The energy price spike: main causes and solutions for companies

In recent months, Italy has faced a sharp increase in energy prices, which has had a significant impact on households and businesses. The cost of gas has exceeded 58€/MWh, a level not seen for about two years. For businesses, electricity tariffs are expected to rise by 15% in 2025, a prospect that puts the economic sustainability of many production sectors at risk. This scenario creates serious concerns, with companies increasingly struggling to contain costs and maintain competitiveness.

However, some innovative technologies and strategies can offer concrete solutions to tackle the root of the problem. In this article, we will analyse the main causes of this escalation in energy costs, from economic and geopolitical factors to the system’s structural weaknesses. Finally, we will explore the crucial role of energy efficiency, an underestimated lever to mitigate the impact of the energy crisis.

Import dependence

To varying degrees, the world’s major economies depend on energy imports. China imports about 20% of its needs, while the United States is close to 0%, positioning itself as self-sufficient in terms of energy production. If we look at Europe, however, the percentage rises to 58.3%, the highest percentage of all major economies.

This high level of dependency clearly leads to a vulnerability to fluctuations in energy commodity prices on the markets and to the consequences of geopolitical tensions. This has significant impacts on both the prices and competitiveness of European countries compared to more self-sufficient states.

In the case of Italy, the degree of energy dependence is the highest of all European countries.

Before Covid, the figure was around 77.5%, currently it is 74.8%, still well above the European average. This dependence is exposing the country to high price volatility and a constant need for diversification of supply sources.

One crucial aspect is the role of natural gas in the Italian energy mix. Currently, around 40% of the country’s energy needs are covered by gas, which, in turn, influences the cost of electricity 90% of the time. The cessation of Russian gas transit via Ukraine, due to the expiry of the supply contract, has made the situation even more critical. Italy recorded the highest price increase among European countries precisely because of its high dependence on gas. The European Union’s gas reserves dropped to below 50 per cent of total capacity compared to 64 per cent in the same period last year.

To mitigate these risks, the country has embarked on several strategies, including increasing gas imports from alternative countries such as Algeria and Azerbaijan, expanding liquefied natural gas (LNG) infrastructure, and accelerating towards renewable sources.

However, the energy transition requires huge investments and long lead times, making the issue of energy supply a central issue for Italy’s economic competitiveness in the coming years.

The vulnerability of renewable energy sources

For the past 20 years or so, we have been witnessing a transition in energy production at European level. Whereas in 2000 the use of coal accounted for 32% of energy needs, today it is around 12%. This is a crucial transition, driven by the goals of sustainable development and decarbonisation, but one that also has significant impacts on other energy sources.

Natural gas went from accounting for 12% to 17% of requirements, a figure that has risen in recent years after Russian gas imports were discontinued. The biggest step has been taken in renewables, which have increased from 15% in 2000 to 45% of the electricity generation mix.

Data provided by Terna for 2024 show that Italy’s electricity demand was 41.2% covered by renewable energy sources, the highest figure to date. The remaining demand was covered 42.5% by non-renewable sources and the remainder by foreign balance.

Among the various sources, the performance of photovoltaics is very positive, which reached a production record in 2023. Overall, the increase in photovoltaics and wind power was decisive, covering around 18.6% of the national electricity demand.

Renewable energies, however, have complexities of their own:

• Intermittency and variability: Sources such as solar and wind energy depend on changing weather conditions, making energy production unpredictable. For example, in the absence of wind, the turbines do not generate electricity, compromising reliability compared to traditional sources such as fossil or nuclear.
• Limited storage capacity: excess energy produced during periods of high production must be stored to meet demand during times of low production. Currently, energy storage technologies such as batteries have limitations in terms of capacity and cost, making it difficult to ensure a continuous supply.
• Peak demand management: The discrepancy between peak renewable energy production and peak consumption can cause imbalances in the system. Without adequate storage solutions or demand management strategies, it becomes complicated to meet energy needs during peaks.

