Italy’s short-term natural gas prices are jumping as the extreme heat blanketing the country drives up electricity demand to keep cool.
(Bloomberg) — Italy’s short-term natural gas prices are jumping as the extreme heat blanketing the country drives up electricity demand to keep cool.
Italian gas for next-day delivery is changing hands at about €33 ($36) per megawatt-hour, with prices up more than 16% since Europe’s heat wave took hold earlier this month. That’s about €2 to €3 higher than those for southern European countries such as Spain, and highlights Italy’s reliance on fossil fuels for power generation.
Electricity consumption has soared across the Mediterranean this summer with extreme weather sweeping most parts of the continent. The impact on short-dated gas prices is stronger in Italy, where the grid relies more on natural gas to meet demand for power than Spain, where renewables are more widely used.
“Italy is always higher as it is more gas dependent, while the abundance of solar in Spain is most likely keeping prices slightly lower there,” said Jean-Paul Harreman, a director at EnAppSys BV. “Spain hasn’t really got a structural need to import power, whereas Italy does. Therefore when the tightness hits, it hits harder in Italy.”
Traditional thermal power plants are contributing to more than half of the day’s actual generation, with solar and wind power making up a fraction of the total, according to grid operator Terna SpA. In Spain, natural gas accounts for about one-third of the day’s total demand, Enagas SA data show.
Power consumption in Sicily reached a record on Monday, with the daily electricity load 10% above the previous high set in August 2021, according to Terna. The island reported widespread blackouts and water outages Monday, including in Catania, the island’s second-largest city.
Temperatures in the Mediterranean rose amid a heat wave that pushed the mercury close to Europe’s all-time high of 48.8C (119.8F), triggering health- related alerts, droughts and wild fires.
–With assistance from Anna Shiryaevskaya and Giovanni Salzano.
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