Italy’s electricity prices are not rising by chance —they are the predictable outcome of system design and reliance on energy imports.
More than a month after the publication of the “DL Bollette” in Italy and the start of the conflict in Iran, it’s increasingly clear that temporary measures cannot resolve a structural issue: Italy’s excessive reliance on imported natural gas.
In Europe’s electricity market,prices are set by marginal generation. This means the last—i.e. the most expensive—source needed to meet demand sets the price for the entire system.
Today in Italy that source is gas.
If gas remains the marginalprice-setter, Italy will continue to import not just fuel, but also its
volatility and the exposure to geopolitical risks that comes with it.
The comparison with Spain makes the implications clear. According to Ember’s recent analysis (see graph below), Spain has reduced the role of gas in price formation to roughly 15% of the time by accelerating renewables and maintaining a diversified energy mix (solar, wind, and hydro). In Italy, gas still sets the price in around 89% of hours.
Italy, and more broadly Europe, now must face a strategic decision. Implement short term measures that provide relief to the cost-structure of gas, locking-in and entrenching long-term exposure to geopolitical shocks, or accepting some short term pain while accelerating towards a greener and more structurally resilient future energy system.
Three priorities stand out:
➡️ Accelerate renewabledeployment — focus on building capacity faster, not just setting targets;
➡️Scale up storage (BESS) — enable renewables to replace gas inprice-setting consistently;
➡️Streamline permitting — remove approval bottlenecks to speed up bothrenewables and storage.
It is important to note that renewables alone do not automatically guarantee lower prices. Their intermittency, combined with system constraints, means that without sufficient flexibility, gas can still set the price.
The objective is not simply to add more greencapacity. It is to change how electricity prices are formed and reduce thefrequency with which gas sets the price.
Countries that move faster will not only decarbonize, theywill secure lower energy costs, stronger strategic autonomy, and significant economic and industrial benefits.