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Impact of the Abolition of PUN on the Outcomes of the Italian Day Ahead Market

Publications - Paper

Impact of the Abolition of PUN on the Outcomes of the Italian Day Ahead Market

Italy has a uniform electricity purchase price called PUN, but is considering abolishing it in 2025. Analysis shows that the change could lead to different zonal prices and benefits for different regions.

Italy is the only European country where buyers (except for pumped storage hydro units) are subject to a uniform purchase price, called PUN, regardless of the zone in which they are located. The paper presents the evaluations of a possible abolition of the PUN starting from 2025.

 

Firstly, a historical analysis has been carried out both from a statistical point of view and by developing a methodology to compare the results of the Italian market solved with PUN and a purely zonal market. The analysis has been developed using models already available in RSE whose level of precision allows to replicate historical results. Subsequently, the impact on the electricity markets of the change in the generation technological mix due to the growth of renewable sources, is assessed.

 

The hypotheses for the evolution of the national power system have been defined and a scenario and sensitivities have been developed on specific drivers to evaluate the impact of these hypotheses on the zonal prices at the target year 2030. The results show that, if in the past Sicily recorded higher zonal prices than other zones benefitting from the presence of the PUN, the scenario analysis shows that, thanks to the strong penetration of renewable sources and the development of the transmission grid, Sicily will benefit from buying at a zonal price, being one of the zones with the lowest price.

 

Conversely, consumers in the North have historically borne higher costs due to the PUN while in the future they would benefit from the presence of the PUN since the North zone should be characterized by higher prices than the other zones.

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