The rise in electricity prices does not stop. On Tuesday 8 September the reference of the Italian electricity market rises to 224.46 euros per megawatt hour, compared to 218.93 euros the previous day. As already seen on 7 September, the peak is concentrated precisely when photovoltaic production begins to decline and the system must rely more on other programmable sources and imports: on the evening of 8 September it will reach 349.99 euros/MWh. A figure that confirms that September’s electricity prices were not an isolated episode. In fact, since the beginning of the month, Italians have been paying on average over €200/MWh, compared to €132.5/MWh in June, 157 in July and 180 in August.
As we have seen, the problem explodes especially in the evening with the photovoltaic supply rapidly disappearing, while demand still remains high. At that point, more expensive systems, often gas-fired, enter the market. With raw material prices running at €73.5/MWh, for a combined cycle power plant the cost of producing electricity can easily exceed €150-180/MWh before even considering the tax on carbon dioxide emissions, efficiency and producers’ margins. However, looking carefully at the graph above you can see that there does not appear to be an absolute shortage of energy. Indeed: 1.322 million MWh were offered and 982,662 were sold; therefore approximately 339 thousand MWh of offers remained unsold. However, the energy price formation mechanism is based on a particular mechanism called “marginal prices”. When a very expensive gas-fired power plant is needed to meet that last bit of demand, that price tends to become the benchmark for all energy traded in that range. This is clearly evident from the electricity market offers collected by GME: the marginal market also allows a very small quantity of energy, but necessary to close the market, to set the price for an entire area, setting very high prices for everyone.
The example of September 1st
Let’s take for example the case of the energy price formation on September 1st (the latest data for which are public today). It perfectly shows the mechanism that can produce very high returns in times of shortage of supply. In the evening hours, the price of electricity was not simply set by the cost of large gas-fired power plants, but by the last supply needed to meet demand in each area. In fact, GME data shows that many large combined cycles offered hundreds of megawatts at prices ranging roughly between 150 and 200-220 euros per MWh.
However, other units often determined the marginal price. At 7pm, for example, in Sardinia an Enel storage system offered energy at 239.75 euros/MWh: 43.9 MW were accepted and that price became the reference for the area. In the North, in the following hours, the Venaus hydroelectric pumping plant also entered the margin, with an offer at 228.70 euros/MWh, and another large Enel battery system, which at 8pm offered at 238.24 euros/MWh. On the continent, after 8pm, prices remain predominantly in the area of 236-240 euros. The situation becomes even more extreme in Sicily, where interconnection limits separate the area from the rest of the market: between 8.30pm and 8.45pm, 3.2 MW of an offer presented by Banco Energia at 340.82 euro/MWh is enough to set the price of the entire area; in the following quarter of an hour, 39.7 MW of the Giammoro gas plant in Duferco, offered at 312.89 euro/MWh, determined the price.
For the former minister of economic development Carlo Calenda, now a senator for Action, there would however be a “systematic manipulation of the Italian electricity market which would seriously damage consumers”. According to Calenda, the current market structure would allow producers to implement a speculative strategy to set an artificially high selling price at figures well above the real production costs. In particular, producers who sell energy taken from sources with low marginal costs, such as hydroelectric (estimated around €35-50/MWh), can earn exceptional profits. All in the absence of adequate controls by the competent authorities who, according to Calenda, would be incapable of stopping what is defined as a real “deception against citizens”.
The issue reported by Calenda was also at the center of a fact-finding investigation by Arera which in July 2025 confirmed (for the two-year period 2023-2024) the presence of manipulative conduct defined as “economic retention of capacity” prohibited by the European regulation. According to the authority, some operators offered energy at artificially high prices so as not to be accepted by the market, reducing the real offer to make final prices soar and inflating Italians’ bills by over 5 billion euros.
Following the investigation, sanctioning proceedings were initiated against some operators: A2a received a fine of 5 million euros from Arera “considering the relevance of the potential damage caused to electricity consumers by the manipulative conduct of one of the primary market operators”. The company justified its strategy – in a back-and-forth that lasted for several months – for optimizing the planning of the A2A electricity park, and recovering the fixed costs on the plants. He announced to The Vermilion that he will challenge the sanction by filing an appeal with the Lombardy Regional Administrative Court as he believes “that the measure is based on an incorrect interpretation” of the regulation, while he did not want to comment on Senator Calenda’s words.
It’s about the first individual sanctioning proceedings for withholding of capacity, demonstrating that the supervisory authority has finally decided to intervene with concrete sanctioning powers. The outcome of the proceedings will tell us what effects it will have on the electricity market.