Demand-side policies for power generation in response to the energy crisis : a model analysis for Italy

To mitigate the impacts of the energy crisis, the European Union has proposed various measures. For the electricity sector a directive prescribes a shift of 5% of the demand in 10% of the peak hours, plus a voluntary 10% overall demand reduction. Here a power system model is used to quantify the implications of this policy for the Italian power sector, as it stands in 2022 and under the transformation required to meet the climate goals of the Fit-for-55. Findings show that it would be beneficial to incentivize electricity consumption in the middle of the day while discouraging it in the early morning and late afternoon. It is also noteworthy to observe the advantages of the decarbonization strategy in light of fluctuating gas prices and uncertainties: for a cost of gas at or above 50€/MWh, power generation through gas is reduced by more than one third, approaching what needed to comply with the Fit-for-55. Finally, the study assesses the potential of demand side management strategies to curb fossil resource consumption and to reduce curtailed electricity under a high renewable scenario.