Italy's solar market went into overdrive in the fourth quarter of 2010, setting the stage for a doubling in photovoltaic installations this year as global investment flows into the country, according to a report from market research firm iSuppli (now part of IHS Inc.).
Based on interviews with project developers and energy performance contractors in Italy, iSuppli predicts the country will have installed 975 MW worth of PV solar systems in the fourth quarter, doubling the 487 MW in the third quarter, and rising 239% from 288 MW during the fourth quarter of 2009.
This fourth-quarter surge is predicted to have caused installations in 2010 to rise to 1.9 GW, up 100% from 720 GW in 2009. The rise in installations will set the stage for another doubling of the market this year, with installations rising to 3.9 GW, the company says.
‘The strong fourth-quarter growth represents a breakthrough for Italian PV installations, which until now had been limited to 300 MW or less, with the expansion propelled by installers rushing to take advantage of an Italian government subsidy scheduled to expire soon,’ says Dr. Henning Wicht, senior director and principal analyst for PV systems at iSuppli.
Installations finished by the end of 2010 and connected to the grid by June 30, 2011, will still be able to benefit from the 2010 feed-in tariff (FIT) of Italy's Second Conto d'energia. Under the current FIT, and with installed system prices of 2,500 to 2,800 euros per kW, a highly attractive internal rate of return (IRR) of 15% to 18% is possible in Italy.
Italy's IRR is alluring to solar investors given the depressing news about caps or severe reductions of solar FITs in France, the Czech Republic and Spain, iSuppli notes. Consequently, investors are flocking to Italy, leaving behind the closing Czech market and even the safe harbor of Germany.
Nonetheless, some signs of potential trouble may lie ahead, the company adds. For one, a potential risk to the positive market outlook because the Italian government might reduce the FIT more quickly than scheduled. However, it is unlikely that authorities will be able to change the FIT before the third quarter of 2011. Furthermore, official data from the state-run power management agency could be delayed by as much as six months, resulting in the deferral of any formal assessment that would lead to FIT adjustments.
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