May 12, 2011 | 0 Comments
With Italy's revised solar policy draft finally approved, analysts explain what happens next in the world's No.2 solar demand market. (Hint: High inventories and lower prices.)
May 12, 2011 - Italy's revised solar policy draft has been approved, setting out a two-year transition period; in 2013 incentives will be based on reaching installed capacity targets. Annual subsidies are being capped at €6B-€7B by the end of 2016. The policies also extend a deadline for ground-mount projects to August 31 (vs. May 31).
Smaller is better? The policy provides for uncapped rooftop markets for <1MW projects during the transition period (through 2012), as well as <200kW ground-mount systems operating under "net-metering." But larger non-net-metered systems (>1MW on roofs and >200kW on ground) will be subject to quotas and permitting process.
Though the 2010 backlog probably won't be fully connected until August of this year, one might argue that smaller systems (e.g. <200kW rooftops) would be faster to connect and help speed things along. However, there's still been a high mix of smaller systems in the past couple of months, points out Credit Suisse analyst Satya Kumar, in a research note. With incentives based on grid-connection, and connections typically happening 8-9 months after requested, construction financing will likely be held up to be timed closer to connection, he explains (though project owners might get compensated for interconnection delays preventing incentives).
Out of the fog... With the now-all-but-official policy, Italy hopes to provide long-term market visibility with a set transition period, while maintaining economic costs sub-€6-7B, and cumulative target of 23GW of cumulative installations by 2016, explains Kumar. At the current 650MW/month connect rate, 3.7GW of leftover 2010 inventory, and 1.3GW shipped in 1Q11, he now sees only 1.5GW new shipments through year-end. His new annual demand estimates in Italy (sell-in) are 2.8GW in 2011 (from 6GW in 2010) and 4.3GW in 2012 -- eventually matching sell-through/grid-connection, which he projects at 6.5GW in 2011 (up from 2.3GW in 2010), and back down to 4.3GW in 2012.
|Italian shipment and interconnection forecasts through 2012. (Source: GSE, Credit Suisse estimates)|
|Italian shipment and interconnection forecasts through 2016.
(Source: GSE, Credit Suisse estimates)