Topic: Electricity bills worth 500,000 euros: a hotel chain closes down in Italy. (Read 341 times)

Now we all are the brink of nervous break down.
This inflation beast is  not going to sleep anytime sooner.

First of all, not all forms of renewable energy maybe suitable for all geographies. For example, solar panels maybe suitable for regions such as Southern Italy. However, I really doubt whether they will be very useful in countries such as Iceland and Norway. Wind turbines may work in Netherlands and England. But I doubt whether they will have the same effect in coastal Germany. A combination of renewable and non-renewable energy would be the best way to move forward. Issues arise when the socialist dictators in EU decide to suddenly phase out non-renewables.

I don't think it was a gamble. Russia was unlikely to stop at Ukraine and go further through Europe to start annexing countries in the EU and close neighbours.

Renewables were considered more efficient than trans atlantic cabling but it might be faster to lay those cables too than it will be to wait for renewables to power a lot of the grid. That would probably annoy the US quite a bit too as they'll not get cheap gas from Canada (as they already do).

I've been reading through quite a bit of what's gone wrong (put harshly) with this and 1 paying people too little for producing their own electricity and 2 taxing them on that production looks like it is dissincentivised in a lot of areas (like Spain's solar tax).

To be honest such big companies could invest a this money, consider 500,000 euros once and start investing in green energy. The installed capacity is biggest for " Solar energy" in Italy, thus to be honest people could take a step further and extend it by making it better. Italy would definately have better options since they are already generating loads of green energy 40% + but amount of private institutions involved in it might be nominal thus it's defiantly important to have better ideas. Once you close they won't be able to open again that easily, it takes a lot of work, loads of time and also loads of money as well in the start.

First of all if you take that paragraph as the only one, my context is lost. In this very specific case; Hotels.

The explanation is there, it is long but at least in the PDF they explain it and very well, you have to read it, for this particular case "Hotels" and it is the subject of my idea, which by the way is nothing against your idea of ​​publication, it is the context of the news that is attached to or takes advantage of a real moment, that it overwhelms many sectors, there are many examples, yes!, but this sector "hotels" is a wasteful.

It is the point, on the contrary, they are the ones that should be demonstrating strength of support in the face of a long-announced crisis that is simply having a high point to perhaps finally draw the attention of the sector, when you have been told for more than 20 years.

Finally:The objective news is, "The hotel sector suffers the consequences of its little attention to the calls that have been made to them for years and as expected in this electricity crisis they are the first to fall from the tourism sector".

EU played a huge gamble by turning against Russia. Now they have no other option but to buy gas from USA in a considerable higher price. If EU shift towards renewable energy then what will happens to their manufacturing sectors? German automobile industry survive because of cheap Russians gas. Now living standard of EU will considerably lower. Fully shifting into renewable energy sectors can not replace the necessity of cheap Russians gas in many sectors.

Quantitative easing is one way to rob your population by depreciating the currency.But European sanctions will kill the European economy before the Russian one, so quantitative easing will only slightly postpone some problems until a later date.

I am not saying that government has to increase the tax on top of 300% hike in the electricity bills, I am suggesting the government has to bear the price hike by paying the price to electricity from their pocket and don't let the people to bear them at all, to compensate what they paid now, in the future they can make up by gradually increasing the taxes on various sectors without affecting the business and every individual living in their nation.

If they are truly a rich country then why they are struggling with this issue? But, you don't really need to be rich in order to afford the materials to be able to use natural energies. They can always consider this for now till the electric cost becomes cheap again for some time.

The only problem here that is see is if these kinds of energy can sustain a big business such as hotels as we know that they aren't really sustainable. Maybe it's also good for them to take a break for a while and maybe this can be a sign for them to venture other businesses which aren't totally relying on electricity. I think there are types of businesses who are like that.

Yes, of course, now it turns out that socialism, which is one of the most important causes of the problem, is going to get us out of it.

