Liberalization of the electricity market in Europe

1.       A wide-ranging look

EDF (Électricité de France) is a French electric utility company that is wholly owned by the French state, which reacquired full control in 2023 through a renationalization process, taking it off the stock market. While it operates in competitive markets and has international subsidiaries (like EDF Energy in the UK), its parent company is fully controlled by the French government, which manages it to serve national energy interests, particularly nuclear power.

EDF's full state ownership (Electricité de France) by the French government is considered generally in line with EU rules, though it required navigating EU state aid and market opening regulations, with past tensions over whether state support  acted like a private investor or distorted competition, leading to court cases and some conditions, but the core principle of national ownership in strategic sectors like energy is permissible if handled within EU framework.

Both Germany and Spain have state-owned (or municipally-owned) electricity companies, though their energy markets are largely liberalized; Germany has strong regional municipal suppliers like Stadtwerke München, while Spain has major private players but also public entities, with ongoing debates about renationalization in Germany.

Italy has state-owned involvement in electricity, primarily through Enel, where the Ministry of Economy and Finance is the main shareholder (around 23.6%), making it a significant state-influenced player in generation, distribution, and sales, while Terna (the grid operator) is also partially state-linked through CDP Reti, but the sector is liberalized with private companies and local utilities also active.

Italy's electricity market liberalization has delivered mixed results: it increased supplier choice and efficiency but struggled with low consumer switching, limited price reductions for residential users, and ongoing market power issues for incumbents, with the full transition for households only completing recently, leaving debates about whether promises of lower prices and greater benefits have been fully met for everyone. While new operators entered and some efficiencies were gained, many consumers remained on regulated tariffs, benefiting less from competition, and some studies suggest price drops weren't as significant as hoped, highlighting persistent challenges.

2.       Promises vs. Reality

Promise: Increased competition, efficiency, and lower prices for consumers through supplier choice.

Reality:

Limited Consumer Engagement: Many residential customers (small consumers) were slow to switch from regulated tariffs ("maggior tutela") to the free market, limiting the competitive benefits.

Price Impact: General consensus suggests liberalization didn't significantly reduce electricity prices for all, especially compared to expectations or other markets, with some studies showing limited impact on consumer welfare.

Market Concentration: The market faced issues with dominant players, and new entrants struggled to gain significant share, undermining effective competition.

3.       Key Developments

Phased Liberalization: Italy started in 1999, with full liberalization targeting completion by 2007, but kept a "protected" market (maggior tutela) for those who didn't switch.

The Final Push: The protected market for electricity officially ended in April 2024, fully transitioning all consumers to the free market, a long-delayed final step.

Regulatory Efforts: The Italian regulator (ARERA) tried to encourage switching through measures like auctions for "captive" customers to move them to the free market.

4.       Overall Assessment

While the structure for competition is in place, with an independent grid operator and new players, the hoped-for widespread benefits for all users, particularly lower residential prices, haven't fully materialized as promised due to consumer inertia, market structure issues, and slow adoption, though the recent complete market opening aims to change this.

The privatization of ENEL and energy market liberalization in Italy brought mixed results, benefiting producers (like Enel itself) and traders with new markets and international expansion, while users gained choice and potential price benefits, but often faced complex free markets; distributors (like e-distribuzione) kept network control; and the State benefited from privatization revenue, reduced direct control, and dividends but retained influence via significant stakes in key energy players, leading to ongoing debates about true competition.

5.       Overall Impact and real Italian present situation

The process successfully broke the state monopoly, created a competitive framework, and allowed companies like Enel to thrive globally, but the State's continued significant ownership in key players (Enel, Terna, Eni) created a chronic conflict of interest, tempering the full competitive potential of the market.

Table 1 – Source “X”: https://x.com/degiorgiod/status/1997015592134668555/photo/1

 6.     Italy's electricity sector

Referring to Table 1 above and given the unfulfilled promises of privatization and liberalization of the Italian electricity system, there appear to be circles (associations, industries, etc.) that are considering a possible renationalization. These are not inventions, because there is substance to the underlying premise that Italy's electricity privatization and liberalization—initiated in the late 1990s and accelerated in recent years—have fallen short of expectations in several ways, leading to widespread frustration. However, the idea of organized "circles" (e.g., major industry associations, trade unions, or business groups) actively pushing for renationalization appears overstated or unsubstantiated based on current evidence. It's more of a recurring theme in political rhetoric, social media discussions, and nostalgic critiques rather than a coordinated, mainstream campaign. Let’s break this down step by step with the help of Grok and Gemini AI systems.

