By Alessandra Migliaccio - Apr 18, 2011 6:01 PM GMT-0500
Italy’s decision to shelve an 18 billion euro ($26 billion) reactor-building program after Japan’s nuclear crisis means companies from Fiat SpA (F) to Parmalat SpA (PLT) will keep paying Europe’s highest power prices.
Italy, the only major world economy without atomic power, had planned to build its first four reactors by 2020. The government ordered a one-year moratorium after radiation leaked from Fukushima, jeopardizing Prime Minister Silvio Berlusconi’s goal of curbing dependence on energy imports.
Fiat and Parmalat, Italy’s biggest carmaker and dairy producer, will probably continue to pay more for energy. Italian companies paid twice as much for power in 2010 as their French counterparts, 40 percent more than in the U.K. and 27 percent more than German rivals, according to Eurostat, the region’s official provider of statistics.
“With everything blocked and no near-term solutions, prices will stay high,” said Edoardo Liuni an analyst at IlNuovoMercato.it in Rome. “Unfortunately, Italian companies will continue to pay the price for immobility.”
Fiat highlighted rising energy costs among factors that could potentially have a “material adverse” effect on earnings in its 2010 annual report. The carmaker said it’s continually working to find more energy-efficient production processes to reduce costs.
Overturned Ban
Berlusconi’s centre-right coalition government in 2008 overturned a ban on nuclear energy imposed following the 1986 Chernobyl disaster. Enel SpA (ENEL), the country’s biggest utility, and Electricite de France SA drew up plans to build new reactors to supply 25 percent of the country’s energy needs. That would have implied an installed nuclear base of 8 gigawatts, according to UBS AG. Given the events in Japan, the government may lose a planned referendum in June.
“It’s a pity, people were slowly coming round to nuclear since we have it all around our borders and now we’re back into paranoia,” said Giuseppe Zollino, a nuclear engineer and professor of energy economics at the University of Padua in northern Italy. “The maddening thing is there is no plan, just to keep paying more for energy.”
Other European countries have put their nuclear plans on hold following the accident at Japan’s Fukushima Dai-Ichi plant arising from the March 11 earthquake and tsunami. Germany halted 25 percent of its nuclear capacity and may close its oldest plants for good. Switzerland deferred plans for new reactors and the U.K. said it may delay its program.
‘No-Win Scenario’
Europe has become more hesitant about nuclear energy at a time when countries face difficulties in reducing any of the factors that drive up power prices, said Tatjana Eifrig, an energy analyst at Banca Finnat Euramerica in Rome.
“It’s a no-win scenario for energy buyers,” said Eifrig. “You can’t cut taxes at a time of budget problems, renewables involve large investments, and substituting nuclear with traditional fuels tends to increase prices and forces companies to pay emissions permits.”
Parmalat declined to comment on the impact of energy prices on its operations, as did Fiat.
Italy’s nuclear blueprint formed the center of an energy strategy aimed at reducing its dependence on fossil fuels from 80 percent to 50 percent.
Italy currently gets 60 percent of its electricity from gas, mainly from Algeria and Russia, according to data from grid operator Terna SpA. The country obtains 12 percent of its electricity from coal, 8 percent from oil and 20 percent from hydroelectric and other renewable sources.
Increase Share
By 2020, Italy had planned to produce 50 percent of its electricity from fossil fuels and the remaining 50 percent equally divided between nuclear and renewable energy, Environment Minister Stefania Prestigiacomo said last year.
Enel Green Power SpA (EGPW), the renewable-energy arm of Enel which listed in Milan last year, surged to a record 2.048 euros earlier this month on speculation the halt in Italy’s nuclear plans would spur greater investment.
“I don’t believe nuclear lowers electricity costs because modern plants, which is what Italy would be building, have huge initial costs that companies recover through bills later on,” said Salvatore Barbera, a nuclear physicist and head of Greenpeace Italy’s anti-nuclear campaign. “Renewable energy which is becoming less expensive as we develop it makes much more sense, is safe, and provides more jobs.”
Clean Energy Incentives
While the Italian government has announced plans to reduce clean energy incentives, they currently remain the highest in continental Europe for onshore wind, biomass, and hydro, and among the highest for offshore wind and solar energy, according to Brussels-based research firm Europe’s Energy Portal.
Italian utilities pay 30 euro cents a kilowatt-hour for onshore wind power, more than triple the equivalent rates in France and Germany. They also pay three times French and German rates for biomass and triple French rates for hydropower.
Yet renewable energy remains a limited part of the country’s energy mix and doesn’t produce enough to supply power for large industries. That means countries like Italy will have to find ways to use traditional energy in more efficient ways.
“Near-term policies are likely to favor gas and energy efficiency and to a lesser extent coal,” according to an April 4 report by UBS. “Undersupply will put upward pressure on energy prices.”
