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Italy power costs remain sky high in spite of tidy energy push: Maguire

Electrical energy costs in Italy are the greatest amongst significant European economies, due to a long-lasting reliance on nonrenewable fuel sources for power generation despite development in renewable energy output.

Italy's wholesale electricity rates have actually averaged around 100 euros per megawatt hour (MWh) up until now in 2024, according to energy think tank Coal.

That compares to 69 euros in Germany and 50 euros in Spain, and indicates that Italy's families and companies pay far bigger energy costs than most of their peers across Europe.

FOSSIL REPAIR

High dependence on fossil fuels for electrical energy generation is the main driver behind Italy's high power costs. In 2023, 55%. of Italy's electrical energy originated from nonrenewable fuel sources, Coal information shows.

That compared to 45% in Germany, 39% in the UK,. 25% in Spain and 41% for Europe as a whole.

Up until now in 2024, Italy's power companies have managed to raise. clean power generation to a new record, and have actually cut the share. of fossil fuels in electricity generation listed below 50% for the. very first time, to 47%.

Nevertheless, that fossil generation share still exceeds that of. competing economies, with Europe as a whole recording a 37% average. fossil share this year and Germany a 40% share.

HIGH AND RISING

Italy's fossil fuel generation share is expected to increase. over the rest of the year as tidy power generation. decreases.

The lift in Italy's tidy power output so far in 2024 has. been generally fuelled by a 45% increase in output from hydro dams and. a 18% rise in solar generation.

Along with a 2% rise in wind output, the higher hydro and. solar production assisted lift overall clean electrical power generation. by 20% from January through August from the exact same months in 2023.

In overall, Italy's tidy electrical power generation hit a record. 88 terawatt hours (TWh) during the January to August period,. compared to 73.4 TWh throughout the exact same months in 2023.

However, both hydro and solar generation peak throughout summertime. in Italy, and after that trend progressively lower over the remainder of. the year as snow melt levels drop off and decreased daylight cuts. into solar output.

That means that overall tidy power generation will also. decrease, and will likely stimulate a revival in fossil fuel-fired. output as we head into winter season and the country's primary heating. season.

GAS COST PRESSURE

Italy's power companies mainly count on gas for power. generation, with around 45% of electricity generation coming. from gas-fired plants in 2023.

In contrast, Germany's power manufacturers just depend on. natural gas to create around 15% of electrical power in 2015,. while the average for Europe as a whole was 24%.

What's more, more than 95% of Italy's gas comes from imports. due to steadily decreasing domestic gas production.

Such a high dependence on imported gas implies that Italy's. power companies have been at the mercy of global gas markets. for the lion's share of their power generation fuels.

In addition, Italy's federal government has decided to change gas. supplies from Russia - which was approved by European Union. member states following its invasion of Ukraine in 2022 - with. buy from other providers.

This switch-out of gas from Russia - which was formerly. Italy's single largest gas supplier - with gas from other. providers has actually strained gas market streams throughout Europe, and. lifted overall gas costs.

In addition, Italy has plugged a growing share of its gas. supply space with imports of liquefied natural gas (LNG), which is. significantly more pricey than gas provided through pipeline.

PASSED ON EXPENSES

Much of the higher costs of gas imports have actually been handed down. to Italy's customers in the kind of the higher wholesale. electrical power expenses.

Italy's government has tried to soften the blow of higher. energy prices by reducing sales taxes and supplying subsidies. for the build-out of renewable energy generation capacity.

However with energies on the hook for aggressive boosts in. renewable resource capability as part of a brand-new energy security. decree passed last year, families have borne the force of the. impact from the greater cost of energy imports.

And with power companies set to face high capital costs as. they construct new tidy energy production assets, utilities are. not in any position to cut costs for households at any time soon.

That suggests that Italy's energy customers look set to keep. paying among the greatest rates in Europe for their power and. electricity for the foreseeable future.

<< The opinions expressed here are those of the author, a. columnist .>

(source: Reuters)