So with the price of energy having increased by at least 300%, and in some places in Europe it is more, you want the government to raise taxes on top of that?  Great plan, eh?


This you say is interesting and I think this is what is going to happen. The policy of raising rates and tightening has been given a reality check and they are going to have to slow down, if not go back to printing and easing because otherwise the 2008 recession is going to be child's play compared to this.

Confusing.

Even if the electricity bills are up by 300%, they don't need to increase the price of their services by that much. Because electricity costs are only a part of the overall cost. So if they increase the price by 50% or so, they should be able to survive. But even this 50% increase may be too hard for many of the customers, at a time when there is economic slowdown. And also, we need to see whether these levels will remain as such for the medium term. Gas/electricity prices are abnormally high. Increased production should bring down the prices within the next few months. Till then, it is the duty of the government to support small businesses.

Normally government will take the burden at situation like this instead of completely forcing the consumers but later they compensate the loss from electricity with increasing the taxes gradually that can be applied here as well instead of completely forcing the consumers to pay for it. If the government is going to point out other nations political issue is the reason then the respective government is actually failed to fulfill the people requirements.

300% is already too much and an injustice for their consumers. The inflation crisis is getting worse but increasing the electricity bills too high will surely affect small and huge businesses and may be the reason for them to shut down their business especially if they won't be able to sustain it.
The energy cost increase is also a burden to ordinary people especially the minimum and middle wagers. The government must find alternatives and back up to fix this problem because if it will continue, this will hit their economy badly. They should check it the long time effect and find a long term solution for this.

Most business in Europe profited because their countries bought cheap resources from Russia and other countries. Now this opportunity has ended and some companies will go bankrupt. I think the quantitative easing program will start working in many countries soon.

There is conspiracy against the citizens in my country if not why country that supply energy to another Countries suffers in light energy. The business elites will the Political elites came to an agreement that there would be no constant light  in the country so that those who sell fuel can sell it in a high price and also those who import generators can sell to the citizens. Therefore, with this now the energy generating companies also join the team (cartel) or group to give 1,2,3,4 hours light. In my locality, the village which is one of the crude oil producing communities including the city has not gotten 24 hours light. That is we have not slept with  or see a light for 24 hours. The worst part of the matter is that, generators which we use to do our daily businesses have increased price (inflation), what of fuel price, now the average person not do business in the country again. Government is to create conducive environment for his citizens but irony is our own.

The amount looks insane and yeah price hike of 300% can't bearable unless the company wants to spend their money from their pockets to sustain in the business until the return of normality but as wise decision they decided to close and don't want to spend any money but imagine what will happen if every business takes out this stance? The government has to take some chances now to keep the business on the run or else they will be facing serious economy loss in near future.

Yes, Electricity is one of the main costs for the hotel industry. All utility bills add up over time, and owners often find themselves unable to afford it. Therefore, they have to sell their hotel at a low price or leave it as it is.

This is the reason why hotels of this type are disappearing from Italy, but not only here. Due to the crisis, many hotels are closed and empty.

Solving this problem seems almost impossible because all the factors that affect costs cannot be controlled by one party. Relying on renewable energy sources might help the hotel industry to some degree, but it will require serious investment.

And I got to attribute your sentence to not reading and shitposting. If you would read the OP, instead of typing fast for a quick buck you would see that it says they were not authorized to install solar panels.


This is what is going to happen, if production costs become unsustainable and cannot be passed on to the end consumer, there will only be two solutions: shut down, or move production to where it is cheaper.


Well, it's partly because of what you say, but the war is what made it worse. I'm for treating the planet in a more sustainable way, but it's pathetic how the EU where 5% of the world's population lives sets itself up as the savior of the climate.


This is the point. Nobody in going to pay 20EUR for a cup of coffee. Unless it's in the poshest place on the island of Capri. And not even that.


Renewable energy in Italy


I think so. What happens is that it does not seem that a peaceful solution is going to be reached, and even less so in the short term.


