Italy's 2015 Annual Competition Law, if finally approved, provides for phasing out retail electricity price regulation, as well as the implementation of full retail liberalisation, from 1 July 2018. This is a significant reform, not just because it is consistent with the broader market design for electricity. Indeed, retail liberalisation is a qualifying element of the full integration of the European Union's electricity market. The full opening of retail markets provides a great opportunity for innovation, both on the demand side and on the supply side. This article investigates the theoretical background, and presents some empirical evidence, on the competition-innovation nexus in retail electricity markets.JEL codes: L43, L81, L94, D47.

Italy will phase electricity retail price regulation by July 1st, 2020. This is the last step in the process of electricity market liberalization, that started in 1999. Until then, residential customers and small businesses who do not choose their supplier, will be supplied under a transitional, regulated service named "maggior tutela" (greater protection), which is supplied by the local distributor at a price set by the regulator. This paper reviews the literature on electricity retail competitionwith particular regard to its expected effects on prices, innovation and customer engagementand the condition under which its benefits may be delivered. Then a Structure-Conduct-Performance analysis of Italy's retail electricity market for residential customers is performed. Two issues are found to be potentially problematic: excessive market concentration and low customer engagement. Energy poverty is also identified as an issue to be addressed. A phase-out mechanism is finally proposed, that relies on graduality, asymmetric regulation and a mandatory, opt-out collective switching exercise. The mechanism aims to rapidly reducing market concentration by leveraging on behavioral incentives to customers still under regulated prices to switch to the cheapest supplier.

The European Union has made the promotion of renewable energies a key objective of its energy, environmental, and industrial policies. The underlying assumption is that several benefits may be delivered: preventing the perceived environmental externalities, insuring energy security through reduced import dependency of conventional energy sources, promoting innovation and creating new jobs. This paper addresses this latter issue. Unfortunately, a fair assessment of the net occupational impact of green subsidies is quite complex because, among other reasons, reliable data are lacking. We try to estimate whether subsidies to solar power in Italy actually created more jobs than they destroyed (or prevented the creation thereof) because of the negative macroeconomic effect of higher electricity prices.

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