Italy's Gas Reform Plan Risks Widening the Cost Gap It Aims to Close
A think tank warned on Wednesday (2026-09-09) that Italy's PSV hub reform risks creating price distortions rather than closing its persistent premium over TTF.
Goldman Sachs modelling cited in an analysis published on Friday (2026-09-11) found that a large European car factory can carry €500 million a year in excess power costs relative to a US competitor, with a chemical plant closer to €1 billion — figures that quantify the industrial penalty imposed by Europe's gas-dependent power markets.6
Italy's PSV gas hub has traded at a persistent premium to the ICE Endex TTF front-month, which settled at €79.51/MWh at Friday's close (2026-09-11). That spread feeds directly into Italian power prices: Ember data show gas set the marginal price in 89% of Italian power-market hours so far in 2026, compared with 15% in Spain. Italy's average power price in March 2026 was €142 per MWh; Spain's was €59, a gap that compounds the competitiveness pressure on Italian industry from elevated gas input costs.2
Rome has proposed regulatory changes designed to bring PSV prices closer to TTF. But analysts told Montel on Monday (2026-06-15) that the plan is unlikely to achieve its aims, with hub differentials shaped by physical and structural conditions that administrative adjustments cannot simply undo.4
A think tank sharpened that critique on Wednesday (2026-09-09), warning Montel that Italy's reform plan risks creating price distortions rather than resolving the spread. The warning strikes at the core assumption behind Rome's approach: that administrative alignment of a hub price can substitute for the underlying supply and infrastructure conditions generating it.5
Italy's energy regulator has separately begun developing a compensation mechanism for gas-fired power plants facing elevated costs, pending European Commission approval. The scheme would reimburse generators for part of their fuel-related costs, Montel reported on Thursday (2026-05-21). That design is proceeding in parallel with the hub reform rather than sequentially, reflecting the urgency of the cost problem for Italian generators. It also means Italy could end up layering a subsidy backstop on top of a market structure the reform fails to fix.1
The EU carbon market adds a further complication. Italy's energy sector is divided over the EU ETS ahead of a review of key reform proposals, Montel reported on Thursday (2026-06-18). Analysts warned that a highly politicised domestic debate could weaken Italy's negotiating leverage in Brussels, with one source cautioning that pushing for extreme positions risks costing the country influence over the final design of both the ETS and any associated market reforms.3
The competitive gap quantified by Goldman applies with particular force to Italy. Spain's March power-price advantage of €83 per MWh over Italy reflects its far lower dependence on gas for generation; with gas setting prices in 15% of Spanish hours versus 89% in Italy, the structural difference is not one Rome can close through hub regulation alone, regardless of whether PSV converges toward TTF.2,6
Three threads now run in parallel: the PSV reform challenged on distortion grounds, the compensation scheme awaiting a Brussels decision, and the ETS review whose outcome shapes the carbon cost embedded in Italian power prices. If the reform misfires and distortions materialise as the think tank warns, the compensation mechanism becomes Italy's main policy lever on industrial energy costs. But a scheme still awaiting Commission approval offers far less price certainty than a functioning market, and no timeline for that approval has been made public.5,1,3