Italian Solar Feed in Tariff Subsidy Cuts for 2011 will fail to stop the Boom in Solar Demand

Italian Solar Feed in Tariff Cuts to be More Moderate than Market Expectations

The German government allowed a face saving gesture to the Upper House by moderating the solar feed in tariff cuts by 3% for the 3 months in the 3Q 2010.Despite rumors of sharp cuts in Solar Subsidy,there has been recent moderation in Renewable Energy Subsidy Cuts by Italy and Spain.The Italian Solar Subsidy Policy for 2011 is also expected to be passed in early July.The recent proposal which have been as usual delayed seems to be better than industry expectations and much more rational in their rollout.The main features of the Feed in Tariff Policy from 2011 will be

1. A 20% cut in Feed in Tariffs in 2011 to be rolled out in 3 phases with 4 months gap.So apparently a 6.66%  cut in January and so on.
2. A 30% cut in FIT for solar plants greater than 5 MW.This should not have much repercussions as most of the capacity is lower than 5 MW.The German experience shows that the market can easily adapt to lower solar project sizes.
3. A 3000 MW cap on the installations during this phase with a target of 8000 MW by 2020.This proposal seems weird.Italy with its huge sunny areas and high retail electricity prices is already approaching grid parity in some places.Expect the 8000 MW target by 2020 to be far exceeded.
4. 6% cuts in solar subsidy in 2012 and 2013.This might have to be changed if Italy sees a massive boom like Spain did in 2008 and Czech Republic in 2009

Italy First Country to reach Solar Grid Parity on a Large Scale

Italy’s high electricity retail prices and superior solar insolation makes it naturally attractive to solar energy generation.With solar insolation almost 50% higher than Germany and Feed in Tariffs equal to if not higher than Germany,Italy has seen a massive boom in solar installations in 2010.The project ROI for solar plants has made it a lucrative target for all solar companies leading to a scarcity of solar components.Expect this boom to continue forward as the the 20% cuts will fail to dent the enthusiasm of solar developers who are seeing 20%+ project IRRs in that country.Italy’s target  of 8000 MW by 2020 will be far exceeded in my humble opinion.Some parts of the country are already at grid parity and by 2012-2013 you should see the first unsubsidized solar projects.

Italy set to cut solar incentives: industry sources – Reuters

Italy‘s new, long-awaited solar incentive plan includes gradual cuts in feed-in tariffs of up to 30 percent next year and 6 percent in both 2012 and 2013, two industry sources told Reuters on Friday.Italy‘s regional governors approved the government’s three-year solar incentives plan on Thursday. The Industry Ministry is due to release the details on Friday.Solar energy has boomed in Italy, Europe’s third-biggest solar market, since the launch in 2007 of the current support scheme, which expires this year. Incentives, among the most generous in Europe, have lured investors and the world’s biggest producers of solar power systems.

Incentives for big photovoltaic (PV) installations — which turn sunlight into power — with a capacity of more than 5 megawatts (MW) will be slashed every four months by a total of up to 30 percent next year, said Gianni Chianetta, chairman of the Assosolare industry body.He and another industry source, who asked to remain unnamed, cited the final version of the government’s plan presented for approval on Thursday to a key state body on relations between regions and central government.They were not aware if changes were introduced during the discussion on Thursday.”We are fairly satisfied … It is important to have the (national incentives) plan to be able to make investment plans for next year. The situation was critical before,” Chianetta said.