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The ‘Italian PV market to grow to 15 GigaWatt
Interview with Federico Brucciani, independent solar PV expert and author of the report "The Italian PV market". Italian consultant Federico Brucciani is very optimistic about market growth in his country. In an interview with Solarplaza, he says that grid-parity will be reached in all market segments within the next 6 to 8 years. He adds that the market is becoming more sustainable than in Spain and that a new and appealing FiT program can be expected as a follow up to the current program, which has met with so much success. His report, available in Italian and English and published by Solarplaza, is a unique, complete, and detailed overview of Italy’s PV market and industry. It includes a comprehensive analysis of the market, growth forecasts, regulation procedures, and a detailed overview of Italy’s PV supply chain.
What are the official government targets for the Italian PV market?
The official government targets are set within the framework of legislation currently in force (Nuovo Conto Energia – Ministerial Decree dated 19/02/2007): 3.000 MW by 2016. However, during the discussions for the 20 20 20 EU Directive, the government presented a position paper of its own in which the PV market was addressed with regard to a potential of 8,500 MW: 7,500 MW roof-mounted and 1,000 MW ground-mounted.
Italy’s PV market is growing fast, but not as fast as in Spain. In the meantime, module prices are much lower this year. What is your explanation?
The explanation for this situation can be boiled down to the length of the licensing procedure for PV plants, which may vary from 2 to 3 months for small BIPV roof-mounted systems to up to 18 months for large ground-mounted plants. This, coupled with the crisis to have hit the financial sector that has led to a slow-down in investments, has caused the Italian PV market in 2008 to grow more slowly (but more sustainably) than the Spanish market.
What do you see as the most important market segments in your country over the short term and long term in relation to residential, commercial, or utility-scale projects?
The main challenge for PV stakeholders in the years to come is in finding the right balance between all the market segments. However, I note that residential and commercial roof-mounted installations are being focused on by most of the national PV downstream players.
When do you think the current feed-in tariff regime will come to an end? And what will happen subsequently? The Italian solar industry proposed a new FiT. What is its content?
The current FiT scheme will end on December 31, 2010, and a new regime will be in place from 2011. The Italian PV industry, represented by GIFI (the Italian PV Industry Association), proposed a new scheme to the decision makers. It differs from the current scheme in terms of tariffs and the types of installation that have been given an incentive. A reduction of the tariff from 5 to 20% and only two types of PV plants, roof and ground-mounted, thus avoiding the complicated definition of BIPV, BAPV, no BIPV rules.
Are the ongoing module price decreases having any impact on the rate of market growth in your country, or are administrative procedures determining the growth rate?
I believe that the rate of market growth is indeed being set by both module price decreases and administrative procedures. But not only that! In fact, one of the major barriers affecting the pace of the market is represented by the status of the national electricity grid, which, in specific areas (mainly southern Italy), is proving to be inefficient and not “technologically” ready to connect and dispatch large amount of PV power.
Is there any risk of the government adjusting the feed-in tariffs in 2010 with module prices falling so fast?
In my opinion that risk is very limited for two main reasons; firstly, because adjusting the current tariffs requires a rather long legislative time-frame; secondly, the government is already working with the trade associations on setting up the FiT scheme, which will come into effect from 2011.
When do you anticipate that grid parity can be reached in Italy? Do you believe that a FiT program will still be necessary at that time (to maintain the appeal of PV project ROIs), or will new business models create sustainable market growth?
If one looks carefully at the definition of grid parity, it can be easily understood that, once it is reached, PV kWh will compete fully with traditional kWh even without incentives; FiT to be specific. However, with large PV parks particularly in mind, I believe that some sort of public support will be needed to maintain sufficient appeal for the ROIs; this support may come in the form of a capital account or even tax rebates/subsidies.
Chinese companies seem to be lowering their module prices substantially in order to gain market share. What do Italian customers think about Chinese module brands?
Low prices do not always go hand in hand with reliability and efficiency. I believe that the real challenge is to couple low prices and high module efficiency. Looking at the major Italian PV downstream players, we can see that they are focused on providing their customers with high standards and high performance PV systems, being Chinese, German, Japanese, or Spanish products.
The PV industry is still facing an oversupply situation. Several Italian companies entered upstream in the value chain. How will they compete with the major foreign brands (German, Japanese, and Chinese)?
To compete in the global market, Italian companies will need to increase their production lines by up to 500 MW within the next 3 to 5 years. However, I believe that there is room even for “small” but efficient module producers who target regional markets. At the same time, strong support in R&TD should arrive from central and regional government especially for the new (III and IV generation) materials where significant market share has yet to be taken up.
How will the Italian solar PV energy market look in your country in 5 years from now?
My opinion is that in 5 years’ time the annual PV market will be over 1 GW with a strong focus on differently sized roof installations, ranging from a few kW up to 1 MW. Technological integration with the construction sector will prove a win-win approach as far as mandatory installations in new buildings are concerned.
This report can be purchased from the Solarplaza shop.