In Depth: Now Italy faces the hangover after its 9GW PV party
That Italy connected 9GW of PV to its grid last year — nearly quadrupling its total capacity, and snatching the global crown from Germany — is impressive enough.
That it happened in the middle of the country’s sovereign debt crisis, the fall of the Berlusconi government and a tangle of confusion regarding its ever-morphing feed-in tariff makes it nothing short of astonishing.
Today, however, the Italian solar sector has the feeling of a house the morning after an epic party: worn out and littered with uninvited guests, with the hosts struggling to remember why they threw the party in the first place.
With sunlight creeping through the blinds and reality setting in — most analysts expect a market of about 2.5GW this year — the question on the lips of many in the Italian sector is: Have we created anything of lasting value?
Pessimists argue that the bonanza was little more than a get-rich-quick scheme rigged in favour of a handful of companies and investors — many of them foreign — with the Italian ratepayer left holding the bag.
But the reality, as industry sources tell Recharge, is not nearly so gloomy or simplistic. The PV boom did create lasting opportunities for Italian companies — but only certain kinds, and for those with the ability to move very quickly.
System integrators and engineering, procurement and construction (EPC) players would seem to have the easiest path forward. Although a significant amount of the installation work was performed by foreign companies, Italy’s PV boom also fuelled growth at a host of local firms.
“Maybe on an industrial level the Italian PV sector can’t be compared to other European examples, but downstream we have developed a lot of know-how,” says Valentina Leva, marketing manager at Italian PV distributor Enerpoint. “This knowledge is extremely useful in countries that are just now taking the first steps towards PV.”
The challenge for such companies will be moving beyond Italy into new markets around the Mediterranean, the Middle East and sub-Saharan Africa, says Elisa Baccini, head of Italian business for PV monitoring-equipment specialist SolarEdge Technologies. “If I were an EPC [contractor], I’d have already left Italy,” she says.
In some cases, Italian EPC companies may make interesting takeover candidates or joint-venture partners for major manufacturers looking to move downstream, notes Vincenzo Quintani, Suntech sales director for Southern Europe.
“I know Italian companies that can install 1,000-1,500 plants a year, which are being looked at very closely by major international groups,” he says.
For Italian manufacturers, however, the picture may be grimmer. Despite the recent boom, Italy was late to the PV table compared to many of its European peers.
As a result, it has fewer local manufacturers than most countries with comparable installed capacities, and those it does have tend to be smaller and more niche-focused.
As such, the success of Italy’s PV manufacturing base may ultimately ride on two factors: the willingness of government — in Rome or Brussels — to support production rather than just consumption; and the extent to which module buyers will one day be willing to pay more for “premium” kit.
That latter question is germane to all Western module makers, but particularly for Italy, the country that gave the world Prada and Lamborghini.
Convincing consumers that having an Italian module on their roof brings more cachet than a Chinese one may be the holy grail for the Italian industry, says Roberto Vigotti, chairman of the renewables working party within the International Energy Agency.
“When I buy an Italian car, I’m not buying a car — I’m buying music,” Vigotti says. “What are we Italians missing in terms of taking that next step forward in PV?”
Christian Steinberg, a senior consultant at Solarpraxis, thinks that such product differentiation will become more common as the PV industry matures.
“Even the cigarette industry has created unique selling points,” Steinberg says. “Why not PV?”
And while leading Italian PV companies race to internationalise their businesses, some observers point out that the Italian market itself still holds plenty of opportunity — perhaps without the intoxicating rush of the past few years, but also without the hangover.
The government has imposed a cumulative cap of 23GW for 2016, an annual support ceiling of €6bn-7bn ($7.7bn-9.3bn) and measures aimed at shifting the market from ground-mounted systems to rooftop installations.
But many observers see this as a starting point for negotiations, and expect the rules of the game to continue changing in line with the economics of PV.
“We have to acknowledge the mistakes made in the past few years and take stock in a responsible way,” says Valerio Natalizia, president of trade body Gruppo Imprese Fotovoltaiche Italiane.
“But the conclusion shouldn’t be that because we ran a bit too fast in the past, we must suddenly come to a complete standstill.”