The recent spikes in energy prices in Germany have particularly highlighted the role of renewables. While energy demand has gradually increased due to winter temperatures, wind and solar energy production has decreased by almost 50 per cent. The reason for this is known as ‘Dunkelflaute’, a common period in the winter months when wind and sunshine are scarce and therefore renewable energy production is limited. This phenomenon is common not only in Germany, but also in the Netherlands, Austria, Norway and Denmark.

In these times, resorting to fossil energy sources seems to be the only possible solution to balance supplies. In particular, recourse is made to gas-fired power stations, which can be put into operation quickly to meet demand. The adjustment of supply to demand has been further complicated by the rise in gas prices, which has increased electricity prices accordingly.

The cost of CO2 emissions

Another factor that contributed to the rising price of energy in Italy is the increasing cost of CO₂ emission permits in the European Union’s Emissions Trading System (ETS). This carbon trading system requires highly polluting companies, including power plants using fossil fuels such as gas and coal, to buy rights to emit carbon dioxide.

Over the past few years, the price of these permits has risen significantly, from a few euros per tonne to over €90-100 at peak times. Since early 2025, prices have spiked significantly, reaching €83 per tonne in February. This increase has been driven by increasingly stringent European policies to reduce emissions, which aim to incentivise the energy transition towards renewable sources. However, in the short term, the rising cost of CO₂ has had a direct effect on energy prices, as generating companies have had to pass on these higher costs to the tariffs paid by households and businesses.

In an energy market that is still heavily dependent on gas, such as the Italian one, this mechanism has contributed to the rise in electricity prices, making the problem even more pronounced at times of high demand or low production from renewable sources.

This factor, added to the other elements of pressure on energy costs, has made it necessary to rethink supply strategies and policies to support the energy transition, so that decarbonisation does not result in an excessive burden on consumers and businesses.

Coping with rising prices

The increasing variability of energy prices, influenced by geopolitical factors, demand fluctuations and supply uncertainties, represents a significant challenge for Italian companies. In this scenario, energy efficiency emerges as one of the most effective and straightforward strategies to ensure reduced energy costs and increased competitiveness. By implementing efficiency measures, companies can significantly reduce consumption, with savings of up to 20% of annual energy costs, without the need for large capital investments.

A structured approach to optimising energy use is the adoption of an Energy Management System (EMS). This system integrates technologies and methodologies that enable companies to monitor, control and continuously improve their energy performance. Our Energy Management System, E-BOOST, is specifically designed to provide companies not only with a complete view of their consumption, but also to manage it optimally.

The main benefits of implementing an EMS include:

• Real-time monitoring and analysis: E-BOOST enables the evaluation of energy performance through continuous monitoring of consumption, facilitating the identification of inefficiencies.
• Identification of improvement opportunities: By analysing collected data, both real-time and historical, companies can identify underperforming energy processes and implement targeted interventions to optimise energy use. Punctual data makes it possible to invest in interventions that guarantee the best results in terms of energy and cost savings.
• Reduction of energy consumption and costs: Through targeted interventions and optimised strategies, both energy consumption and related costs can be reduced, contributing to the improvement of the company’s economic sustainability.
• Regulatory compliance: An SGE helps companies to ensure compliance with legal and regulatory requirements regarding energy efficiency, reducing the risk of sanctions and improving the company’s image.

In an environment characterised by volatile energy prices and growing environmental challenges, the adoption of energy efficiency practices and the implementation of an Energy Management System are key strategic choices. These actions not only help reduce operating costs, but also support long-term sustainability goals, strengthening the company’s competitive position in the global market.

Veil Energy’s role

At Veil Energy we are a leader in promoting energy efficiency. We facilitate the energy transition by providing an innovative platform for energy management. E-BOOST offers real-time asset monitoring, diagnosis and customised consultancy to ensure efficient energy consumption and increased grid stability. By facilitating transparent access to data, we help organisations reduce costs, increase sustainability and effectively achieve their energy goals.

Do not hesitate to contact us for a demo, an energy audit or more information about our services!