Italian households face another hike in their electricity bills over the coming weeks, consumer watchdog Codacons warned earlier this month, after seeing a 61 percent increase since last autumn.
Rubbing salt in the wound is the fact that people in Italy already pay significantly more for their electricity than those in most other European countries.
Prices in 2025 averaged €115.9 per megawatt hour, regulator Arera told parliament in July, well above France's €61.1 and Spain's €65.3.
As well as penalising consumers, this “enormous” gap means “Italian companies have to compete on international markets with structurally higher costs than their European competitors, thereby reducing their profit margins and investment capacity,” complains business association Confindustria.
Russia’s invasion of Ukraine and the US’s war on Iran have driven up fuel costs in recent years – but the impact of those shocks has been global. So why is electricity in Italy so much more expensive than elsewhere in Europe?
READ ALSO: Energy bills set to rise sharply in Italy this autumn
Reliance on gas imports
Italy is heavily reliant on natural gas, which generates around 45 percent of its electricity (41 percent is from renewables and the rest from coal, oil and cross-border electricity imports).
By comparison, France uses nuclear energy to generate around 68 percent of its electricity, with renewables accounting for roughly 27 percent and fossil fuels just 5 percent.
Spain gets three quarters of its electricity from a mix of renewables and nuclear, and Germany almost 60 percent from renewables and just 16 percent from natural gas, making Italy an outlier among its European neighbours.
Over 90 percent of Italy’s gas is imported, making it particularly vulnerable to price shocks on the international market.
READ ALSO: How much more expensive will your Italian utility bills get this autumn?
Marginal pricing
Inflated gas prices mean people in Italy don’t just pay more for electricity generated by gas but also renewables, due to something known as marginal pricing or merit order pricing.
Under this EU-wide system, power plants are turned on in the order of cheapest (renewables) to most expensive (natural gas) to run based on bids they submit each day until the hourly demand is met.
All suppliers – including, for example, solar-powered plants that cost very little to run – are then paid the same rate as the most expensive operator for that hour.
The logic is that low-cost operators are incentivised to bid based on their actual operating costs rather than submitting inflated bids based on what they think their competitors are charging, as doing so would run the risk of not getting selected that day.
But in gas-dependent Italy, it means that gas-fired plants set the clearing price most days, and far more frequently than in most other European countries.
In a speech to the Italian parliament last year, ex-European Central Bank Chief and former Italian PM Mario Draghi noted that in 2022, gas set the overall price of electricity in Italy “about 90 percent of the time”.
READ ALSO: Five of the big challenges facing Italy this September
What’s being done about it?
Italy is looking into reintroducing nuclear power as the longer-term answer to high energy costs.
Italy voted to abandon nuclear power after the 1986 Chernobyl disaster and rejected it again in a 2011 referendum, but the government hopes that the public can now be persuaded of the advantages of next-generation Small Modular Reactors.
Voters could be asked to decide on its return once more by 2028 or 2029, but any new plants are not expected to come online before 2033 or 2034.
In the meantime, people in Italy can save money on their electricity bills by investing in energy-saving appliances and using them during ‘off-peak’ hours. Find more cost-saving tips here.
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