Leadership Lectures | Leading a Resilient European Energy System | Stefano Venier
20 February 2023Since April 2022, Stefano Venier has been CEO of Snam, Europe’s leading operator in the transport and storage of natural gas. He was introduced at the first BBS Leadership Lecture by Max Bergami, Dean of Bologna Business School, who briefly outlined his career path.
Originally from Udine, where he graduated in Computer Science, before earning a Master’s degree in Energy and Environmental Management and Economics at the E. Mattei School of Advanced Studies, Venier has a unique relationship with the city of Bologna, having served from 2014 to 2022 as CEO of the Hera Group, Italy’s first aggregation of municipalized companies that, with a multi-business approach, manages the supply of energy and environmental services to citizens and businesses. In addition to holding the position of CEO at Hera, Venier was also General Manager of Development and Market Energy from 2008 to 2014 and Director of Business Development, Strategic Planning and Regulatory Affairs from 2004 to 2008.
With over thirty years of experience in the energy and utility sector, both nationally and internationally, on 10 February Venier was the first guest in the new series of Leadership Lectures, held at Bologna Business School’s historic venue, Villa Guastavillani. In his speech, Snam’s CEO offered a reasoned view of future energy scenarios, starting with the current crisis. A topic, that of energy security and transition, which combines geopolitics, technology, logistics, sustainability and economics, creating the interdisciplinary approach that is one of the founding values of the School.
At the center of the Lecture is the strategic role of Snam, operator of the gas transmission network, storage facilities and control of the main gas flow routes. A leading company in Italy and Europe, committed to ensuring greater security of energy supply for our country.
The challenge to be faced is complex, Venier said, and concerns on the one hand the need to guarantee security for the national and European energy system, and on the other the drive to be given to the energy transition, with the aim of building a resilient system that can manage the continuous adaptations required by the changing geopolitical and economic context we are experiencing. “We know that the last energy transitions have each taken more than eighty years to complete,” Venier explained at the beginning of his speech. “In this case, if we want to meet the environmental goals we have set ourselves, we need to conclude it in less than half that time. And we know that we have to do this taking into account a world population and development context that are very different from those of eighty and 160 years ago. We have to foresee a magnitude of effects that will also touch on a dimension that has never before been examined: that of just transition, so as not to leave significant portions of the world behind.”
Bearing in mind the goal of achieving a resilient – i.e. flexible, secure and reliable – European energy system and starting from the current set-up of the European energy system, it follows that in order to launch and manage the transition, it will not be possible to ignore the need to strengthen the interconnections within the infrastructure systems currently in place.
Within the European geopolitical and energy scenario, Italy enjoys a privileged position, both because of its geographical location and its infrastructure system, and the strategic nature of our country has emerged from the outset.
We are, indeed, the only country that has five interconnection pipelines connected to five different gas import points. Other countries such as, for example, Germany and the Benelux (Belgium, the Netherlands, Luxembourg), despite possessing an even greater number of pipelines, use one or two suppliers, with an undoubtedly lower degree of diversification. “Italy,” Venier said, “therefore enjoys an advantage not only because of its geographic position, but also because of its infrastructure, because these five interconnection points are joined by three LNG (liquefied natural gas) regasification units that will soon become five, for a total of ten landing points and a flexibility and balancing of sources that no other European country has”.
Snam’s strategic value also emerges from another specific characteristic: among European TSOs (Transmission System Operators), it is the one present in all three components of the value chain: transport, storage and regasification. “With the two regasifier ships that will go into operation in Tuscany and Ravenna,” continued Venier, “we will become the second LNG infrastructure operator in Europe after Enagas in Spain. No country has a TSO capable of presiding over the value chain on all these three elements, which have become strategic because they are closely interconnected in guaranteeing energy security and allow us to play a very important role in the European resilience system.”
Often in this context of uncertainty there has been talk of a ‘gas crisis’, “but in reality,” Venier went on to explain, “this is an energy crisis and its origins can be traced long before the Russian invasion of Ukraine.” The abrupt rebound in energy demand in the post-pandemic period, the drop in electricity production in Germany and France, and the drop in the hydroelectric sector in Italy, resulted in greater demand for natural gas in a sector that was already suffering from a massive drop in upstream investments. This additional demand for gas, also due to the disappearance of other sources, made an already unstable situation critical. “In 2021, additional gas demand in Europe weighed on an already tight market. In the rest of the world, demand continued to grow by 3-4%, starting with the Far East, and in the period from 2014 to 2021, investments in E&P was 50% lower than in the previous ten to twenty years. The war in Ukraine has added further uncertainty to the tension between demand and supply availability. But the imbalance had already been in place for some time and I think this has to be taken into account to some extent.”
The graphs shown by Venier to accompany his lecture showed how the composition of the flows has changed since the lower gas supply from Russia: “We used to live in a world where gas came from the east,” commented the Snam CEO, “whereas today we have flows coming mainly from the west and going east, in the opposite direction, and above all increasingly significant flows going north from the south”.
How was it possible to manage these changes? Thanks to a flexible system and LNG infrastructure that is not fully utilized. There was a paradigm shift, and it was evident how the system was turned upside down, but without ever losing sight of the primary objective, which was to ensure that gas flows remained the same, as is still the case today.
What has this crisis shown us? “The crisis has told us that the energy strategy must be based on three fundamental pillars,” Venier replied, “those of the so-called energy trilemma: security of supply, price competitiveness, and environmental and social sustainability. History has proven what can happen when even one of these three dimensions fails.” “Today the issue is to try to recover a condition of energy security that is not only functional in responding to scenarios of geopolitical change,” he added, “but that is adequate for the path of transition. We will need an energy system that also has security margins, so that we do not risk finding ourselves facing other more or less profound micro-crises in the future.” In the general narrative, “the solution to the transition problem stems from electrification through renewable sources. Even today, however, 80-85% of energy consumption comes from fossil molecules, and even in a net-zero situation, with electrification penetration reaching 45-50%, there will remain 40-50% of the world’s energy demand that will have to be served by molecules, green or decarbonized.” This paves the way for the need to design a network system that can transport fossil molecules, green molecules or molecules to which a decarbonization system has been integrated. That is why, Venier added, “system design must look at this kind of perspective. If, as a country, we want to take advantage of our geographic location and the opportunities that the countries of North Africa can offer, then we have to design a system that is capable of transporting a multi-molecule.”
How does hydrogen fit into this new context? “My goal as chief executive of an infrastructure operator is to make these assets essential not only to address the short term, but also to ease the transition path through the development of new technologies. The complexity of transporting hydrogen over long distances is an issue that needs to be addressed. All hydrogen networks are limited to a few kilometers within petrochemical sites or refineries. There is an opportunity that can arise from allocating part of the networks to hydrogen transport, although of course these need to be properly tested.” For a greener future through this new energy carrier we would have to convert and retrofit existing facilities, considering the fact that hydrogen has one-third of the calorific value of gas, so for every cubic meter of gas we replace with hydrogen we would have three times the transport volumes.
It was with the theme of sustainability and the need to focus on cleaner energy that the first Leadership Lecture at Villa Guastavillani came to a close after numerous questions from those present, also thanks to the presence of an exceptional moderator such as Professor Matteo Mura, Director of the School’s programs dedicated to sustainability and the BBS Initiative for Sustainable Society and Business.
