BMI View: Non-hydropower renewables and transmission and distribution networks will be the most attractive sectors in the Italian power market in 2016, due to planned financial incentives for non-PV renewable s and public and private focus on the development of additional cross-border power interconnection s . Delays in the introduction of a capacity market maintain our outlook for the Italian thermal power sector grim, with further retirements expected to take place.
|e/f = BMI estimate/forecast. Source: Terna, EIA, BMI|
|Generation, Total, TWh||279.816||277.321||277.918||278.908||279.838||280.233||281.267|
|Consumption, Net Consumption, TWh||287.9||292.2||291.6||290.1||288.7||287.8||286.4|
|Capacity, Net, MW||122,221.4||116,351.4||112,170.6||110,133.2||110,308.1||110,861.1||111,472.7|
Latest Updates And Structural Trends
The first round of auction for a simplified thermal capacity market didn't take place in September 2015, the deadline initially recommended by the Italian energy regulator AEEGSI in March. This makes unlikely that a capacity market will be introduced by 2017, the deadline suggested by AEEGSI to guarantee the stability of the Italian power market. These factors, coupled with low wholesale electricity prices and growing renewables power generation, support our negative outlook for Italy's thermal power sector - with additional capacity retirements expected.
The narrow margins of Italy's thermal power generators could push players in the sector towards consolidation. As a potential first step in this direction, in November 2015, utilities A2A and Sorgenia agreed on the shared management of two CCGT power plants for a period of five years. The aim of the operation is to enhance the efficiency of the grid and of the plants involved.
A regulation from the Ministry of Economic Development which will extend existing incentives to new non-photovoltaic (PV) renewables capacity has been approved by all relevant Italian legislative bodies and will enter into force in 2016, provided that it is accepted by the European Commission (EC). Should the EC fail to approve the regulation before the end of January 2016, the ceiling to the existing incentives (which is left unchanged to EUR5.8bn) would be reached and the regulation would need to be modified. Given this remaining risk of delays, at present we are not including in our forecast for 2016 the positive impact that new incentives would have on the deployment of non-PV renewables in 2016.
We expect to see a decoupling between growth in Italy's real GDP and power consumption over the coming years, a trend that is increasingly common among developed economies. Government support for the adoption of technologies reducing an economy's energy intensity - the ratio between energy use and economic output - will be a crucial factor in this structural shift. To this end, in October 2015 the Italian government decided to extend existing incentives for energy efficiency measures until the end of 2016, by including them in next year's budget law.
We maintain a positive outlook for the growth strategy of Italy's power group Enel as the company strengthens its focus on renewable energy, emerging markets, networks and reducing merchant risk via concentrating on regulated assets. The re-integration of Enel Green Power in the group - announced in November 2015 - will be a crucial step in this direction, with Enel gaining exposure to several high-growth 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).