HomeNewsItaly to pay gas incentive to meet 90% storage target

Italy to pay gas incentive to meet 90% storage target

4/4/2025

Italy has introduced an incentive scheme from the start of this month to ensure companies inject gas into storage after its sites ended the winter season just 42% full, gas grid operator Snam said.

The European Commission has set a target for Europe's gas stores to be 90% full by November 1 to try to prevent supply shortages and price shocks in the winter months.

The mandate, however, has led to higher prices than usual for the summer months, often pushing them above the winter contracts, meaning there is little market incentive for traders to inject gas into storage and prompting European Union countries to negotiate changes to storage targets.

Under Italy's incentive scheme, market operators that inject gas will be paid any negative difference between the summer and winter spread, Snam said late on Thursday.

The gas grid operator will publish the premium before each storage capacity auction, Italy's energy authority ARERA said on its website.

The incentive scheme will be in place until the filling level reaches the 90% threshold, ARERA added.

Snam calculated that operators will have to inject around 9.4 billion cubic metres of gas into storage to reach the 90% threshold.

How much the incentive scheme will cost is unclear, but European gas prices plunged to their lowest in over six months on Friday, in line with declines on other markets after China announced retaliatory tariffs on U.S. goods, fanning fears of a global recession.

The European benchmark Dutch front-month contract was trading at 36.45 euros per megawatt hour, down 8% from Thursday's close and almost 40% below a peak hit in February, LSEG data showed.

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