Energy: In Italy highest electricity price of Europe

New historic highs for gas (in the energy mix) and non-programmable renewables (in the electricity demand), road traffic on the rise but fuel consumption declining, also thanks to more efficient models.

The electricity price differential in Italy is on the rise as compared to the main European countries, with peaks of 60% more as compared to Germany, our chief manufacturing competitor in Europe (20% more as compared to the beginning of the year).  This according to the latest ENEA Quarterly Review of the Italian Energy System, which examines data from July to September 2017.

In the first nine months of 2017 also national demand for gas rose (+8% as compared to the same period in 2016), urged on by thermoelectric (+14%) and industry (+8%), while gas consumption rates were still far from the annual peak reached in 2005. At their historical highs both the share of gas in the energy mix (about 39% of the total primary energy) and our reliance on foreign sources (over 92% of the gas consumed), with increasing imports (+9%), mostly from Russia (+11%) and Northern Europe; significant growth of NLG (natural liquified gas), (+32% in the first nine months).

“The Italian energy system reaches the winter with a limited expectation of risk as regards safety of electrical and gas systems, but aware of the fact that in the case of extreme events, criticalities in both sectors could take place, as indicated by the European associations of operators of the networks ENTSO-E and ENTSO-G”, Francesco Gracceva, the ENEA expert who coordinated the analysis, explained. The growth of demand and the subsequent resumption of the role of gas in the electrical market-Gracceva went on- resulted in an increase of electricity prices significantly higher than that registered in continental markets, because of which the already large gap between Italian wholesale prices and those of the main European countries widened further. Similarly, the gap between the cost of Italian gas and that of northern Europe, the other priority objective for SEN for improving the country’s competitiveness, remains at high levels, constantly superior to 2 €/MWh in the last trimester”.

Also in this third trimester the economic recovery was mirrored in the growth of final energy consumption (+0.5% in the trimester, +0.9% in the first nine months of the year as compared to the same periods in 2016), but contrary to the previous trimester, CO2 emissions dropped (-1.2%), thanks to electricity production from renewables (-3.4%) and a reduction in fuel consumption in road transportation (-3.4%). In the latter case the decrease seemed to be mainly related to the renewal of the vehicle fleet (approximately 2 million new registrations in 2017), which succeeded at “countering” the increase in road traffic while the percentage of electrical vehicles was not significant.

The growth of electricity production from renewables in the last trimester was driven by the increase of wind (+20%) and photovoltaics (+9%), with a positive trend IN PLACE since the beginning of the year, almost capable of compensating the drop in hydroelectric which went on for ten trimesters. In the first nine months of the year the share of non programmable renewable sources (wind and photovoltaics) in the national electric energy demand was 13.9%, new historic high.

“Final energy consumptions – Gracceva went on – were sustained by both an increase in industrial production and the weather conditions in the civil sector. It’s interesting to note that for the first time road transportation consumptions dropped (-1.8% in the first nine months of 2017) despite the fact that mobility indicators significantly increased. This means that also in the absence of significant increases in electrc mobility, the renewal of the vehicle fleet was important for achieving this decoupling”.

Coal and oil consumption continued to decline (-6% and -3% respectively), a trend that went on for 8 and 6 consecutive trimesters respectively.

According to the ENEA index ISPRED, which measures the transition of the national energy system on the basis of safety, prices and carbon dioxide emissions, in the third quarter of 2017 the italian energy system showed a 2% drop on the previous (-10% as compared to the same period in 2016) as a consequence of the decarbonisation and prices not compensated by the improvement in energy safety (+4% as compared to the second quarter of 2017).

“In spite of the decrease of emissions in the last trimester, the decarbonisation component in the Index worsened, since it mirrored the strenghtening of a medium term trend (the last three years) that highlighted a slowdown in emissions reduction.  As for safety, instead,  slight progresses were obtained thanks to the improvement  of refinery margins and the reduction trend of the share of oil in overall energy consumptions, jointly with greater diversification of crude oil imports”. Gracceva concluded.

Finally, this issue of the Quarterly Review includes two in-depth analysis of the Italian position in the international trade of low-carbon energy technologies (photovoltaics, wind, accumulation systems, electric vehicles) and energy as a key element for the performance of the Italian economic system.

The complete Quarterly Review (only Italian version) is available here

For more information please contact:

Francesco Gracceva, ENEA – Studies and Strategies Unit, francesco.gracceva@enea.it