According to the Italia Solare industry association, Italy's photovoltaic projects are expected to grow exponentially in the next decade. Today, let's talk about the development history and future opportunities and business opportunities of Italy's photovoltaic industry.
01
Overview of the Italian Electricity Market
Over the past decade, the Italian economy has had an urgent need to restore its international competitiveness, recover from the recession and lay the foundations for long-term growth. The National Energy Strategy Department recognizes the fundamental role that the energy sector can play in economic growth. Therefore, developing a more competitive and sustainable energy market is one of Italy's most significant challenges for the future.
In recent years, Italy has changed from overcapacity in the traditional energy market to undercapacity, and the power demand gap has reached the highest level in history. Italy is a basic free electricity market system, showing different characteristics of monopoly or development according to different fields such as electricity production, electricity transmission, electricity distribution and electricity sales.
Among them, electricity production and electricity retail are open markets, which can produce and sell electricity through market matching, and the competition is fierce. Electricity transmission and electricity distribution are state monopoly and regional oligopoly respectively, and are managed by the Italian Electricity, Gas and Water Authority (AEEGSI).
02
The History of the Italian Renewable Energy Market
Italy is the fifth largest renewable energy market in the European Union, with an annual renewable energy generation capacity of 112TWh. In recent years, Italian renewable energy power generation companies have grown rapidly, especially the solar power generation industry.
After the government slowed down the subsidy policy in 2013, the annual photovoltaic installed capacity has decreased, but it is still growing at a rate of 300-400MW.
In 2005, the Italian government implemented the photovoltaic subsidy program ContoEnergia to provide subsidies for large-scale power stations with feed-in tariffs (FiT). Although the FIT price has been lowered several times, it does not affect the rapid growth of Italian photovoltaic installed capacity. As of 2012, the installed capacity of Italian photovoltaic power plants exceeded 16GW.
In 2017, the European Commission announced the "Clean Energy for All Europeans" winter package, which aims to lay the foundation for energy transition and make Europe a fossil fuel-free economy by 2050. The Italian Ministry of Economic Development has also released the "Italy National Energy and Climate Comprehensive Plan 2030", with the goal that by 2030 the consumption of renewable energy will account for 30% of total energy consumption, while the proportion in 2017 was only 18.3%.
According to the plan, in the power industry, Italy's goal is to increase the installed capacity of renewable energy by 55.4% in 2030. The photovoltaic power station is the main way to promote its goal.
In 2017, solar power accounted for 8% of the total electricity generation in the Italian market, second only to Germany in Europe with a total capacity of 19.7 GW.
At present, Italy also supports the development of the photovoltaic industry by subsidizing photovoltaic installations and deducting investment or tax relief for self-use equipment for renewable energy. Moreover, the application of photovoltaics in agriculture and other fields is also expanding. And in order to achieve the goal of accumulatively installed photovoltaic capacity of 50GW by the end of 2030, Italy's photovoltaic industry will develop better and better with the support of the government in the next ten years.
03
Commercial potential of the Italian solar market
According to reports, the Italian solar market is divided into three regions: Sicily, Apulia and other regions. The first two have high potential and demand, while the third has decent potential.
Of all projects larger than 1kW, 39% have still not started the authorization process, and this is a full year after the first grid connection application. As in many countries, grid connection is an important key point and the demand is very high.
Grid-connection applications will keep the grid busy, especially the high-voltage network.
This industry needs grid connections, authorizations, building regulations and funding to realize the full potential of the country. In general, analysts demanded more clarity. For example, there is a requirement for clear rules for agricultural PV projects, especially in defining which projects are eligible for incentives.
04
Market trends for PV projects in Italy
In the current context, there are several market trends emerging. Below are some of the trends we think are most relevant and interesting.
First, the expansion of the PPA market.
A further boost to the solar market will come from the PPA market. The sharp rise in energy prices will mark a turning point for the Italian PPA market this year, and we believe it will do so in the years to come. Compared to previous years, we are witnessing a reversal of trend in the PPA market, as utilities and companies are now actively looking for opportunities to execute long-term PPAs, both direct and financial, that can guarantee stable energy prices while maintaining a strong reputation in the "green "Rewarded. With the number of authorized projects increasing and banks becoming more mature in terms of long-term PPA financing, we can expect the PPA market to definitely kick off this year.
Utilities and traders will be favored in negotiating PPAs - at least initially - given the higher level of knowledge and skills they have built up over the past few years.
However, we expect large and mid-sized companies to catch up quickly, as these are the most vulnerable entities in this energy crisis, especially for those that are most energy intensive, a long-term PPA can be a long-term solution , which can be implemented in the short term. As a result, these companies are prepared to pay higher prices compared to those offered by utilities and traders. In addition, banks and financial entities now have a more sophisticated approach to financing long-term PPAs (and commercial projects in general), and we believe that insurance markets will also kick in to mitigate the risk of insolvency for buyers.
Second, agricultural photovoltaic power generation.
In Italy, especially in the southern regions of Italy, there is great potential for the development of the agri-PV sector, given the high irradiation levels and the presence of a large amount of dry land. A number of investors have already started deploying funds for the technology in Italy (including Edf, Falck and NextEnergy Capital), also because the associated authorization process seems to be faster than the "standard" procedure for photovoltaic plants.
The data shows that more than half of the authorization applications submitted in 2022 are related to agricultural photovoltaic power plants, and the success rate of completing the relevant authorization procedures is particularly high. Recently, the Minister of Agriculture, Mr. Patuanelli, announced that the government intends to deploy 1.5 billion euros to accelerate investment in the field of agricultural photovoltaics.