The problem with energy is that you can't store it. We get energy from the sun when it is sunny but not when it is cloudy or at night, and energy from the wind when it is windy, but not when it is not windy. That's why you need a mix with other sources that are in constant supply.


There is only one scenario. Being the average price of coffee in Italy 1EUR until recently if they have to put it at €20, they have no choice but to close.

Italians are furious as the cost of an espresso soars toward record highs

Although €20 is probably too much of an exaggeration. It would have to go from €1 to at least €3 or 4, but with a 400% increase they are going to run out of customers.


I agree that the USA gains more than Europe, but this last sentence is incorrect. In the USA they also have high inflation and other problems which are reasons, together with the immigration crisis, that the polls for Biden for the mid-term elections are catastrophic.


Explain. When your energy costs go up 300% and you can't put solar panels on, how are you going to become more efficient. By changing the windows? You don't solve the problem and also changing them has a cost.

Explain well the solution you have to combat the 300% increase in energy prices.

The news I posted about the hotel is one but search and you will see a lot of companies in Europe stopping production or planning to shut down because of energy costs.

-/Although the future reality and its consequences cannot be ignored, we must not echo the bad omen, we must always see the cause and the effect objectively, and based on this, expose our best thinking on the solution, especially in times when it is easy predict darkness./-

This hotel is perhaps not the best example to take as a flag in a situation that has been in Europe for years, more in some countries less in others, but in the case of hotel chains, the "adjustment" of rates allows them to survive more than others areas or companies such as manufacturing where it is complex to implement variables to the final product... as a trite phrase says in times of crisis, "companies have to reinvent themselves," a phrase that is obviously successful in certain sectors and does not apply in the complex conglomerate economic and business of a country.

That hotel is part of the tourism branch, it was one of the areas most affected by those almost two and a half years of the pandemic...

Be careful, understand the point, the situation is "f.k.d up", but for a hotel to come out as the flag of the real, evil situation that exists in the electrical issue in Europe, it is somewhat ironic when they are one of the sectors that spend the most electricity, not now , not even a few years ago.

Ecological concept; it is something that has existed in hotels for many years, in fact they were ambassadors of the "green" or "ecological" concept at the beginning of the new century that one could get in many hotels and Europe has always been in the hotel industry with that concept.

In some hotels there are things like "please, help us to wash less," something like that . Hotel laundries generate a high electrical cost, among other things obviously.

Sometimes this type of news is an unnecessary catalyst to say negative things about a real issue, I repeat it, but this hotel instead of reinventing itself and announcing reductions, they do the simple; ..."we close and when things improve maybe we will open again,"... it's okay, it's a logical business decision, perhaps framed in not being able to sustain prices in the face of the competition? not wanting to lower the status of the hotel?... the price of electricity in the tourist sector, like in many other sectors, is badly hit, but without a doubt it is one of those that can perhaps be better reinvented, most than other areas.

I leave the article from an English source: https://pledgetimes.com/bills-of-500-thousand-euros-historic-hotel-chain-closes-in-puglia/

Some of what I mention:

<sup>Source:https://www2.deloitte.com/ro/en/pages/about-deloitte/articles/studiu-deloitte-industria-hoteliera-europeana-estimeaza-ca-va-ajunge-din-nou-la-nivelurile-de-performanta-din-2019-incepand-din-2023.html

Source:https://www2.deloitte.com/ro/en/pages/about-deloitte/articles/studiu-deloitte-industria-hoteliera-europeana-estimeaza-ca-va-ajunge-din-nou-la-nivelurile-de-performanta-din-2019-incepand-din-2023.html


source:https://www.e-unwto.org/doi/pdf/10.18111/9789284414970</sup>


Whatever the matter is, the current situation definitely brings to the fore an issue that has always been resolved by bringing the costs to the end consumer and the polluting consequences to the environment. That is the true reality.

