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Energy Outlook n.1 - Year I

Published on: 02-25-2016

In this issue: EXECUTIVE SUMMARY
I DRIVER DI MERCATO E I PRINCIPALI FATTORI DI RISCHIO

  • Scenario macroeconomico e prezzo del petrolio
  • Ulteriori fattori di rischio
CAPITOLO 1. OUTLOOK PER IL MERCATO ELETTRICO
  • I costi di produzione
  • I fondamentali di domanda e offerta
  • L’impatto dell’economia e delle variabili regolatorie
  • Il dettaglio delle previsioni per mese, fascia e zona
CAPITOLO 2 - OUTLOOK PER IL MERCATO GAS
  • La domanda
  • L’offerta
  • I prezzi
APPROFONDIMENTO 1 - Scenari alternativi di Brent e condizioni macroeconomiche
APPROFONDIMENTO 2 - Lo sviluppo della generazione rinnovabile e la variabilità nella producibilità delle fonti
APPROFONDIMENTO 3 - Il contatore GSE e le prospettive di sviluppo di nuova capacità incentivata
APPROFONDIMENTO 4 - Impatto su PUN e costi di generazione della riforma del conferimento della capacità di trasporto gas
APPENDICE I - TABELLE DI SINTESI
APPENDICE 2 - INFRASTRUTTURE GAS

Natural Gas Outlook - Year VII - Issue 12 - November 2015

Published on: 11-10-2015

In this issue: Forecasts

  • Demand.The recovery in the macroeconomic scenario should stimulate the increase in demand for gas, which nonetheless should not exceed 70 bcm. The contribution of the power sector should be modest, although the ever-increasing variability in electricity imports, hydro output and temperatures widens the forecast range..
  • Supply. The possible entrance of Snam Rete Gas may speed up TAP construction works, although a solution of the dispute with local authorities still seems far off. In the meanwhile, the prospects a new gas hub for Europe seem to move northwards.
  • Prices In the coming months supply glut and stagnant demand are pushing PSV and TTF prices down further and making spikes in prices unlikely even in the event of low winter temperatures. Not even the most optimistic hypotheses of a recovery in oil prices would buoy gas prices before the summer of 2016.
Key issues
1. Gas pricing on the retail market: more and more hub indexation and fixed prices 2. Biomethane: a new national resource 3. New infrastructures

Natural Gas Outlook - Year VII - Issue 11 - June 2015

Published on: 06-29-2015

In this issue: Forecasts

  • Demand. Although weather conditions are closer to seasonal averages, demand remains weak in GY14 (increase over GY13 lower than 2%); however the recovery, driven mostly by temperatures and rainfall, may bring consumption back to 70 bcm in GY15..
  • Supply. The outlook is one of a “buyer’s market” scenario: large inventories, falling import prices, greater availability of LNG in Europe and end to tensions over Russian imports may result in PSV prices below 24 €c/cm in GY15. The PSV should be more in line with foreign markets as a result of entry expenses shifting downstream and the application of European network rules.
  • Prices. The outlook is one of a “buyer’s market” scenario: large inventories, falling import prices, greater availability of LNG in Europe and an end to tensions over Russian imports may push prices below 24 €c/cm in GY15. The PSV should be more in line with foreign markets as a result of entry expenses shifting downstream and the application of European network rules.
Key issues
1. Security of Supply and Storage 2. The new European balancing model: necessary conditions and risks 3. New infrastructures

