Italy changes solar FITs May 9, 2011Posted by Laura Arnold in Feed-in Tariffs (FiT), Uncategorized.
Tags: Craig Morris, Italian feed-in tariff
Editor’s Note: This article from Craig Morris is a follow-up on an earlier post entitled, Abound Solar Wants Italian Sun; Will Italian Government Extention of Current Feed-in Tariff Impact Indiana? Craig Morris and I are both members of the Alliance for Renewable Energy Steering Committee. Last week during our monthly telephone conference call I asked if anyone knew the outcome of this pending decision by the Italian government. Craig Morris obliged with this post on Renewables International. Thanks for the update, Craig! Laura Ann Arnold
The changes were both highly anticipated and long in coming, but last Thursday [05/05/2011] the Council of Ministers adopted a new decree for photovoltaics. The reductions are yet another success story for feed-in tariffs, whose purpose has always been twofold: the widespread deployment of renewables, and bringing down cost.
On Thursday Italian ministers adopted a degree that would cut solar feed-in tariffs by between 22 and 30 percent in 2011, by 23 to 45 percent in 2012, and by 10 to 45 percent in 2013 depending on how much is actually installed. A ceiling has also been imposed depending on system size to prevent speculation: one megawatt on rooftops and 200 kilowatts foreground-mounted systems according to Reuters, which also explains that one goal is to limit the cost of solar feed-in tariffs at 6 to 7 billion euros by the end of 2016, when roughly 23 gigawatts is to have been installed.
According to a report at PV Tech (which includes a chart of specific rates), there is now to be a monthly degression, which could cause a headache for developers, but those who can get their projects completed by August 31 will reportedly still be eligible for the previous tariffs. Interestingly, PV Tech also reports that Italy has come up with a new way of approaching the “domestic content” issue: a five percent bonus is paid if 60 percent of the investment cost comes from within the EU – not from within Italy. Finally, PV Tech writes that Conto Energia IV stipulates that grid operators have 30 days to connect completed arrays.
Reuters cites a number of firms and investors who are not pleased by the cuts, one of which even plans to sue the Italian government for losses stemming from the changes, but not everyone agrees. For instance, Germany’s Photon Magazine argued recently that Italian feed-in tariffs for solar are too high in comparison to Germany, especially in light of the much greater insulation conditions in Italy. The limit on project size will also help ensure that the market is not gobbled up by a small number of large corporate investors. And PV Tech quotes Jeffrey’s International, which says that the new feed-in tariffs are “more positive for the solar industry” than its prior estimates.
Italy has become the world’s second-largest market for photovoltaics behind Germany, and the goal of 23 gigawatts by 2016 remains ambitious. As Renewables International recently reported, Italy has probably already met its photovoltaics target for 2020 at 8,000 megawatts. In comparison, the United States – which has more than five times as many inhabitants as Italy and per capita power consumption nearly 4 times greater – installed less than 500 megawatts last year. Italy will obviously remain a gigawatt market over the next five years, and to match that performance on a per capita consumption basis, the US would have to install nearly 20 times as much – around 20,000 megawatts per year. In fact, market researchers at Solarbuzz recently estimated that the photovoltaics pipeline has “now soared past 12 gigawatts” – but apparently for the next five years according to the chart in the announcement, not per year.
Solarbuzz says that “the PV industry is facing the effects of large cuts in feed-in tariffs across Europe,” but that the Request for Proposal process in the US is making the country “one of the most promising growth markets over the next 24 months.” That’s true, but a comparison of feed-in tariffs in Germany and Italy with RFPs in the US also clearly shows that the US will have a hard time keeping up with PV growth in Italy and Germany in absolute terms (not to mention per capita consumption). Furthermore, the US seems unable to bring the costs down without feed-in tariffs. Solarbuzz writes that “the largest US projects are now being completed in the range of $3-4 per watt,” but that price only makes the largest systems in sunny deserts in the US competitive with systems smaller than 100 kilowatts in cloudy Germany (Renewables International reported).
Although the full text of Conto Energia IV has yet to be published in Italy’s Gazette, it has been made available online at the Industry Ministry’s website in Italian. The decree becomes law once it is published in the Gazette, and the law is expected to take effect on June 1. (Craig Morris)