Electricity sector in Italy

In 2008 Italy consumed electricity in 6,054 kWh per capita, while the EU15 average was slightly higher 7,409 kWh per capita. In 2009 consumption was divided by power source: 13.5% import, 65.8% fossil electricity and 20.7% renewable electricity.[8]

Pie chart of Italy's fossil fuel electricity production by fuel type

Fossil fuels are the most common source of electrical energy in Italy, accounting for 72.7% of the total production in 2012. Of these, natural gas is the predominant source; it accounts for 59.5% of the total power produced using fossil fuels. the total electricity produced by natural gas was 173 TWh in 2008.[9] Coal (21.6%), petroleum, (4.3%), other gases (2%), and other solid combustibles (biomass, waste, bitumen, and others, 12.2%), contribute smaller percentages to the total production.

Italy is the world's 14th largest producer of hydroelectric power, with a total of 41,456 GWh produced in 2012.[10] Energy from hydro accounted for about 18% of the national production in 2010, with hydroelectric plants located mainly in the Alps and the Apennines.[11] From the beginning of the 20th century to the 1950s, hydroelectric power accounted for the majority of generated power, but as energy needs increased approaching the 21st century that percentage dropped significantly.

Italy ranks among the largest producers of electricity from solar power, which accounted for almost 9% of the total electric consumption in the country in 2014.[5] The installed photovoltaic capacity, compared to the previous year, has tripled in 2010 and almost quadrupled in 2011 reaching 12,750 MW. This was a result of strong economic incentives towards renewable energy development.

As of 2019, Italy has about 10 GW of wind power capacity installed, generating over 5% of total electricity use. Italy is also one of the largest producers of geothermal power, ranking 5th in the world in 2016. However, this is a relatively minor contribution to total electricity at under 2%. Biomass and waste are also important sources of electricity, accounting for about 6% of total electricity use in 2016.

Italian international grid connections comprise several lines connecting the national grid with Europe: 4 with France, 12 with Switzerland, 1 with Austria, 2 with Slovenia, 1 with Greece, 1 with Corsica.[12] In addition, a new subsea HCDC power line was installed in 2015 between Sicily and Malta. Electricity imports amounted to about 40 TWh in 2008. This was the second highest import in the world, after Brazil.[9] Most electricity imports into Italy come from Switzerland and France. Import accounts for over 10% of total consumption.

Italy does not have nuclear power due to a public vote against it in the wake of the 1986 Chernobyl disaster. Much concern has arisen because Italy is in a seismically active area, placing it at greater risk for a nuclear accident.

Former Prime Minister of Italy Silvio Berlusconi and President of France Nicolas Sarkozy made an agreement to construct four nuclear power plants in Italy in February 2009.[13] In April 2009, the 2009 L'Aquila earthquake struck, which caused further concern. Based on the Seveso II Directive, neighbouring countries may end nuclear-energy prospects in Italy. The actual construction of nuclear power is unlikely due to the lack of public support and environmental and construction concerns. The 2011 Tōhoku earthquake and tsunami and the Fukushima nuclear power disaster in Japan in March 2011 caused international investors and politicians to review energy policy with regard to nuclear power. In a subsequent referendum to cancel plans for new reactors, over 94% of the electorate voted in favor of the construction ban, with 55% of the eligible voters participating, making the vote binding.

Electric energy production and sources in Italy 1883–2012[18]

Absolute production

Energy sources (for final electric energy production)

The first electric power plants in Italy were carbon-fueled and were built during the end of 19th century near city centers. Plants had to be close to the place of consumption due to the use of direct current and low voltage electricity, which limits greatly the possible transmission distance. The first power plant was built in 1883 in Milan, near Scala Theater, to power the illumination of the building.[19]

Following the development of high-voltage transmission on long distances, Italy began to utilize hydroelectric power. Several hydroelectric plants have been built on the Alps and the Apennines since the beginning of the 20th century.[20] The first geothermal power station in the world was built in Larderello in 1904.[21] Renewable sources met almost all of the country's electricity demand until the 1960s, when population growth caused an increase in electricity demand.

The electricity sector in Italy, private until then, was nationalized in 1962 with the creation of a state-controlled entity named ENEL, with a monopoly on production, transmission and local distribution of electric energy in the country. The new entity incorporated all the previous private companies operating in Italy since the end of the 19th century. The nationalization followed a general tendency in Europe after the Second World War: France and Great Britain nationalized their sectors in 1946 and 1957 respectively. This was seen as the only solution for an efficient and reliable electricity supply given the natural monopoly nature of this sector. The new entity, which absorbed more than 1000 previously private companies, had to face a rapid growth of electricity demand during subsequent decade, with consumption rising of about 8% every year. This demand was largely met with fossil-fuel powered plants. This trend changed partly after the 1970s oil crisis, which induced Enel to rethink its energy strategy. More investments were devoted to nuclear energy and electricity started to be imported from France to differentiate the supply. However, nuclear energy was abandoned in 1987 following a popular referendum, while imported energy still covers an important share of electricity consumption.

The belief of a more efficient sector with a public monopolistic company progressively reversed since the 1980s. Enel was made into a joint-stock company in 1992, however still fully owned by the Ministry of Economy. The liberation of the electricity sector from government control started in late 1990s following European Union directives. Directive 96/92/CE of 1996 followed the tendency towards privatization. It was based on the adoption of different regulations for production and transmission: production and trading should be free and managed by private companies, while transmission and distribution, being natural monopolies, should be regulated by the state. This first directive suggested a progressive liberalization of the electricity market and the "unbundling", namely the clear separation of monopolistic activities from free-market activities in the companies involved in the electricity sector. This separation was effected by clearly separating budgets for different businesses.

The European directive was followed by the Italian legislative decree 79/1999 ("Decreto Bersani") of 1999. The decree created a path towards a complete liberalization of the market through gradual steps. Not only the European directive was followed, but the transition to the free market was planned to be faster, with more than 40% of electricity planned to be traded on the free market by 2002 and with a corporate separation of activities. Some of Enel's core activities were passed on other companies. The network was transferred to a new company, Terna, responsible for the management of the system. Moreover, the limit on Enel property share of Terna was set at 20%. Enel eventually sold its remaining share of the company in January 2012. In order to improve competition and to develop a free market for production, Enel was also forced to sell 15,000 MW of capacity to competitors before 2003. Following this, three new production companies were created: Endesa Italia, Edipower and Tirreno Power.

A new European directive, 2003/54/CE of 2003, and a subsequent Italian decree, requested a free electricity trading for all commercial clients from July 2004 and, eventually, a complete opening of the market for private customers from July 2007.