Natural Gas Outlook - Year VI - Issue 10 - December 2014

Published on: 12-01-2014

In this issue: Forecasts

  • Demand. Given the weak macroeconomic recovery, the renewable growth may be crowded out by hydroelectric production reduction; this, coupled with residential demand normalization, may allow for a temporary growth in consumption. The weather is the main short term risk factor, however it is unlikely that demand durably returns to above 70 bcm.
  • Supply . A recent law could boost the investments in infrastructures and production of hydrocarbons, but the regulatory incentive framework remains uncertain and the main investment decisions are postponed.
  • Prices. Bullish pressures are relaxing as winter begins and low prices could result from abundant reserves in storage, excess of supply, reduction in the import cost and greater abundance of LNG in Europe. The SOS risk remains nevertheless higher for Italy with respect to continental Europe, explaining the presence of a PSV premium.
Key issues
    1. Focus on the global LNG market . The balance of the global LNG market is changing: after 2015 it could become a buyers’ market with an a more liquid spot market, a closer convergence of world gas prices and more abundant flows of LNG to Europe than in the recent past.
    2. An eco-friendly vehicle fuel: LNG . Alternative services to the traditional imports of shipments that regasification terminals can provide in order to diversify their business include refuelling vehicles fuelled by natural liquefied gas.
    3. New infrastructures

Natural Gas Outlook - Year VI - Issue 9 - April 2014

Published on: 04-01-2014

In this issue:
Forecasts

  • Demand
    The fall in the demand for gas seems to be without end. This time it was exceptional temperatures and rainfall responsible for the trend, but recovery is possible after the summer.
  • Supply
    The final investment decision for the Southern Corridor faces local opposition while work is proceeding on South Stream, which is now waiting for an agreement on compliance with EU principles for the European section.
  • Prices
    Prices will be at low levels next summer, depressed by weak demand, but for the winter increase in expenses on volumes injected into the network will drive the recovery. The seasonal spread is increasing, while that with other European markets remains small.
Key issues

    1. Daily variability in gas consumption on European markets . Italy and the main gas markets in North West Europe are facing the challenge of growing volatility in daily offtake from networks.
    2. The Russian crisis and supply security: a few scenarios . All the indicators suggest there is no need for concern, but the raw nerve of peak demand still remains. The economic consequences of possible rationing from Russia could therefore be considerable.
    3. New infrastructures

Natural Gas Outlook - Year V - Issue 8 - November 2013

Published on: 11-28-2013

In this issue: Forecasts

  • Demand. Gas consumption could start to increase again next year, thanks to a recovery in its use for power generation. This will only be possible if hydroelectric and wind power generation returns to average historical levels and forecasts of a slight improvement in the economy are confirmed.
  • Supply. TAP will be the official pipeline for transporting Azeri gas to Europe and the final investment decision should now be imminent, following a complex procedure which led to the definition of access and tariff rules; onshore work for South Stream has commenced at the same time, while on the LNG front, OLT is expected to go into operation in the next few days.
  • Prices. Given the low level of concerns over possible supply shortages over the winter, stable prices are forecast for coming months with low seasonal and TTF spreads. Increases in charges on volumes injected into the network are possible.
Key issues
1. The flexibility of combined cycle plants and demand for gas in the power sector. The greater operational flexibility demanded of gas-fired plants does not seem to have reduced the average efficiency of the fleet. Operators and the electricity system in general will benefit, but gas demand will not.
2. Gas pricing: are we moving towards the end of oil-indexation? The indexing of long-term contracts to oil products is under attack because of the fall in spot prices, but is strongly defended by producers. The practice of hub indexing on the other hand is increasingly gaining ground, but is not to be relied on according to supporters of oil-indexation: will this be a forced transition?
3. New infrastructures

Natural Gas Outlook - Year V - Issue 7 - June 2013

Published on: 06-11-2013

In this issue: Forecasts

  • Demand
    In a context of weak demand, consumption is increasingly more volatile; the impact of solar generation in the summer and also the first signs of weakness in low-pressure network demand constitute causes for concern.
  • Supply
    The context for investments is increasingly more difficult: the new OLT regasification terminal should go into service at the beginning of GY13; the LNG market is suffering from the contraction in European demand and from contracts that are still too rigid.
  • Prices
    PSV stable in the summer at the equilibrium levels reached in the second half of 2012, recovering slightly at the start of the next GY. The spread with TTF below 2 €/MWh and under allocation of storage not the cause of pressures on prices.
Key issues
    1. The importance of storage. In the first case of under allocation of storage, connected with limits on flexibility performance, a low seasonal spread, growth in the spot market and a reform which rendered the service less attractive, future gas crises and pressures on prices are not very probable. However, security under peak demand conditions is at risk from a reduction in the supply.
    2. What is the value of import capacity with spot prices aligned?. Notwithstanding the alignment between the average price on the Italian market and prices on the main European hubs, the value of import capacity in the long-term continues to remain positive in probability terms.
    3. New infrastructures

