the fault lies with the gas

On Tuesday 9 August, the price of wholesale electricity reached € 474 per megawatt hour. The fault lies with the extensive use of natural gas to generate electricity. THE SKYWALL

In Italy electricity costs more than in the rest of Europe. This record is closely linked to the price of natural gas. In fact, Italy boasts gas reserves greater than the European average and a good diversification of supply. But the very high price of methane, close to € 200 per megawatt hour, penalizes our country which burns a lot of gas to generate electricity.

Most expensive electricity in Europe

In fact, in Italy in these hours wholesale electricity – that is, that sold by electricity suppliers – is sold for € 474 per megawatt hour. These are very high prices, given that in August 2019 electricity sold on average at € 49.5: ten times less. Moreover, if we compare the Italian numbers with the European ones. According to the Energy Live platform, ours is the highest price in all of Europe. In second position we find Greece, which pays € 368 per megawatt hour, 100 less than in Italy. While among the most important economies there are France (348 €), Germany (345 €) and Spain, where electricity costs only 144 € per megawatt hour.


If we go back in time we see how electricity in Italy has become increasingly expensive. And above all that the gap with respect to other countries has widened more and more. Through the data of Refinitiv, by comparing our country with Germany, it can be seen that energy prices have drifted further and further away, to the detriment of Italian families and businesses.


Blame the gas

The main cause is the rise in the price of natural gas, now stable in Europe at just under € 200 per megawatt hour according to the trading of the Ttf on the Amsterdam stock exchange.


According to the marginal price mechanism, gas – being the most expensive energy source – determines the cost of all electricity. In this way, supply and market efficiency are guaranteed. And the more gas is used to generate electricity, the more expensive it will be for end users. It is therefore no coincidence that Italy, according to data from the International Energy Agency, is the European country that burns the most gas to generate electricity. Almost half, 49%, is in fact produced by natural gas plants.


In Spain this figure reaches half, to 26.5%. While in Germany and France gas reaches 17 and 6.5% respectively – thanks to the use of nuclear energy.

Also in these cases the marginal price mechanism, thanks to the high cost of gas, pushes up the price of electricity. But it does so to a lesser extent than in Italy, because the energy mix is ​​less unbalanced. The opposite case is that of Scandinavian countries, where the price is often determined by hydroelectricity and not hydrocarbons: in this way the price of electricity in Sweden and Norway does not even reach € 200 per megawatt hour.

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About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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