1.     Unfulfilled Promises of Privatization and Liberalization:

This holds up Italy's electricity sector that was largely state-controlled until the 1990s (via entities like ENEL and ENI under the IRI holding). Privatization aimed to boost efficiency, lower prices, and foster competition, while EU-driven liberalization (e.g., ending the "protected market" or mercato tutelato in 2024) sought to integrate Italy into the single energy market. Key shortcomings include:

• High and Volatile Prices: Despite record renewable growth (renewables covered ~43% of demand in 2024, up from 37% in 2023), wholesale electricity prices spiked in 2023 due to gas dependency (Italy imports ~40% of its energy) and grid bottlenecks. (montel.energy)
• Zonal pricing introduced in 2025 (replacing the single national price, PUN) was meant to curb costs but has been criticized for exacerbating regional disparities without enough renewable rollout.(cleanenergywire.org)
• Household and industrial bills remain among Europe's highest, up ~20-30% since 2021, fueling economic strain (e.g., Confindustria reports energy costs eroding competitiveness). (confindustria.it)
• Delays in Renewables and Grid Modernization: Targets lag (e.g., only ~7.5 GW new renewable capacity added in 2024 vs. 12 GW needed annually for 2030 goals).(cleanenergywire.org)
• Terna's €23 billion 2025-2034 grid plan is ambitious but faces permitting bottlenecks and NIMBYism.
• Regulated Monopolies' Profits: State-linked firms like Terna (transmission) and Enel (distribution) report margins ~50% higher than EU peers, seen as "rents" extracted from bills. (@CarloCalenda)
• This has drawn fire from politicians like Carlo Calenda (Azione party), who in 2025 called for urgent decrees to cap these and reform the market.

These issues have indeed sparked debate, with subsidies totaling €21+ billion in 2023 alone to shield consumers—highlighting how liberalization hasn't delivered affordability or resilience. (montel.energy)

2. Evidence of Renationalization Discussions

Some Noise, Little Organization Calls for renationalization (or "renazionalizzazione") echo pre-1980s nostalgia, when ENEL and ENI were fully public and integrated. But they're sporadic, not driven by major stakeholders:

• Political Voices:
• Figures like Calenda criticize "speculator bengodi" (paradise for speculators) in the market but focus on regulation (e.g., profit caps, better auctions) rather than full state takeover. (@CarloCalenda)
• Left-leaning or sovereignist politicians (e.g., in M5S or minor parties) occasionally reference France's EDF or Germany's Uniper nationalizations as models, noting Italy's PNRR funds were tied to ending protections that peers retained. (@Gitro77)
• A June 2025 X post proposed a referendum to "restore pre-1981" with public ENEL/ENI, gaining ~1,000 likes but no follow-through. (@FrancescoITA333)
• Social Media and Public Discourse: X (formerly Twitter) shows frustration with privatization's "catastrophic failure," with users arguing nationalization could lower prices. (@Strongisgentle)
• Semantic searches reveal ~10-20 relevant posts since 2023, often tying it to energy crises or EU comparisons, but engagement is low (e.g., <100 likes average).
• No Major Circles Involved:
• Industry Associations (e.g., Confindustria, Assoelettrica): They push for faster renewables, grid investments, and EU reforms (e.g., long-term contracts like PPAs), not reversal to state control. Confindustria critiques high costs but advocates market fixes.(confindustria.it)
• Trade Unions (e.g., CGIL, CISL): Focus on worker protections, green jobs, and affordability (e.g., opposing zonal pricing's risks to southern Italy), but no campaigns for renationalization in 2024-2025 reports.
• Business Groups: Enel (partly state-owned at ~23%) emphasizes private-led growth in its 2025-2027 plan (€43 billion investments, mostly renewables), aligning with liberalization.
• Overall, these discussions lack momentum—no petitions, white papers, or coalition announcements from credible groups. They're amplified by energy price hikes (e.g., +1.6% CPI in early 2025) but drowned out by pro-transition narratives

3. Emerging opinion: Limited Substance, But a Symptom of Deeper Issues

One might think that the claim has a kernel of truth—privatization's flaws are real and politically weaponized, creating fertile ground for "renationalization" as a slogan. But it lacks substance as a viable, organized push. Italy's path is locked into EU liberalization (e.g., 2024 Electricity Market Design), with focus on hybrids like public-private renewables (Terna's plan is 99% green-aligned). (strategicenergy.eu)

• True reversal would require exiting EU frameworks, clashing with PNRR commitments (€191 billion in funds). If prices keep rising (projected +1.8% CPI in 2025) or renewables stall, this could gain traction—especially if Meloni's government (pro-nuclear, pro-gas) faces backlash. For now, solutions lean toward tweaks: more storage, interconnections (e.g., Italy-Greece link), and profit curbs.(terna.it)
• Watch unions or Confindustria for shifts; they're the real bellwethers.

4. A final observation

Voter turnout now shows that those who vote are half of those who don't. If someone up there really cared about the country's democratic stability, they could no longer ignore the discontent pervading the country. And the cost of energy, attributed to the country's energy situation, is one of the main reasons for this discontent.