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MARKETNEWS Italian review

AFTER WEEKS of uncertainty the Italian government has finally signed the fourth Conto Energia to the relief of the PV industry. Company profits and share prices along the value chain had been negatively hit as the industry tried to predict how the government would respond to the review of their extremely generous Feed in Tariff that saw the region become the second largest market for solar after Germany.

The fear had been the government may do a ‘reversal of fortune’ as had been seen recently in the UK market. Many companies have discovered to their peril that business plans based on government subsidies do not come with any guarantee that levels of subsidy will remain as long as the business plan expectations. The subsequent global market jitters tend to expect the worse.

Although ground mounted 200kw projects will see a marked reduction in support the overall industry feeling towards the signed Conto Energia has been positive with strong growth up to 4 GW expected for the rest of this year with longer term growth predicted providing confidence in longer term investments despite the fact the new deal includes a monthly reduction if FiT returns. From June 2011 the Italian authorities will begin reducing the FiT on a monthly basis and have introduced a funding cap. Another key

aspect of the new approach is the premium tariffs applied to products produced within the EU. This approach has been suggested Europe wide as the industry seeks to hold onto its global leadership as it comes under pressure from China and USA in terms of manufacturing capacities and market size.

The monthly reductions will be case specific and depend on the size and type of PV installation. This will ensure careful product selection within the market as consumers seek to make the best deal possible for themselves in relation to the Conto Energia offerings. The major differentiations include whether a system is integrated into buildings or stand alone. The new system sees a simple classification of rooftop PV systems to either being under 1000 kW and therefore small. Everything else is now considered

a large system. The same method is applied to open space based systems but the changeover from small to large occurs at 200 kW. In an effort to extend the reach the government subsidies can impact there will now be a funding cap on any system classified as large. The cap has been initially limited to 580 million Euro but this equates to around 2.7 GW based on current pricing which is of course expected to fall. From 2013 to 2016 the government tens to provide nearly 1.4 billion Euros in subsidies but this will cover all systems. Still accounting for almost 10 GW in installed capacity based on today’s prices.

Parity perceived

The Italian authorities have stated that they believe PV is very near grid parity in the region and the new system reflects the changing technology price mix. The tariff breakdown also encourages investment in unusual sites such as landfill and contaminated areas, encouraging investors to make use of dead space. There is also increased incentives to set up in small towns, PV systems replacing asbestos roofs and also for systems that have at least 60% content in the final product.

Another key factor the new regulations enforce is that the actual tariffs will not commence until the project is grid connected meaning the grid operators will have to meet connection deadlines agreed to with PV projects or take responsibility for the lost FiT revenue and even pay compensation. Overall the changes are positive and the future growth of the Italian market will depend how quickly the industry responds to the new regulations. The quicker the installations are complete the higher the tariff returns will be.

11 Issue V 2011

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