Energy market

Relative to the domestic electricity market, electricity demand in 2023 totalled 307,749 GWh, (source: Terna), down by -2.5% with respect to the previous year. Despite the negative result, the gap compared to 2022 fell gradually over the year, such that in the fourth quarter an increase of +1.2% year on year was recorded.

This reversal of trend, already partially seen in the third quarter, can be attributed on one hand to 2022 consumption which was strongly down due to high utility prices and the reductions requested by the European Commission to reduce consumption of gas generated through electricity during the energy crisis, and on the other to meteorological factors, with intense heat waves in July and August 2023 and an extended summer season through September/October 2023 (+1 °C with respect to September/October 2022) which kept cooling consumption high.

Energy production, net of self-consumption and consumption by pumping (29,227 GWh, +10.6%) came to 227,277 GWh, down by -8% with respect to 2022, and covered 74% of requirements. Net imports consolidated the positive contribution already seen in the beginning of the year, coming to 51,246 GWh (+19.4%) and contributing 16.7% to meeting demand, in part replacing thermoelectric production (135,579 GWh, -20.1%), above all impacted by the large contribution from renewables. In fact, with the sole exception of geothermal (5,347 GWh, -1.6%), renewable sources played the leading role in a very positive 2023, with hydroelectric production up +34.4% (39,833 GWh), compared to the drought impacted 2022, wind was up +15.4% (23,338 GWh) and photovoltaic up +7.3% (24,179 GWh, with an additional 5 GW of photovoltaic capacity installed with respect to 12 months prior).

The Single National Price (SNP) in 2023 saw an average value of € 127.24/MWh, down by -58% over 2022, with the fourth quarter registering an average of € 123.85/MWh (-49% with respect to the fourth quarter of 2022). More specifically, the quarter began with an overreaction by the gas markets, reflected in the electricity markets, to a series of events (above all the Hamas attack on Israel on 7 October) which impacted security and tranquillity embedded in bearish fundamentals, while also giving rise to speculative actions and technical corrections. In the course of a week the daily average SNP gained +40%, reaching € 175/MWh on 16 October, a figure not seen since the beginning of February, followed by a return to more tranquil waters by the end of October (€ 121/MWh on 30 October).

Single National Price (SNP)

With regards to natural gas, domestic demand in 2023 came to 59,069 Msmc (source: Snam Rete Gas), down by -10.5% with respect to 2022. The significant decline seen at the beginning of the year (-19.8% with respect to the first quarter figure year on year) was gradually limited due to seasonal absence of residential demand in the spring/summer and an end of the year with temperatures not as high as the previous year, to which were added the more marginal effects of the coal-to-gas switch in electricity generation and the weak signs of recovery coming from the industrial sector compared to the extremely low levels in 2022. Distribution, including residential and SME, ended the year with 26,567 of consumption (-8.6% compared to one year prior, but +5.6% on just the fourth quarter), with the thermoelectric segment requesting 21,079 Msmc of gas (-15.5% in annual change, -9.8% on just the fourth quarter), also thanks to a renewed contribution from renewable production (above all hydroelectric), while the industrial segment required 11,423 Msmc of gas (-4.7% in annual change, +7% on just the fourth quarter).

Overall, 2023 saw an annual average TTF of € 42.98 c/smc (-66% with respect to the same period in 2022) and an annual average PSV of €44.72 c/smc (-65%). In the fourth quarter, the average values were € 42.95 c/smc for the TTF (-57%) and € 43.22 c/smc for the PSV (-57%).

In 2023, the PSV-TTF differential was an average of +€ 1.74 c/smc (+€ 0.27 c/smc for the fourth quarter), trending down by -€ 0.25 c/smc with respect to the value expressed in 2022 (-€ 0.67 c/smc).