Energy: ENEA Quarterly Analysis, 2021 energy demand bounced back in Italy (+8%), but signs of slowdown in 2022

31/3/2022

The ISPRED index, assessing the Italian energy transition, shrinked by 27%

Share of renewable energy below 19%

2021 was the year of the rebound in energy consumption in Italy (+8% with respect to 2020), despite the unprecedented increase in electricity and gas prices. This is what emerges from ENEA's Quarterly Analysis of the Italian Energy System, which also highlights a sharp rise in CO2 emissions (+8.5%; 70% of CO2 emissions “lost” in 2020 for the pandemic has been recovered) and a sharp worsening (-27%) of the ISPRED index, a composite index developed by the Agency to measure the energy transition on the basis of the trend in energy security, energy prices and CO2 emissions. In addition, the share of renewable sources is now below 19% of final consumption, down by more than one percentage point compared to the peak reached in 2020.

“Last year about 80% of the drop in energy consumption due to the pandemic has been recovered”, highlights Francesco Gracceva, the researcher from ENEA who coordinates the analysis. “More than half of this recovery took place in the second quarter of 2021, but growth remained strong also in the second part of the year (+7% in the third quarter and +6% in the fourth). Energy consumption has essentially followed a trajectory consistent with that of the drivers of energy demand, i.e. GDP, industrial production and climate throughout 2021”, adds Gracceva.

As regards energy prices, the last quarter of 2021 saw an unprecedented rise: TTF gas price reached around €100/MWh compared to €20/MWh in the first quarter of the year (+400%), and electricity prices on European stock exchanges followed suit, with Italian PUN growing by 300% over the same period (from 60 to 240 €/MWh). These increases have been progressively transmitted to final consumers, albeit partially, thanks to the exceptional measures carried out by the Government. In the fourth quarter of 2021, the growth of Eurostat HICP[1] for gas and electricity in Italy (electricity +30%, gas +40%) was about twice the EU average. “Moreover, in the first two months of 2022 preliminary data show a growth of 70% YOY[2] in HICP for gas and electricity in Italy, about double the EU average. This has already resulted in a sharp slowdown in economic growth as well as in energy demand, for which we foresee a growth of around 2% YOY in the first quarter of 2022 (that is much less than a in the IV quarter of 2021”, adds Gracceva.

In terms of energy sources, 40% of the increase in total energy consumption is attributable to oil, over 30% to natural gas, almost 20% to electricity imports and the rest to solid fuels. Oil demand, while still much lower than pre-Covid levels, grew by 10%, equivalent to about half the oil consumption lost in 2020. Gas consumption grew by 7% in 2021, exceeding 2019 levels (+ 2.4%) and reaching its highest value since 2011. Net electricity imports grew by 30% (back to their long-term average) while coal consumption grew by 10%, but it still remains well below pre-Covid levels (-15%).

More than half of the increase in CO2 emissions (+8.5%) is due to the increased energy demand of the transportation sector (whose emissions increased by 15%), 20% to the residential and tertiary sectors, 15% to power generation, less than 10% to industry.

Even though the drop of the ISPRED index is due to the worsening of all its three components, the main driver was the fall (-45%) of the indicator assessing the ongoing decarbonisation pathway of the Italian Energy System. As regards energy security, last winter recorded daily peaks of gas demand in the power sector at historic highs, “while reasons for concern come from the indicators measuring power system adequacy system and the central role that natural gas imports have in the entire Italian Energy System”, concludes Gracceva.

The Italian trade deficit in low-carbon technologies doubled again in 2021, as already happened in 2020. The highest deficits are related to lithium-ion accumulators (almost one billion euros), plug-in hybrid vehicles (600 million euros) and photovoltaic products (which grew from -40 to -400 million euros). On the other hand, exports of electric vehicles increased from about 270 to 780 million euros, and the net balance of this specific sector is now only slightly negative.

This Quarterly analysis includes an assessment of the trend of public spending on energy research between 2016 and the first part of 2020, showing that in Italy this R&D segment grew by 10%, which is about a quarter of that recorded in Germany.

The executive summary and the full report of the Quarterly analysis is available in Italian  at: https://www.pubblicazioni.enea.it/le-pubblicazioni-enea/analisi-trimestrale-del-sistema-energetico-italiano.html

 



[1] Harmonized Index of consumer prices

[2] Year-Over-Year

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