Solar curtailments bullish for Italian power prices – traders

• Italian TSO Terna has likely been curtailing solar generation on sunny days with low demand according to traders and publicly available data
• Market participants told ICIS that curtailments could be bullish for Italian gas and power prices
• Curtailments aim to safeguard grid stability and could indicate Terna taking cautious approach following Iberian blackout in April

LONDON (ICIS)–Several market participants told ICIS that recent curtailments of Italian solar output by the national transmission system operator (TSO) Terna could have a bullish impact on summer power prices by replacing cheap renewable generation with more expensive gas-fired output.

“The Italian TSO has likely been curtailing solar generation, as the forecasts don’t match up with the actual generation levels, especially on festive days with low demand,” a trader told ICIS.

A second trader added that the effect would be “decidedly bullish on power and gas”.

BEAR OR BULL?

Italian solar curtailments are indicative of grid oversupply, which is potentially a bearish indicator for power prices.

On 1 May, amid the Labor Day national holiday, low demand and sunny weather, Italian electricity prices were pressured to zero or near-zero for seven consecutive hours (11:00-17:00) across all zones.

Italian load peaked at 27.7GW on 1 May, some 9.3GW below the peak load average for the month of May so far.

The combination of low demand and strong solar led to actual solar generation, as reported by Terna, falling behind ENTSO-E’s Day-ahead forecast for 1 May, a discrepancy which could indicate curtailments.

Despite being an indicator of oversupply, according to ICIS Italian power analyst Luca Urbanucci, the impact of the curtailments is ultimately bullish.

“If Terna is curtailing solar generation more, this means that low-cost renewable generation is being replaced by something more expensive, like gas”, said Urbanucci.

A third trader agreed with this view, claiming that “the impact will be more bullish than bearish”.

Perhaps in anticipation of increased prospects of solar curtailments, on 27 March the Italian regulator Arera issued Resolution 128/2025/R/EFR to compensate solar producers for curtailed energy, extending a mechanism that previously applied only to wind power.

GRID SECURITY

The first trader told ICIS that curtailments were “probably made because Terna is having difficulties balancing the grid”.

The first trader also explained Terna’s curtailments could be due to safety reasons.

“Curtailments are made in order to have more gas-fired power plants running, so that if solar generation should suddenly and unexpectedly drop due to a passing cloud, gas-fired generation can be quickly ramped up and offset the loss,” the same trader said.

A second Italian power analyst noted that “we are also witnessing unplanned import reductions made likewise with the goal of leaving more space for Italian CCGTs”.

Keeping additional combined-cycle gas turbines (CCGTs) online could provide both additional grid inertia and ramping capability for the Italian grid.

The second trader suggested that the curtailments might be linked to the Italian TSO taking a more cautious approach after the major Iberian blackout on 28 April.

However, ICIS’s Urbanucci was skeptical regarding any recent change in Terna’s approach, stating that he did not believe that “Terna’s recent behavior has been particularly influenced by what happened in Spain.”

“The Italian TSO has always been quite conservative in avoiding risks of overloading the grid,” said Urbanucci.

In April, Italian solar generation was 15.7% higher than in April 2024.

Terna did not reply to questions from ICIS by the time of publishing.