Boston, MA -- (SBWIRE) -- 02/06/2013 -- BMI View: Italy's electricity mix is split between gas, hydro, coal and oil; renewable sources also account for an important proportion of electricity generation. Our forecasts that Italy's use of gas as a source of electricity will increase were confirmed this quarter when Italy's Edison won in arbitration a EUR450mn discount on its liquefied natural gas supplies, sourced from Rasgas in Qatar. The judge's ruling could pave the way for lower gas prices overall boosting gas-fired sources of power in Italy. Italy is also keen to boost domestic production, and is investing in its transmission and distribution network. But the country is still subjected to a degree of economic uncertainty and a lengthy bureaucratic processes deter potential investors from embarking on building power plants that may not be required, given the sluggish growth of domestic consumption.
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Gas-fired power plants account for the nearly half of Italy's electricity generation capacity, and this figure is unlikely to change over the course of our forecast period. Italy has no nuclear power stations, and following a referendum in mid-2011, Italians voted against turning to nuclear sources of power. The remainder of domestic generation is split between oil-fired power stations, hydroelectric power stations and coal-fired power stations.
During the 2012-2021 period, Italy's overall power generation is expected to increase by an annual average of 0.96%, to reach 323.2 terawatt hours (TWh). Driving this growth is an annual 1.35% gain in gas-fired. Coal-fired generation is expected to fall by 2.20% per annum, with the use of oil-fuelled generation to drop by an annual average of 1.55% over the period.
Following an estimated increase in 2011 real GDP of 0.47%, BMI forecasts average annual growth of 0.98% between 2012 and 2021. Over the 2012-2021 period, the average annual growth rate for electricity demand is forecast to be 1.43%. Thanks partly to the modest rise in net generation, the growth of which barely matches that of the underlying demand trend, we believe the country's net import requirement will be 37.23TWh by 2016, which could increase to 53.27TWh by 2021 if investment does not increase appreciably.
The key trends and developments in the Italian electricity market are:
- The European Investment Bank provided Enel with a EUR380mn loan in Q312 to upgrade Italy's power distribution grid.
- Sicily's authorities granted approval for the construction of a 97.5km electricity interconnector between Malta and Sicily in August 2012. Costing EUR200mn, it will be part-funded by the EU.
- In corporate news, press reports suggest that Finmeccanica is seeking advice on the sale of its Ansaldo Energia unit, while France's EDF raised its stake in Italy's Edison to 99.484%.
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