We are going to see this happen more and more because many businesses are yet to really adapt to their first year running at much higher energy costs - at least throughout places like Europe, but it affects even the poorest countries worldwide. It feels like we're currently in a very volatile situation and consumers are starting to watch where they spend, so there isn't even room to raise prices too much or you will simply drive away custom. There was a slight bounce back in fortunes after Covid, but Russia's war against Ukraine has really ruined life for many people. However these situations can also prove which companies are more resourceful and trim out the most wasteful.

I understand this is a hotel chain but consider all the smaller hotels before it that have closed down already for which no one has batted an eye.

The operating costs will hurt small businesses the most. Larger corporations might have the resources to temporarily foot the bill, or lobbying power to pull strings on a governmental level that may help alleviate financial burdens. Small businesses will be stuck with nothing. You're seeing the COVID effect all over again. During COVID lockdowns and supply chain constrictions, small businesses weren't able to keep up with government regulations or labor shortages that resulted from the lockdowns (that is, for the businesses that were given the luxury of remaining open). Businesses went under, the corporations prevailed.

Energy costs operate in a similar fashion. It's the bigger players that will incur these cost and they will gladly take the markets share away from the businesses that can't keep up. I suppose after a while, not even the corporations will be able to keep up.

I can safely say the main reason is the ongoing Russia Ukraine war and the sanctions that some western countries have imposed on Russia. But do you understand who is playing the main game from behind? It's US! After the war started US has imposed multiple sanctions on Russia and some EU countries like France or UK also followed through without understanding what game US is playing with them from the disguise of NATO.

US people is not paying the price of the war, rather EU countries are facing huge issues. But who wanted to reach to Russian border in the disguise of NATO? - It's US! Russia has pushed back because no one wants their enemies to reach to their border. This entire war is prompted by US and look who is paying the price - EU.

A completely expected situation, after Merkel and some other EU politicians began to fulfill the will of "their masters" and promote the topic of closing nuclear power plants in Europe, pumping their energy resources into the EU. Well, what did you want? WHAT would the "oil and gas drug dealer" help? No - his task is to put him on his "drugs", remove alternative options, and pull out money ... The short-sightedness of some European politicians and their venality, only this is the main reason for what this post is about. And many more will suffer, otherwise life cannot

Incorrect, because 1) nuclear energy, which you mention, is viewed as "green" by the EU, and 2) the problem lies in the natural gas prices, and renewables are driving down them, but the installed power in most countries is not enough.

I think you're in principle right but greatly exaggerating here. You cite the example of a restaurant/coffee shop, but energy/electricity isn't the main cost of this kind of business, so even if electricity costs triple, they don't have to increase their prices _that_ much. However, there are definitively industries, for example aluminium production, which are suffering a lot in the present conditions in Europe.

Good point with the equilibrium. Some businesses will most certainly close; the recession could be as deep as in 2008/09, even deeper if the situation in Ukraine extends in time. But I guess many will also see new opportunities to increase efficiency in a scenario where energy is more scarce and expensive.

We can compare that to the way the Bitcoin difficulty works. If electricity prices rose in the whole world, and all other constants were equal, then there would be less profitability, until all unprofitable miners cease mining; but after the difficulty adjustment, for the rest of the miners the profitability will be restablished.

Some would however innovate, for example generating their own electricity, or finding ways to use less, and could survive even if they not so competitive in other areas. In various countries you can see offices, factories and warehouses with solar panels on them.

You can, but of course not in a single year (or a few years). But in a decade you can significatively increase renewable production. China for example, between 2011 and 2021, has made x8 in wind energy production, x20 in solar and x2 in hydro. In total renewable production almost tripled, increasing the renewable percentage from 17% to 27% in a period when China almost doubled total electricity production/consumption due to its strong economic growth. See the table here.

I don't know whether they need to increase the price of coffee to €20, for the business to remain profitable. But in case if that happens, then there are few scenarios.

