Italy revises electricity price cap to curb gas‑driven power costs

The Italian government modified its "Decreto Bollette" by dropping the original plan to directly compensate gas‑fired power plants for CO₂ costs. Instead, it proposes a temporary ceiling on the gas price used for electricity generation, modelled on the Iberian "Tope" that Spain and Portugal applied in 2022‑2023. Aurora Energy Research estimates that this approach is less harmful to renewable‑energy investments, reducing the expected decline in renewable capture prices from 16% under a low‑cap scenario to about 11% with a €36/MWh cap. The agency also forecasts a temporary 10% drop in wholesale electricity prices by 2027, but notes that additional compensation to gas plants could erode any savings for consumers.

On 15 July, Italy’s power‑price index (PUN) rose to €165.9/MWh – its highest level since early 2022 – as natural‑gas prices surged. The increase reflects tighter global gas supplies, heightened geopolitical tension in the Gulf and the Strait of Hormuz, reduced Russian deliveries and higher US LNG costs. The European Commission’s ACER agency warned that European gas storage remains below historic norms and that the EU will need significantly more LNG imports this summer to safeguard winter supply. Persistently high gas prices could translate into higher electricity bills for households and businesses, affecting inflation and competitiveness.