise management of the use of infrastructures and information.
The Hera Group's reference territories are also undergoing profound changes that require resilient, state-of-the-art infrastructures to support the transformation of our cities towards evolved smart city models. The business plan to 2028 includes investments of approximately 2.4 billion euros, representing 47% of total investments, aimed at enhancing the resilience of managed assets and activities to address increasingly frequent and intense external events.
involved in the changing models and their new necessities
Customer/Consumers
- Higher attention given to energy efficiency and each product's carbon footprint
- A call for smart, innovative, digitals solutions for one's own daily requirements
- Accustomed to levels of service with increasing qualitative standards
- Promotion of innovative investments in service management
- Regulations supporting a paradigm shift in terms of service sustainability and the use of resources
Companies (Utilities)
- Definition of new business model able to bring together customers' requirements, requests coming for the institutions involved, and industrial needs
- Preparation for a higher degree of competition in each business area
is a universal standard
For Hera, technological and digital transformation along the lines of “Industry 4.0” is an opportunity to reinforce its own sustainable economic model, within a strategy that includes developing cloud, mobile, analytics and big data technologies.
Our goal is to plan new intelligent and “transformative” solutions, not only in the area of energy networks and infrastructures, but also in light of future challenges. This includes introducing new sales support tools, increasing the speed of procedure implementation and becoming able to swiftly adjust approaches to business, thanks to processes that are perfectly integrated among themselves.
Internal digitalization
- Digital workplace
- Community data analytics
- Smart working
- HEUREKA+ and Digi e Lode
- Cybersecurity
Customer digitalization
- Online services
- Applications for tablets and smartphones e-billing
- Whatsapp channel
Business intelligence
- Data management ad AI
- Fiber optic broadband network
- Technological implementations
- Process digitalization
The ongoing innovation and development plan will allow us to have a positive impact on the local areas and communities served, introducing new potential services linked to a circular economy, environmental sustainability and safety.
Given that digital transformation is a process that calls for continuous technological innovation and the enhancement of information system performance, Hera is committed to staying in line with these megatrends. It will thus complete a technological renovation of the entire infrastructure and continue to facilitate the introduction of technologies able to transform the energy model into a more efficient, safe, sustainable and flexible system.
A process that began some years ago
Innovation is one of the Group's five strategic levers (agility, efficiency, growth, innovation, excellence). The model we use is based on widespread innovation: each department is responsible for its own individual innovation initiatives, from the review of processes to the identification of new services, from instruments for improving efficiency to the launch of new operating models.
The main innovation areas within the Hera Group, also in line with its business plan, can be summarised as follows:
- circular economy, aimed at environmental sustainability, the optimisation of materials, and maximising the recovery of waste and scrap;
- customer experience, aimed at understanding the needs and wishes, whether expressed and not, of consumers in order to shape actions to improve their satisfaction level;
- digitalisation and data analytics (Utilities 4.0), with activities linked to implementing new technologies, mainly IT, for the digitalisation, automation, and flexibility of processes, and the enhancement and efficient use of data;
- smart cities, to introduce technologies that can improve living conditions in cities, and the services supplied to the general public.
In the area of innovation, BP to 2025 has allocated 950 M€ for projects intended to enhance innovative technologies involving the development of smart cities, circular economy, Utility 4.0 and customer experience.
Learn more: Innovators by nature
OUTLOOK 2025
In 2026, the Hera Group is committed both to its usual focus on efficiently managing the services provided and to searching for opportunities for growth through external lines, as well as to the continuing actions towards increasing shared value, in line with European policies and the objectives on the UN’s 2030 Agenda.
Industrial growth, through a balanced management of commercial development, the circular economy, not only as a statement of social commitment but also as a strategic driver of sustainable growth, and risk management, across the board and proactive, both in corporate strategy and integrated into the corporate culture, are the commitments that the Hera Group has made to achieve its new objectives, also turning to digitalisation and innovation as levers to support resilience.
Also in 2026, Hera will pursue the strategic lines addressed by the business plan, presented at the beginning of the year, managing the various dynamics that will arise in the various business areas:
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Networks: the results will see the elimination of positive income components accounted for in 2025 as tariff adjustments and will be supported by a significant investment plan of 3.1 billion euros expected over the period of the Plan
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Environment: growth is expected thanks to both our leadership position, based on a single, large, modern, sustainable and diversified plant base which represents a solid "platform" and to the commercial development, driven by demand which requires more and more advanced solutions in terms of sustainability, circularity and waste valorisation that can become a resource
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Energy: the business will continue to benefit from the development of value-added services offer, commercial expansion and cross-selling activities. A reduced contribution from last-resort markets is expected due to the launch of new contracts, which have seen an expected normalization of margins. Regarding energy sales to end customers, the development of value-added offerings will continue to enable the energy transition of the customers served.
In economic-financial terms, the forecast of an increase in shareholder remuneration, consistent with the targets set by the recent business plan, and the maintenance of financial solidity are confirmed.
The debt structure towards which the Hera Group is oriented responds to its business needs, not only in terms of the duration of loans, but also in terms of interest rate exposure. The Group’s financial strategy, in turn, is aimed at maximising its return profile while maintaining a prudent risk strategy.