The most likely scenario is this:

In a small town, there were 10 cafeterias, selling on average 1,000 coffees per day (100 coffees per shop). Let's assume that price of a cup of coffee is €10. Daily revenues stand at €10,000 (€1,000 per shop). Because of high energy prices, they are forced to increase the prices to €20. Now 50% of the customers will be forced to stop their habit of having coffee. But the remaining 50% will be willing to buy coffee at a higher cost. And instead of 1,000 coffees per day, the total sales now stand at 500 coffees per day. Let's assume that half of the shops close down and only the other half survives. So that means that each shop still has a business of 100 coffees per day. So it is not all bad.

Green energy wouldn’t be enough. You just can’t manufacture enough equipment and install enough equipment to make a difference. Wind energy you can only put it in certain areas. And solar energy is very expensive to produce and install.

We already got tons of green energy everywhere pretty much but we still rely on the old energy. It’s not going anywhere. Not anytime soon.

Unfortunately this is nothing more but the system trying to find some sort of equilibrium, and only businesses which find a way to be more efficient are going to survive.

And it is unfortunate because all of those people which started those businesses did so with the very best intentions but now they are finding that due to circumstances which are completely out of their control most likely their business is not going to survive, because if we are honest there is not really a solution which can be implemented right now which is going solve the problem Europe has with high energy prices.

Most businesses in my location depend solely on generators to power their machines and other appliances because of unstable power supply and the high cost of power. The government has always subsidized the cost of fuel making it very affordable. But the global economic crisis has skyrocketed the cost of subsidies and the government cannot sustain it anymore. The government is scared that removing fuel subsidies would lead to public unrest, hence they are even borrowing to sustain it. This has really affected the economy negatively because a large chunk of the country's income goes to debt servicing.   

The government has given a timeline for the removal of these subsidies and when that happens businesses would start shutting down. 50% of businesses in my locality might not be able to afford the cost of powering their machines with generators if the subsidy on fuel is scraped. Switching to renewable would be very slow because of its cost, except the government also subsidizes the price. Our hope now is the quick peaceful resolution of the war in Ukraine. 

If they are in Italy but not using Solar panels for power I got to attribute some of their costs to misallocation of resources.   Every country and company within its own economy must make the most of its own advantages and bias and surely Italy has the sun where not every country can count good weather as a positive they can rely on.   Its not exactly fair but business and competition is a harsh reality to deal with.

The increase in the electricity charges were due to the oil price increase. Most of the western nations have been experiencing it. In our country for political reasons the price hasn't been increased for a long providing subsidies and now after a long the price have been increased. If this has been increased over the years in a gradual way, this couldn't have affected much.

The need for renewable energy have come and countries have begun to focus much on it than depending on oil.

this is the period where basically everyone is not experiencing the effect of inflation. or maybe only the rich people don't bother about this crisis. each country has their own crisis owed to this global pandemic. now, it is how they will attack this crisis to overcome this yet another change in humanity. for sure, each country has their own strategic plans on how to tackle this situation. on a personal level, you should list things that you think you can do to survive this situation, you can reduce your unnecessary expenses for one.

The pandemic make things worst, and now we are dealing with a threat of economic recession and there’s no doubt why many businesses files their closure. Green energy might not be enough to sustain a business, because honestly it can also cost you a lot of money. Italy is experiencing a huge inflation as well, while the gas issue are still on top priority though they are able to acquire a deal with other countries, I think that is still not enough.

Why don't Italy invest in green energy? Greta said solar panels and wind turbines provide free and clean energy. Why not give it a try?  I guess Russia kicked Europe where it hurts the most and it seems to me Russia isn't suffering for not selling its gas at all. Only the Europeans are getting hurt. Is it too late to remove sanctions on Russia and get a deal with Putin? Meh that's probably not going to happen any time soon. First, you'll have to suffer more because that's the European way.

