In recent months, the energy scenario has changed a lot. The world seemed to be heading towards a decisive revival of nuclear energy, both to diversify sources of supply and to have an energy source free from CO2 emissions. The problem of cost was debated: the energy produced by the nuclear power plants now in operation is certainly very competitive, but that of the new, much more expensive plants is still an unknown factor. However, nuclear energy is an energy source with a practically fixed cost for the entire life of the plant (given the almost irrelevant weight of the fuel on the cost of energy) and this would have made the accounts pay off in the long run.
The Fukushima accident profoundly changed this perspective in many countries: Italy with the referendum canceled the possibility of having 25% of nuclear electricity generation and Germany, which already today produces 25% of electricity with nuclear power, immediately shut down some plants and scheduled the phase out of the rest by 2020. Other countries have taken less drastic decisions, but by introducing a moratorium they have in fact removed the prospect of a "nuclear renaissance", as only a year ago. What energy source will take the growing place that should have been nuclear in the world's energy mix?
Many predict a "golden age" of gas. Indeed, gas has many arrows to its bow. It is a relatively abundant source, with reserves exceeding one hundred years of consumption. It has a diversified geographical distribution and better distributed, from a political point of view, than oil. With the exploitation of gas obtained from shales (shale gas) new immense reserves will become available, in the USA and perhaps in Europe. In addition, gas has limited CO2 emissions, half those of coal. In short, gas seems to be the essential element of the energy recipe for the next 10 or 20 years.
The Italian energy plan should be presented by the end of the year, it will have to contain the answer regarding the energy mix after the end of the nuclear perspective. But it is not only the abandonment of nuclear power that is new that we will have to take into account. In fact, the general economic crisis has greatly reduced the prospects for growth in demand: at the expected rate of evolution of the GDP, electricity demand could return to its pre-crisis level only at the end of this decade if the energy saving objectives (-20% by 2020) will be achieved.
It should be remembered that the EU objectives of reducing CO2 emissions by 20% by 2020 entail for Italy, in addition to energy savings of 20%, the achievement of a share of renewables on primary energy consumption of 17% (against 8% today) which corresponds to a target of 26% of renewables in electricity generation, (against approximately 20% today). That 26% of renewables should have joined, in the medium term, the aforementioned 25% of nuclear power, thus creating 50% of electricity generation free from CO2 emissions. The remainder would have been produced from fossil sources: coal and gas, with gas confined to marginal technology as it is beaten in the order of merit by renewables (which have dispatching priorities) and by both nuclear and coal as both have variable costs lower than gas.
However, it was thought that an increase in electricity demand of 1,2-1,5% per year would leave enough room, in the medium term, for gas-fired plants as well. What to do now, without nuclear power and with a forecast of zero growth in thermoelectric demand? Germany seems to bet everything on renewables. In the German energy plan, presented before Fukushima, the phase out of nuclear power, already envisaged at the time, was compensated with a massive use of renewables with the aim of covering over 50% of German electricity generation with this source. Now Germany will proceed down that road in even more peremptory terms. For Italy, the natural candidate to replace nuclear power seems to be gas.
After all, today gas already covers 50% of the national electricity requirement. It would therefore be sufficient not to envisage a reduction of its role. It is not even necessary to increase production capacity: in fact we have a fleet of modern and efficient gas-fired plants that are largely underused. In fact, it is estimated that the production overcapacity, given the low volume of demand, is equal to approximately 5000 MW. Furthermore, Italy has been a candidate for some time to become a gas "Hub": given its geographical position, it is planning infrastructures for importing gas in excess of its needs (Itgi, Galsi, Porto Empedocle terminal, just to name the main projects) with the prospect of exporting gas in excess of national demand to northern Europe, where the fields in the North Sea are rapidly running out.
Certainly gas for Italy seems to be an obligatory choice. With the prospect of nuclear power waning, a heavy investment in coal-fired power plants does not seem desirable in total contrast with the objectives of reducing CO2. And alongside gas, renewables, which could even go beyond the target of 26% of electricity generation. In fact, at the end of 2010 we realized, not without surprise, that we had built 8000 MW of photovoltaic plants, a figure that corresponds to the goal that Italy had set itself for 2020! So the overall targets could be revised upwards. Therefore an energy mix dominated by gas and renewables seems to be our future. Is this a desirable future? I believe that a careful reflection should be done.
Indeed, the risk is that Italy will once again choose the most expensive energy mix in Europe. Let's take renewables. It is known that the kilowatt hour produced from renewables is more expensive than that produced with thermal generation, and that the difference in cost is subsidized all over the world. If all countries were equipped with an identical percentage of renewables, there would be no competitive disadvantage. But it is undeniable that in Italy the incentives for renewables are higher than elsewhere, and this cannot last.
It is imperative to design a path that quickly brings the incentives to the levels of other countries and gradually cancels them, stimulating the manufacturing industry of solar panels and wind turbines to continuous cost reductions as has already happened in the recent past. The elimination of incentives on photovoltaics is now foreseen in Italy for 2017, but with the current level of incentives, the volume of investments risks being too high, causing unsustainable charges to be charged to bills for the next few years. There is no shortage of problems as far as gas is concerned.
The crisis of recent years has taught us that for Italy the gas hub is working the other way around: instead of exporting the excess gas caused by the drop in demand to the north of the Alps, we import gas from the northern European hubs, aggravating the our take or pay commitments, due to the simple fact that the cost of gas on the spot markets is lower than that of our long-term contracts, linked to the price of oil. With the massive exploitation of shale gas, the USA have become self-sufficient in their consumption, and have eliminated imports of liquefied gas.
This gas poured into the hubs of northern Europe, causing the spot price to collapse. Part of that gas was also imported into Italy, aggravating the take-or-pay situation and making oil-price contracts, currently undergoing difficult renegotiation, totally uneconomical. In this context, the Italian program to acquire transport infrastructures in excess of national needs, with long-term contracts linked to the price of oil, with a view to exporting the excess gas to Europe, appears at least unrealistic.
From this point of view, Italy's growing dependence on gas and renewables cannot fail to raise questions. Sure gas, but at what price? At the very competitive American price today thanks to shale gas, so much so that it outperforms all other sources of electricity generation, including nuclear? Or the price of the northern European hubs, higher than the American one but still very competitive? Or to that of the current long-term contracts that are now out of the market? And renewable, of course, but with what incentives and charges for future bills? Never before has there been a need for a national energy plan, which has been lacking in Italy for over 30 years.
The plan will have to answer many questions. What will be the possible range of energy demand in 2020%? How much energy efficiency do we plan and what tools do we equip ourselves to achieve it? What energy mix do we plan? How many take-or-pay commitments on long-term gas contracts can our country reasonably make? How many new gas import infrastructures does our country need? What investments in the network to eliminate current congestion and what to do to avoid creating new ones?
Of course, the energy plan is not an oracle nor can it constitute a straitjacket for companies. But "the invisible hand of the market" is far from giving adequate answers to today's problems. In times of great change, an energy guideline for the country is more necessary than ever.