Source: http://www.bloomberg.com/news/2011-04-18/italy-shelving-nuclear-means-no-end-to-eu-s-highest-power-price.html
Italy’s decision to shelve an 18 billion euro ($26 billion) reactor-building program after Japan’s nuclear crisis means companies from Fiat SpA (F) to Parmalat SpA (PLT) will keep paying Europe’s highest power prices.
Italy, the only major world economy without atomic power, had planned to build its first four reactors by 2020. The government ordered a one-year moratorium after radiation leaked from Fukushima, jeopardizing Prime Minister Silvio Berlusconi’s goal of curbing dependence on energy imports.
Fiat and Parmalat, Italy’s biggest carmaker and dairy producer, will probably continue to pay more for energy. Italian companies paid twice as much for power in 2010 as their French counterparts, 40 percent more than in the U.K. and 27 percent more than German rivals, according to Eurostat, the region’s official provider of statistics.
“With everything blocked and no near-term solutions, prices will stay high,” said Edoardo Liuni an analyst at IlNuovoMercato.it in Rome. “Unfortunately, Italian companies will continue to pay the price for immobility.”
Fiat highlighted rising energy costs among factors that could potentially have a “material adverse” effect on earnings in its 2010 annual report. The carmaker said it’s continually working to find more energy-efficient production processes to reduce costs.
Overturned Ban
Berlusconi’s centre-right coalition government in 2008 overturned a ban on nuclear energy imposed following the 1986 Chernobyl disaster. Enel SpA (ENEL), the country’s biggest utility, and Electricite de France SA drew up plans to build new reactors to supply 25 percent of the country’s energy needs. That would have implied an installed nuclear base of 8 gigawatts, according to UBS AG. Given the events in Japan, the government may lose a planned referendum in June.
“It’s a pity, people were slowly coming round to nuclear since we have it all around our borders and now we’re back into paranoia,” said Giuseppe Zollino, a nuclear engineer and professor of energy economics at the University of Padua in northern Italy. “The maddening thing is there is no plan, just to keep paying more for energy.”
Other European countries have put their nuclear plans on hold following the accident at Japan’s Fukushima Dai-Ichi plant arising from the March 11 earthquake and tsunami. Germany halted 25 percent of its nuclear capacity and may close its oldest plants for good. Switzerland deferred plans for new reactors and the U.K. said it may delay its program.
‘No-Win Scenario’
Europe has become more hesitant about nuclear energy at a time when countries face difficulties in reducing any of the factors that drive up power prices, said Tatjana Eifrig, an energy analyst at Banca Finnat Euramerica in Rome.
“It’s a no-win scenario for energy buyers,” said Eifrig. “You can’t cut taxes at a time of budget problems, renewables involve large investments, and substituting nuclear with traditional fuels tends to increase prices and forces companies to pay emissions permits.”
Parmalat declined to comment on the impact of energy prices on its operations, as did Fiat.
Italy’s nuclear blueprint formed the center of an energy strategy aimed at reducing its dependence on fossil fuels from 80 percent to 50 percent.
Italy currently gets 60 percent of its electricity from gas, mainly from Algeria and Russia, according to data from grid operator Terna SpA. The country obtains 12 percent of its electricity from coal, 8 percent from oil and 20 percent from hydroelectric and other renewable sources.
Increase Share
By 2020, Italy had planned to produce 50 percent of its electricity from fossil fuels and the remaining 50 percent equally divided between nuclear and renewable energy, Environment Minister Stefania Prestigiacomo said last year.
Enel Green Power SpA (EGPW), the renewable-energy arm of Enel which listed in Milan last year, surged to a record 2.048 euros earlier this month on speculation the halt in Italy’s nuclear plans would spur greater investment.
“I don’t believe nuclear lowers electricity costs because modern plants, which is what Italy would be building, have huge initial costs that companies recover through bills later on,” said Salvatore Barbera, a nuclear physicist and head of Greenpeace Italy’s anti-nuclear campaign. “Renewable energy which is becoming less expensive as we develop it makes much more sense, is safe, and provides more jobs.”
Clean Energy Incentives
While the Italian government has announced plans to reduce clean energy incentives, they currently remain the highest in continental Europe for onshore wind, biomass, and hydro, and among the highest for offshore wind and solar energy, according to Brussels-based research firm Europe’s Energy Portal.
Italian utilities pay 30 euro cents a kilowatt-hour for onshore wind power, more than triple the equivalent rates in France and Germany. They also pay three times French and German rates for biomass and triple French rates for hydropower.
Yet renewable energy remains a limited part of the country’s energy mix and doesn’t produce enough to supply power for large industries. That means countries like Italy will have to find ways to use traditional energy in more efficient ways.
“Near-term policies are likely to favor gas and energy efficiency and to a lesser extent coal,” according to an April 4 report by UBS. “Undersupply will put upward pressure on energy prices.”
Source: http://www.bloomberg.com/news/2011-04-18/italy-shelving-nuclear-means-no-end-to-eu-s-highest-power-price.html
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