Malta’s GDP could increase by as much as three per cent if Enemalta were to pass on all it saves, thanks to the change from the Marsa power station and the old Delimara plant to the interconnector and the former BWSC plant at Delimara.

A comprehensive study carried out by Noel Rapa, a senior research economist at the Central Bank of Malta’s research office, modelled the outcome under various scenarios – but did not have enough information on the Electrogas plant to include its impact.

The study looked at the impact if the cost of oil stayed the same, fell or rose, and also assumed that Enemalta would pass on all its efficiency gains to consumers in five years.

It found that GDP would increase by 0.81 per cent if the price of oil were to fall, would grow by 2.08 per cent if it were to stay at current prices and would rise by 3 per cent if the price of oil were to go up.

The study explained that the interconnector and former BWSC plant – now known as Delimara 3 ­ – would reduce Enemalta’s costs: “Since the Italian energy system is ‘mature’, the Sicilian spot price is lower than the marginal costs of most of Enemalta’s existent generators. Moreover, given the higher efficiency of the gas-fired turbines, the cost per megawatt hour of Delimara 3 is projected to be lower after the planned conversion [to gas from heavy fuel oil].”

The author noted that the change in the generating mix had a considerable impact on Malta’s sensitivity to international oil prices. When Enemalta was dependent on Marsa and BWSC, its costs were 156 per cent higher when the price of oil was high than when the price was low.

For the purpose of the study, the baseline price of heavy fuel oil per kilogram was 42c, under the low scenario of 24c, and under the high 60c.

The study also found that using the interconnector without switching Delimara 3 to gas would not have had the same impact.

In fact, in a low oil price scenario, the GDP would actually have shrunk by 0.4 per cent. Using gas would give gains irrespective of the three possible oil price scenarios.

Under the EU Energy Roadmap 2050, Malta is required to reduce the vulnerability of its electricity generation to fossil fuel prices and potential import disruptions.