Market research firm iSuppli, now part of IHS Inc., says the country is likely to install 975 megawatts (MWs) worth of PV systems in the fourth quarter, thus doubling the 487 MWs seen in the third quarter, and rising 239 percent from 288 MWs during the fourth quarter of 2009.
The firm adds that this fourth-quarter surge will cause installations in 2010 to rise to 1.9 gigawatts (GWs), up 100 percent from 720 GWs in 2009. The rise in installations will set the stage for another doubling of the market in 2011, with installations rising to 3.9 GWs.
"The strong fourth-quarter growth represents a breakthrough for Italian PV installations, which until now had been limited to 300 MW or less, with the expansion propelled by installers rushing to take advantage of an Italian government subsidy scheduled to expire soon," comnments Henning Wicht, senior director and principal analyst for PV systems at iSuppli.
Installations finished by the end of the year and connected to the grid by June 30, will still be able to benefit of the 2010 feed-in tariff (FIT) tariff of Italys Second Conto denergia. iSuppli explains that under the current FIT, and with installed system prices of between 2,500 and 2,800 euros per kilowatt-peak units (kWp), a highly attractive internal rate of return (IRR) of 15 to 18 percent is possible in Italy.
It goes on to say that Italys IRR is alluring to solar investors given the "depressing" news about caps or severe reductions of solar FITs in France, the Czech Republic and Spain. Consequently, it says investors are flocking to Italy, leaving behind the closing Czech market and even the safe harbor of Germany.
"True, Italian solar installations will drop at the start of the first quarter of 2011, following the burst of the growth at the end of 2010. But the decline is set to last only weeks, rather than months, with the rate of new installations to rise rapidly again following this period," continues Wicht. "And despite the expected FIT declines, the IRR of Solar investments in Italy still will be higher than anywhere else. As a result, installations in Italy will rise to approximately 1 GW per quarter in 2011."
Despite its positive outlook, iSuppli believes some signs of potential trouble may lie ahead.
Firstly, it says a potential risk to the positive market outlook exists in that the Italian government might reduce the FIT more quickly than scheduled. Yet it believes it is unlikely the authorities will be able to change the FIT before the third quarter. Furthermore, it states that official data from the state-run power management agency GSE could be delayed by as much as six months, resulting in the deferral of any formal assessment that would lead to FIT adjustments.
For their part, says the company, regional governments might also try to limit the amount of land used for solar, even though any such limitations must pass Italian federal law. Finally, the grid connection in Southern Italy will "certainly prove more challenging than elsewhere, posing additional headaches".
However, iSuppli concludes by saying if fourth-quarter 2010 figures for PV installations can rise at such healthy rates, project developers more than likely will be able to overcome difficulties in 2011.
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