Principali contenuti: - Conventional Power Generation: The Surge of Renewables And Weak Demand Clouds Credit Prospects - Supply Of Power And Gas: Market Liberalization Is Unlikely To Improve Profitability Sustainably - Transportation And Distribution Of Power And Gas: Increasing Reset Risk - Utilities Are Tapping Capital Markets - Factors Blocking Consolidation In The Industry - Credit Quality Among Rated Italian Utilities Is Declining
The surge in renewable energy generation and subdued demand for power amid weak economic conditions has cutpower prices and, in turn, the profitability of large rated utility companies throughout Europe. Yet, Italian utilities are hit particularly hard. The country's economic prospects remain gloomy amid the harshest recession it has experienced since World War II. Electricity prices have fallen by 15% in 2014 year to date on last year. Gas prices are additionally suffering volatility due to geopolitical risks, given that Italian imports of natural gas from Russia transit through Ukraine. We now predict that power and gas demand in Italy will not recover its 2008 levels before 2020. Consequently, we believe Italian utilities will struggle to keep adjusted returns on capital in the 7% and 10% range they achieved over 2009-2013.