BMI View: Our growth outlook for Italy's non-hydropower renewable energy sector improved this quarter as a result of the approval of a sizeable long-term incentive scheme for the industry. This will mitigate regulatory uncertainty in the Italian power market, which has been one of the key headwinds to investment in the country. However, Italy will continue to face problems such as overcapacity, low wholesale power prices and contracting power consumption. In this context, we maintain that the solar, wind and transmission and distribution segments will be the most attractive sectors for investment in the Italian power market.
|e/f = BMI estimate/forecast. Source: National sources, BMI|
|Generation, Total, TWh||281.650||281.710||281.630||281.960||282.420||283.010||283.700|
|Consumption, Net Consumption, TWh||292.2||291.6||290.1||288.7||287.8||286.4||285.2|
|Capacity, Net, MW||116,082.7||111,543.0||109,170.7||109,121.9||109,523.2||110,125.4||111,127.9|
Latest Updates And Structural Trends
In June, the Italian government approved a EUR9bn subsidy scheme for the renewables sector - with the funds set to be distributed to project developers over a 20-year timeframe. This will entail EUR435mn in earmarked funds on an annual basis over the envisioned timeframe of the support mechanism. After protracted policy uncertainty over the last several years, the availability of long-term funding, coupled with the continued transition to a closely calibrated reverse capacity auction system that is regulated by capacity caps and competitive bidding, will be conducive to growth that is more economically sustainable for Italy's public finances.
In April, the European Commission (EC) released an interim report on its inquiry on capacity mechanisms for the thermal power sector in Europe, which includes the Italian power market. The EC expects its final guidelines on the subject to be published by the end of 2016. Although Italy's regulators originally aimed at starting the capacity mechanism in 2017, a first capacity auction for thermal power plants in the country is likely to take place in 2018 at the earliest.
In August 2016, Italy's energy regulator AEEGSI introduced new rules for the power grid imbalance charges. These are fees charged to generators that fail to supply the amount of power they committed for the day-ahead market. Under the new scheme, these generators will face higher charges in case they do not offer the supply committed - a system that is intended to put an end to the practice of holding back supply from the day-ahead market in order to make it available in the real-time balancing market at a higher price. According to media reports, the new rules have been introduced with a tolerance band of plus or minus 15% around companies' forecasts for their day-ahead demand and supply; this band will be tightened to plus or minus 7.5% from January 1 2017.
In July, Italy's main utility Enel approved the acquisition of fibre-optic firm Metroweb, which will be merged with its subsidiary Enel Open Fiber. This move will reinforce Enel's plan to enter the business of developing ultra-broadband fibre infrastructure in Italy, operating as a wholesale player. In addition, in September Enel announced the creation of a new business unit - called Global Fiber Optic Infrastructures - which will develop ultra-broadband infrastructure in foreign markets.
The Italy Power Report features BMI Research's market assessment and independent forecasts covering electricity generation (coal, gas, oil, nuclear, hydro and non-hydro renewables), electricity consumption, trade, transmission and distribution losses and electricity generating capacity.
The Italy Power Report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing national and multinational operators by sales, market share, investments, projects, partners and expansion strategies.
- Use BMI's independent industry forecasts for Italy to test other views - a key input for successful budgeting and strategic planning in the power market.
- Target business opportunities and risks Italy's power sector through our reviews of latest power industry trends, regulatory changes, and major deals, projects and investments in Italy.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Competitive Landscape analysis.
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering power markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the power sector and within the broader political, economic and business environment.
BMI’s Power Forecast Scenario
Forecasts to end-2024 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Generation: Electricity generation total, thermal, coal, natural gas, oil, nuclear, hydropower, hydro-electric pumped storage and non-hydropower renewables.
- Transmission and Distribution Losses: Electric power transmission and distribution losses.
- Trade: Total imports and exports.
- Electricity Consumption: Net consumption.
- Electricity Capacity: Capacity net, conventional thermal, nuclear, hydropower and non-hydroelectric renewables.
BMI’s Power Risk Reward Index
BMI’s Risk Reward Indices provide investors (power companies, service companies and equity investors) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors,
Structure, size and value of the industry sector; overview of the industry landscape and key players; an assessment of the business operating environment, sustainable energy policies, pricing and the latest regulatory developments.
Key Projects Database
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by location, sector type, capacity, value, companies and operational status.
Illustration of the power industry that exploits our data-rich, in-depth analysis of the leading players in the sector and examination of operational results, strategic goals, market position and the potential for investment.
Power Outlook long-Term Forecasts
Regional long-term power forecasts covering electricity generation, consumption and capacity for thermal, hydroelectric and nuclear power. These are supported by a country specific overview, alongside an analysis of key downside risks to the main forecasts.
Providing BMI’s near-term economic outlook for the region as a whole, as well as taking a close look at countries of particular interest and the latest trends and developments.
The Power Market Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports, including Energy Information Administration (EIA), World Bank (WB) and United Nations (UN).