Is the Italian solar market poised to deliver growth?

Facebook
Twitter
LinkedIn
Reddit
Email

Italy is faced with three very important considerations in determining how to power the nation: very modest domestic energy resources (it imports 87% of its electricity), resulting high electricity prices and abundance of sunlight. Consequently, over the last few years the Italian government has instituted a series of policies to promote solar photovoltaic (PV) deployment. Growing from just 60MW in 2007, Italy installed almost 2GW of solar PV last year – making it the second largest market in the world.

Solar energy generation produces more jobs than any other form of energy generation and each dollar of public money invested generates an additional $4-6 in private investment. Solar is a particularly good investment since it follows a proven and predictable downward cost trajectory that delivers more and more solar energy at a cheaper and cheaper price over the life of the government programs. Policies that promote growth of the solar industry act as a significant economic growth engine everywhere they are employed.

This article requires Premium SubscriptionBasic (FREE) Subscription

Try Premium for just $1

  • Full premium access for the first month at only $1
  • Converts to an annual rate after 30 days unless cancelled
  • Cancel anytime during the trial period

Premium Benefits

  • Expert industry analysis and interviews
  • Digital access to PV Tech Power journal
  • Exclusive event discounts

Or get the full Premium subscription right away

Or continue reading this article for free

However, over the last few weeks, rumors have circulated wildly that Italy was going to limit its solar market with a number of policy changes, including possibly a hard cap of 8GW on cumulative solar deployment – a level expected to be met in 2011. Although the debate continues, last week the Italian Government announced that it would not impose a hard cap (at this time and likely not at all), but it would continue to discuss feed-in-tariff (FiT) reduction to be implemented in June 2011.

Recognizing the disaster to the global market which resulted in Spain’s 2008 hard cap, the Italians have, at least for now, elected to evaluate FiT reductions as a method of insuring electricity consumers are getting the best value from their solar energy dollars. This model follows the successful and ongoing FiT reduction schemes imposed by the German market – decreases which the industry has demonstrated it could absorb while continuing to grow and deliver reduced installed costs.

The looming question is what impact this announcement will have on the Italian market which was expected to reach 4GW in 2011. Analysts and commentators disagree, but the fundamentals favor growth. The Ministry announced that there were 4GW of projects in the pipeline for installation before June 2011.

Historically, announced FiT reductions have the effect of super-charging the market, with participants scrambling to get installed and connected to the grid before lower tariffs start. In Germany, this often presents the challenge of trying to rush installations in December before January FiT reductions. In Italy’s case, however, installation conditions in the summer are ideal and should enable a larger share of projects to move forward before the FiT reduction. There is, however, potential uncertainty around when projects built, in April or May, would get connected to the grid and, therefore, which FiT level they would receive.

Nonetheless, rates of return for Italian projects are high, allowing more headroom to profitably absorb a FiT reduction. As a result, we see every reason to be optimistic about the market approaching its predicted 4GW. With even more modest growth of the Italian market, we see little reason to fear a major Spanish market collapse. And the Italian government’s ongoing support for developing solar generation ensures that Italian citizens reap the benefit of this Italian innovation in solar.

Read Next

October 15, 2025
The Australian government has approved the 141MW Forbes Solar Farm Project in New South Wales in just 19 days, marking one of the fastest environmental approvals on record in the country.
October 15, 2025
Australia has opened registrations for Capacity Investment Scheme (CIS) Tender 7, which targets 5GW of renewable energy generation capacity across the National Electricity Market (NEM).
October 14, 2025
The curtailment of solar PV and wind capacity in Chile has reached 3.2TWh as of August 2025, a slight increase from the same period in 2024.
Premium
October 14, 2025
OCI Holdings’ decision this week to buy a Vietnamese solar wafer facility to supply the US solar cell manufacturing industry makes clear the biggest vulnerability facing the sector today.
Premium
October 14, 2025
Perovskite, tariffs, Section 232 and FEOC were among the key topics discussed at PV CellTech USA this year in San Francisco.
October 14, 2025
German IPP wpd has started construction at its 140.6MW Marcy solar park in the Nièvre department of central France.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
October 21, 2025
New York, USA
Solar Media Events
November 25, 2025
Warsaw, Poland
Solar Media Events
December 2, 2025
Málaga, Spain
Solar Media Events
February 3, 2026
London, UK