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REF-E Scenarios Update IV2022 December 2022

Mild temperatures and energy savings drive price reductions

REF-E scenarios are elaborated by MBS Consulting experts on the base of proprietary suites and market knowledge. Econometric and structural models, as well as our expert sensitiveness, detailed knowledge of regulation, and accurate monitoring of market outcomes underlie our elaborations.
Historical data on which this report analyses are based are updated at the end of December 2022. Bearish trends and market dynamics observed till the end of 2022 were mostly led by temporary mild climate conditions.
Gas and electricity forecasts take into account the diverse geopolitical and economic hypothesis deriving from the potential war-induced structural adjustments. The European Union and each single nation reaction to the disruption generated from the deterioration of both diplomatic and commercial relations with Russia are seen as key determinants of the future equilibrium of the energy markets.
In this perspective, we defined three scenarios.
The Worst Case is characterized by permanently high prices amid the long-lasting conflict induced import-export bans and trade flows interruptions. Negative or zero economic growth and the energy transition process failure would follow as a consequence of investments disruption.
In the Reference scenario, prices remain high in the short-term amid low supplies failing to match demand growth. However, the energy transition process continues and dependence on Russian commodities reduces progressively, also following gas and other fossil fuels supplies from alternative routes increase, leading the energy market towards a normalization path. The economic growth suffers a contraction over the next two years, followed by recovery.
The Best Case scenario would materialize in the event of favourable weather conditions adding to a fast energy transition, supported by low inflation and a faster economic recovery. This would keep demand subdued over the next few years, initially limit prices upside potential and then fuelling a downward acceleration.

The Elfo++ scenario is also accessible through the new Web App interface!

The REF-E scenarios are complete market studies, processed every four months, setting out the evolution of the Italian electricity market up to 2040. The accompanying documents put the reader in a position to investigate the methodological assumptions and knowledge of the main results presented.

In particular, the scenarios show:

  • fuel prices
  • electricity demand
  • the development of the transmission grid
  • production capacity from renewable sources
  • thermal generation
  • marketing strategy
  • the safety and effectiveness of the system

The REF-E scenarios arise from in-depth and accurate understanding of the needs of the people who work in the energy markets in terms of strategic vision. These rich, detailed and reliable information products are able to respond fully and efficiently to the needs of their users.

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