Energy: Rising prices don’t affect consumption, + 3.2% in first half of 2018

The ISPRED index still worsens (security, prices, decarbonisation).

In the first half of 2018 primary energy consumption in Italy has grown by 3.2% as compared to the same period in 2017, driven by transport (+ 2.2%) and the industrial sector (+ 2.6%). In terms of energy sources, there has been an increase in oil consumption (+ 4.5%), which halted a reduction trend in progress since 2016, while consumption of both natural gas (-1.6%), after three years of increases, and the photovoltaic (-10%) dropped,  despite the growth of renewables as a whole (+ 9%).

This is what emerges from the ENEA Quarterly Analysis of the Italian energy system, showing a  general increase in prices of all energy commodities, especially crude oil (+ 32%, at the highest levels since 2014) and gas (+ 17%, at the highest level since 2013) with a significant impact on power exchange prices (+ 5% in the first half, + 20% in the second half as compared to the same period in 2017). Furthermore,  prices of carbon dioxide emissions paid by electricity producers have more than tripled in the last 12 months.

"In spite of these sharp increases, in the first six months of 2018 energy consumption has grown by over 3%, driven on by industrial production and the GDP; however, in the second half of the year, the gradual transfer of increases in wholesale prices into final ones it’s likely to slow down consumption and have a negative impact on an economy which is already showing signs of slowing down, and in a context in which energy commodities prices are not expected to drop in the short-term", Francesco Gracceva, ENEA expert and coordinator of the Analysis, pointed out.

"The fact that since the end of the recession the trend in energy consumption has been going in parallel with  the economy again, while a key element of the transition to a low-carbon economy is a significant decoupling between energy and the economy, is another cause for concern. In practice, the transition process to a low-carbon economy in Italy continues to face obstacles ", Gracceva pointed out.

This is also confirmed by from the new worsening (-9%) of the ISPRED index, developed by ENEA to monitor the energy transition: this is the tenth consecutive decrease in relation to the deterioration of all three components: prices, decarbonisation, energy security.

As for decarbonisation, the reduction in emissions in the first half of 2018 was 0.7% as compared to the first half of 2017, marking a substantial stability over the last two years, while the European targets would require a much faster decline. The share of RES on final consumption,  which for the fourth year in a row stood at the values ​​reached in 2015, mostly due to the modest increase in photovoltaic and wind power, also slowed down decarbonisation.

Energy security was also negative (-2%) due to the indicators referring to the oil system and the refining margins (on the last minum values over the last 3 years due to the rise of oil) and less diversified gas sourcing, with Russia returning to 50% of the total . As for prices, the ISPRED index component shows a -12% for retail increases resulting from a rise on international markets; moreover, once again the Italian diesel oil remains the most expensive in the European Union even after tax.

For more information please contact:

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