Reduced Solar FIT Budget In Italy Could Cut Solar Installations In Half


The budget for Italy's Conto Energia V solar PV incentive program could be cut to less than half of the intended amount, wiping out any feed-in-tariff (FIT) budget for 2013 and significantly reducing the outlook for installations in Italy over the next three years, according to a recent report from IMS Research.

Although the new FIT scheme could have supported an additional 7.5 GW of installations over the next two years, it is now likely that it will result in just 3 GW of additional installations, with the FIT closing as early as 2013, the firm says.

Italy's Gestore dei Servizi Energetici (GSE) announced on July 12 that the annual cost of PV incentives had reached 6 billion euros, triggering the 45-day notice period for the introduction of the country's new Conto Energia V FIT on Aug. 27.

The new scheme was intended to be accompanied by an additional annual budget of 700 million euros and is due to end when the total annual cost reaches 6.7 billion euros. However, a large number of installations were completed in the first half of this year in order to benefit from the previous Conto Energia's generous rates, and all of these are not yet included in the official GSE statistics, IMS Research notes.

As a result, this official annual cost figure has continued to rise since the announcement and already exceeds the 6 billion euro threshold by nearly 100 million euros.

"Based on various supply-chain checks, IMS Research estimates that around 3 GW of installations will have been completed by the time Conto Energia V is introduced in August," explains Sam Wilkinson, senior PV analyst at IMS Research." Currently, the official GSE statistics show 1.8 GW of installations and a cost of 6.1 billion euros. Once these figures catch up with reality, this will take the annual cost of incentives to around 6.4 billion euros and will reduce the additional budget available for new Conto Energia V installations to just 300 million euros."

Furthermore, the severely reduced budget available to the new incentive scheme has led to a significantly reduced long-term outlook for Italy, according to IMS Research, which predicts that installations in Italy will now decline for the second consecutive year in 2013 and fall to less than 3 GW for the first time since 2009.

If the full 700 million euros of additional budget had been available to Conto Energia V installations, Italy could have maintained its leading position in the global market, installing over 7 GW over the next two years, the firm adds.

"Unless additional budget is made available or further changes are made to the incentive scheme, it looks likely that Italy's PV market will need to survive without incentives starting from 2013," Wilkinson says." Italy does have favorable conditions for PV, and some installations will continue without incentives – particularly in the south of the country – but this will not be enough to maintain the market at its current size for some years."

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