Following months of questions about the exact size of the Italian solar market, the Gestore Servizi Energetici (GSE), Italy’s grid interconnect agency released official installation numbers through March 2011: In total, the country has a little over 4.18 GW of cumulative solar installations. Yet, despite the official announcement, uncertainties remain.
Not surprisingly, planned reductions to Italy’s feed-in-tariff (FIT) led installations to soar to nearly 1 GW in December, bringing the total for 2010 to 2.33 GW. In February, announcements from the GSE and a flurry of news from installers and other research firms suggested that number reached 6 GW based on the number of applications received. But, given that 713 MW had been connected to the grid between January 1 and March 30 by the GSE’s count, much uncertainty remains about whether the missing 3 GW of applications were ever actually installed.
As of this writing, all eyes are on The Fourth Conto Energia and what reductions or caps it will introduce to the FIT policy at the end of April. An FIT reduction is certain, but the exact percentage remains to be seen. Reuters reported in mid-April morning that the current draft decree pegged it at an immediate 25% cut, with another 8% planned for January 2012.
A bigger concern is that the GSE will introduce a cap on new installations, which would dramatically hurt the solar market. Reuters further reported it could actually fall below 2010 numbers, at 1.55 GE to 1.8 GW for 2011 and 2.8 GW for 2012. Further, the article suggests the cap will be based on volume, and not total subsidy burden. That means price decreases will not enable higher installation figures.
The greatest concern to the growth of the Italian solar market, however, has been wild announcements of installations that are supposedly in the ground but not yet grid connected. If these 3 GW of phantom systems actually exist, the Italian market may have already exceeded the 2011 cap – effectively closing the market in 2011.
Due to these remaining uncertainties, we are hearing that module players and project developers are already rerouting inventories and supply to the U.S. as the short window between now and the June decree makes it unlikely they will be able to install systems before any possible cap. From our previous conversations, the module vendors with the most exposure to the Italian market include First Solar, Uni-Solar, SunPower, and the major Chinese players like Trina, Yingli and Suntech Power. In general, Italy’s scenario signifies the globe’s most severe case of reductions by a bankrupt government, but we expect to see more of the same elsewhere in the near future.