Warnings About Italian Solar Sector
getsolar.com
The industry cheer raised over news of Italy’s meteoric rise toward grid parity and its quest for photovoltaic dominance has been dampened lately by concerns from analysts that a speculative bubblemay be forming and that the Italian solar PV market may follow the“stop-and-go story” of Spain’s. Italy’s solar incentives, among themost generous in Europe, include a feed-in tariff that guaranteesinvestors up to 0.49 euros per kilowatt-hour of produced power for 20 years and a 1,200 MW cap on the capacity able to be covered by the incentives.Sector experts expect to see a total installed capacity of 1,200-1,300MW by 2010, up from 450 MW today, and some even believe grid paritypossible by next year. Sounds too good to be true? A number of analystsseem to think so: they doubt that the Italian government will be ableto sustain this fairy tale scenario, and are expressing their alarm byraising comparisons to the cautionary tale offered by Spain.
Amidst their optimism, a variety of industryleaders have thrown cold water on the heated excitement of their peers.Anton Milner, chief executive of Germany’s Q-Cells,stated that “Italy must stop the overheating and abuse of the market, astop-and-go story we saw with Spain,” while forecasting cost reductionsof 40 to 50 percent in producing solar energy within six years. And,according to this Financial Times article,the relative lack of long-term clarity “over the level of tariffs to beset after 2010” and the exodus of investors unleashed by the “collapseof the Spanish market,” caused by the credit crunch and property slump,are contributing to the dangers of this bubble. Does the word“speculative bubble” remind you of a certain problem in 2007 and 2008?
“Solar is the new real estate in Italy,”complained one project developer, saying that all sorts of propertycompanies were piling into the sector.
While measures have been taken—
Gerardo Montanino, head of GSE, the state-run powermanagement agency, said incentives were too high in Italy at 68-75cents a kilowatt hour, about double the level in Germany. Tariffs areexpected to decrease in 2010 by 2 per cent.
—“hefty” financial penalties have been introduced to ensure thetimely completion of solar projects and government officials havedeclared themselves up to their necks trying to separate the genuineinvestors from the speculators (as well as from suspected Mafiainvolvement), the death of Spain’s own glorious-and-costly subsidy schemeoffers a lesson many have taken to heart. Yet, as history has shownagain and again, we can only learn from our mistakes, and, while ittakes time to find a working scheme, it’s certainly not the end of theday for the Spanish PV market—and neither, hopefully, will it be for the Italian solar sector. Thoughts?