Natural Gas Outlook - Year IV - Issue 6 - December 2012

Published on: 12-05-2012

In this issue: Forecasts

  • Demand
    The fall in demand close to rates seen in recent years continues in GY12.
  • Supply
    Not just market but also regulatory uncertainties over new infrastructures.
  • Prices
    Spot and indexed prices still far-off and the TTF spread increases only in the winter.
Key issues
    1. Contract renegotiations: who wins and who loses. Volumes subject to renegotiation are forecast to increase, as are the impacts on import costs and the revenues of major players, with results that are not always positive. 2. The future of gas in “non-power” segments. The weakness of the tools proposed, the economic environment, new, but not fully mature technology: the replacement of gas for heating will be slow, even in the SEN scenario. 3. New infrastructures

Natural Gas Outlook - Year IV - Issue 5 - June 2012

Published on: 06-13-2012

In this issue: ref forecasts

  • Demand
    The thermal power sector was most to blame for the recession in demand in GY11. The outlook in the reference scenario is one of a slight contraction, with little room for growth for industrial use and gas as a fuel which is still not very competitive.
  • Supply
    Ownership changes in the transport sector: the GIP buys shares in Transitgas; the CDP replaces ENI as Snam shareholder. Progress with project selection: Azerbaijan supply to TAP and not to ITGI via the Southern Gas Corridor; a final decision on Galsi by 2012; Falconara and Gioia Tauro terminals authorised; progress on Brindisi and Zaule halted. Strategic storage reduced for the first time, but new volumes only for the “storage decree” in GY12.
  • Prices
    PSV prices peak next winter and then fall sharply. Price differences on European markets below the average in recent years as a result of less control by ENI and better allocation of pipeline capacity. The moderate growth in the Gas Release price only continues after 2013 in the high scenario, while indexation formulas fall in GY12 in the reference and low scenarios.
Key issues
    1. The LNG market 2. Producer countries: Norway 3. New infrastructures

Natural Gas Outlook - Year III - Issue 4 – November 2011

Published on: 11-08-2011

In this issue: ref forecasts

  • Demand
    The forecast for Italian demand for natural gas in GY11 is around 81 Bcm, basically unchanged compared to the previous gas year (+0.5%), the result of a deterioration in the economic situation. The only sector of demand to grow compared to GY10 is that of thermoelectric power, which, however, is still performing turbulently with preliminary figures for GY10 lower than expected. On the other hand, a fall (-3.8%) in gas demand in quantitative terms from major industrial companies is forecast, while demand from the distribution network will be basically flat (-0.4%). The greatest factor of variability in the demand estimate is linked to electricity market variables underlying power plant consumption.
  • Supply
    Important factors on the supply side are: the reopening of the Greenstream pipeline in October 2011, although with reduced capacity for the first few months, the steps forward which have been taken with formalities for new pipeline projects and the news concerning LNG infrastructures: the Falconara and Porto Empedocle terminals completed the authorisation processes. The realization of the OLT Offshore is getting closer and good prospects for progress are expected for projects connected with the “storage decree”.
  • Prices
    REF forecasts are for growth in prices in GY11 for all scenarios with respect to the average in GY10, mainly as a consequence of the impact of rises in oil prices recorded in the gas year just ended. This growth nevertheless weakens and reverses over the summer for all scenarios, partly as a result of the normal seasonal fall in demand. Average prices on the PSV for the gas year are 37.1 €cent/cm in the High Scenario, which combines the high scenario for Brent oil with the high demand scenario, 32.4 €cent/cm in the Reference Scenario and 30.4 €cent/cm in the Low Scenario.
Key issues
    1. Boom in the renegotiation of contracts for international gas supplies 2. Producer countries: Russia 3. New infrastructures