Italy plans to introduce auction scheme for large-scale solar starting 2020

Once a leading solar market, Italy saw large-scale PV projects disappear from the radar, after the government closed its fifth and final incentive program for solar Conto Energia in July 2013. Since then, the market has kept growing mostly in the residential and commercial segments thanks to the policy for self-consumption and fiscal incentives for sustainable buildings.

The Italian Ministry of Economic Development (MISE), however, has now released a preliminary version of the country’s new energy strategy (Strategia Energetica Nazionale – SEN) for the period 2020-2030, which reconsiders large-scale PV plants as a concrete option for the national power systems, although not in the short-term.

In the document, the Italian government says the long-term PPAs will be granted to large PV power plants through an auction mechanism starting from 2020. The MISE stressed that PV is now a mature technology which is close to market parity, and that, along with a low level of incentives, what the sector needs is mostly “enabling policies”.

As for the residential and commercial sector, the government said it will keep promoting self-consumption, without providing further details.

The MISE also said that the new strategy aims at reaching a 27% share of renewables in the country’s energy mix by 2030, which is the same target set by the European Commission for the whole EU in its Winter Package, although the package has not set binding targets for member states. Currently, in Italy renewables cover over 17% of energy demand.

The strategy also envisages a plan with three different scenarios to phase-out coal power plants, which currently serve around half of its power demand, in the period 2025-2030. This plan, the government said, could cost between €2.3 billion and €2.7 billion. The most optimistic scenario forecasts the decommissioning of around 8 GW of coal power plants, while the most pessimistics predicts only 2 GW will be phased out. The intermediate scenario expects 5 GW of coal plants will be closed by 2030.

Italy had around 19.3 GW of installed PV capacity at the end of March 2017. The country has been installing between 300 MW and 400 MW per year in the past three years. According to Italy’s grid operator Terna, solar PV installations covered 7.2% of Italy’s electricity demand with 25,587 GWH in 2016.