The Hera Group closes the 2025 financial year with economic and financial indicators growing compared to the previous year. Financial solidity, the pursuit of sustainable development and the creation of value local area and communities served are confirmed as strengths.
In all quarters, the Hera Group achieved good performances in all business areas, as shown by the operating data. The annual performance of the four business areas is presented below:
Outlook Gas 2025
The 2025 results show a downturn compared to the previous year — which had been characterized by particularly strong performance — mainly due to the decline in margins related to the “last resort” markets and energy efficiency activities, following regulatory changes regarding energy saving measures. This occurred despite the increase in intermediation activities, higher regulated revenues in gas distribution, and rising energy sales prices.
The Group maintains a leading position in the Last Resort Markets, thanks to Hera Comm S.p.A.’s successful bids for the gas last resort and gas distribution default markets. Total gas volumes sold increased, driven by higher intermediation activities.
For 2026, the Group expects substantial stability in the customer base, with forecasts of volumes sold which may vary according to the temperatures of the period.
Outlook Electricity 2025
The 2025 results show a decline compared to the previous year, mainly due to the reduction in sales margins, particularly linked to the effects of the new tender procedures for the Electricity Safeguard Service and the Gradual Protection Service (STG). This occurred despite the increase in volumes sold to end customers, the rise in PUN prices, and the growth in regulated revenues from electricity distribution.
In summary, Hera Comm was awarded several lots in the Safeguard Service tender for 2025 and 2026; in the tender for the Gradual Protection Service for household customers for the period from 1 July 2024 to 31 March 2027; in the tender for the Gradual Protection Service for electricity supply to micro enterprises for the period from 1 April 2023 to 31 March 2027; and in the Consip EE22 tender for the supply of electricity to Public Administrations in 2025.
Customer appreciation and loyalty toward the Group’s value added services remain strong: as of December 2025, more than 100,000 customers had subscribed, representing an increase of 23.6% compared to 2024.
Over the year, we plan to continue developing value-added offerings to enable the energy transition of our customer base.
Outlook Water cycle 2025
In 2025, the Integrated Water Cycle area recorded results that were higher than those of the same period of the previous year.
From a regulatory perspective, it is worth noting that 2025 is the second year of application of the tariff method defined by the Authority for the fourth regulatory period (MTI 4), 2024–2029 (Resolution 639/2023/R/idr). MTI 4 will span six years and introduces, among its key new elements, an update of the component covering electricity costs, which have shown significant volatility in recent years. Each operator is granted a revenue requirement (VRG) based on operating costs and capital costs, determined in relation to the investments carried out, with the objective of increasing cost efficiency and promoting and rewarding projects aimed at enhancing the sustainability and resilience of the territories served.
Thanks to the significant investments carried out over the past five years, ARERA’s incentive mechanism for the integrated water service awarded Hera Group 26 bonuses for the 2022–2023 biennium, in recognition of the technical and contractual quality achieved. The number of water customers increased by around 6,000 units compared to December 2024 (+0.4%), confirming the Group’s moderate organic growth trend in its reference territories. In 2025, volumes delivered through the water distribution network, as well as requests for new water and sewerage connections, showed a slight increase compared to the previous year.
Thanks to the investments planned over the course of the Business Plan, this business area will become even more efficient and resilient in the coming years. The Group will work across several fronts to reduce water consumption, decrease network losses and increase the reuse of wastewater.
Sales volumes are expected to remain broadly stable in 2026.
Outlook Waste 2025
With the 2025 Waste EBITDA further increasing compared to 2024, the Group continues its growth trajectory in this business area through a diversified range of services, a broad customer portfolio, and strong responsiveness in service delivery, despite a complex macroeconomic context that has also affected the markets in which the Group operates. In 2025, all key initiatives related to circular economy and decarbonisation also continued, supporting the Group’s objectives of value creation and environmental sustainability.
Protecting environmental resources and maximising their reuse therefore remain top priorities. In addition to the initiatives mentioned above, this is demonstrated by the strong focus placed on developing separate waste collection, which increased by one and a half percentage points compared to 2024, thanks to the Group’s significant commitment across all managed territories.
The analysis of quantitative data highlights growth in waste treated, supported by the full operational capacity of plants as well as the expansion of both proprietary and third party facilities. As for market sourced waste, volumes increased mainly in the Recovery segment and in the industrial waste market, driven by the consolidation of existing commercial relationships and the development of the customer portfolio. This trend is partially offset by a decline in the commercial segment of liquid waste and in intermediation activities.
The Hera Group operates across the entire waste management value chain, with 94 facilities dedicated to the treatment of urban and special waste and to the regeneration of plastic materials. Thanks to its state-of-the-art technologies, the expertise of its personnel and a network of international partners, the Group is able to effectively meet the needs of its reference territories and businesses, providing innovative and sustainable services and solutions for the full management and treatment of all types of waste, transforming them into resources and value for the community.
Further strengthening of the plant base, the recent acquisition of Sostelia and the consolidation of existing commercial relationships, including initiatives to develop the customer portfolio, support positive growth prospects for the Waste area in 2026.
