Renewables and the free market: an advantageous choice for consumers

The increase in electricity prices we've seen in Italy since the last quarter is mostly due to the rise in the cost of natural gas internationally. As the economy restarts, production cycles have surged and gas demand has increased to levels the system is still not prepared to meet, even considering the fact that Italy imports over 90% of this resource from abroad. Since more than half of the electricity in Italy is generated using gas, there is an even stronger connection between the two. And two additional factors come into play: the cost of CO₂emission allowances recording a steep increase; and the effects of climate change, which have noticeably increased energy consumption by end users.

These factors cause the cost of energy production to rise significantly.

This dynamic, however, can be interrupted thanks to renewables, which have already proven to be able to provide greater stability in the market. Between 2009 and 2019, the cost of gas generation in Italy remained relatively unchanged, while the price of wholesale electricity decreased by approximately 19% thanks to the growth of renewables.

So even if the share of electricity generated using renewable energy sources were higher, there would be no significant increase in prices for end users. In fact, as Nicola Lanzetta, our Head of Country Italy, explained in an interview with MF-Milano Finanza, "With production from renewable sources near 70%, which is the target for 2030, the cost of energy would be more than 30% lower. But already today, with the green energy quota in Italy at less than 50%, renewables have contained current prices rises by at least 10%." In other words, electricity prices are increasing today because the share generated from renewable sources is still marginal.