Boston, MA -- (ReleaseWire) -- 05/01/2014 -- Italy is trying hard to appeal to international investors, with the government reorganising its holdings in gas and power grid networks, and signing investment fund agreements with potential trade partners, such as Russia. But the country is still suffering in the face of economic challenges, and the austerity measures proposed to turn the economy around are unpopular. As such, it is of little surprise that firms such as E.ON are reconsidering their role in Italy's electricity market. In addition, the sluggish economic performance is also having an impact on electricity consumption levels - we have lowered our forecasts this quarter. In the short term at least, we forecast that the renewable energy sector and transmission and distribution projects present the best opportunities for growth.
Gas-fired power plants account for just under half of Italy's electricity generation capacity, and this figure is unlikely to change over our ten-year forecast period 2014-2013; but a government ruling means this gas will come from conventional sources and not shale gas exploration. The gas-fired power market is likely to see changes over the course of our forecast period, however, given E.ON's announcement it is considering selling its Italian assets. Italy has no nuclear power stations and following a referendum in mid-2011, Italians voted against turning to nuclear sources of power.
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During the 2012-2022 period, Italy's overall power generation is expected to increase by an annual average of 1.1%, to reach 305.1TWh. Driving this growth is an annual 2.6% gain in gas-fired power. Coal-fired generation is expected to fall by 1.6% per annum, with the use of oil-fuelled generation to drop by an annual average of 12.0% over the period.
Following an estimated decrease in 2013 real GDP of 1.8%, BMI forecasts average annual growth of 0.5% between 2013 and 2023. Over 2013-2023, the average annual growth rate for electricity demand is forecast at 1.0%.
Key Trends And Developments
- The sudden growth of solar generation sources in 2011 due to strong fiscal incentives has eroded the market share of traditional ones as the former have benefited legally from priority access to the energy grid. In particular this has reduced the opportunities to service marginal demand peaks for combined cycle gas turbine (CCGT) providers that had heavily invested in this technology in the last decade.
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