All over twitter and reddit there are stories of many small and medium type of businesses closing due to electricity costs. At first when the costs went up, they increased their prices, and then they went up again, and there was no point in increasing prices because nobody would buy a 20EUR cup of coffee.

I think they got energy caps in place for residential but it doesn't apply appartely to commercial businesses. Hence when the PPI comes out of these countries its no wonder its in the double digits. Because its very expensive being a producer these days and all these costs are past on and it increases inflation everywhere.

It's only going to get worse because nuclear power plants also have a refit or shutdown schedule and for instance in Germany refits were being neglected for many years because they were trying to be green and thought nuclear and coal power are becoming obsolete. Now that a demand has increased they're starting to fire up their coal power plants once again, but it's not going to be enough if they're forced to shut down a nuclear plant for refit.

IMO countries that decided to pursue green energy at all cost have shot themselves in the knee and this wasn't done willingly. Many countries opposed this but were forced into submission by the EU council that kept reducing their CO2 emission limits. In other words, the EU put its members in a crisis situation.

The increase of electricity prices has to do a lot with the way the wholesale electricity prices are calculated in Europe (merit-order pricing system), and due to current problems which are partly, but not all, related to the Ukraine crisis.

Basically, if you have a certain demand of electricity, there will be a number of producers willing to cover the demand for a certain price, some will be cheaper (renewables, nuclear, coal) and some will be more expensive (currently, above all gas). These producers are then ranked, starting with the cheapest, and the price of the most expensive producer who is needed to cover the demand is paid to all producers.

There are now two problems currently which have increased prices:
1) High gas prices, due to the Russian war in Ukraine.
2) Problems in France's electricity sector: several nuclear plants shut down due to technical problems (partly, but not only, due to the heat wave in July/August), so they need electricity from other, more expensive sources, primarily gas.

Both reasons combined with the merit-order pricing system are driving electricity prices high currently. And the EU is an interconnected market, so France's problems influence the market in neighboring countries, including Italy.

What I don't understand is how you think that "large companies" could "make renewable sources a lot cheaper" (if you want, elaborate ). Renewable energy producers currently are among the cheapest, together with nuclear and coal, so the problem is not their price but the availability, even if the installed power is growing at a good pace.

Looks like electricity prices have tripled in Italy too so that would have taken a bill that was probably around €160K and made it the €500k.

Considering most of the EU was meant to be half renewable and is on paper, I don't know why these rates are going up so much and why larger companies can't take advantage of it and make renewable sources a lot cheaper. At this current rate, the whole of Europe's economy might end up hibernating or moving in order to sustain production costs (put uprooting whole manufacturing plants and transporting them to countries like Canada would be expensive to do quickly).

I am going to paste here an excerpt from this news published in El Corriere de la Sera, previously translated with Deepl.com.

"Electricity bills totaled about 500,000 euros, in August alone. This is the reason that prompted Caroli Hotels, an Apulian chain consisting of four hotels between Gallipoli and Santa Maria di Leuca, to close its operations. "It is shutting down, due to high electricity costs, our historic hotel chain after almost sixty years of uninterrupted activity," announced Attilio Caputo, the general manager.

Unsustainable costs

The chain has a history and tradition it has carried on for nearly 60 years, employs 275 people and operates several other businesses in the hospitality industry. "Although we regret the disservice we will create to guests, partners and suppliers," Caputo explained, "the disproportionate and unsustainable costs, which have totally eroded profit margins, make it impossible to guarantee the continuation of the business, even if we resort to the opportunities offered by the credit system and the implementation of photovoltaic systems, the installation of which has not yet been authorized. The decision to discontinue all hotel and restaurant services for new clients, honoring until expiration only existing and already signed contracts, has already been forwarded to the prefecture of Lecce."

If energy costs are not reduced, much productive activity will come to a standstill in Europe.

I understand that it is something difficult in the midst of the war between Ukraine and Russia, and that efforts are being made for it, but if this is not solved in a short time in Europe there will be people going hungry and cold as it has not happened for many decades.