Italy Not Enough to Plug Gap in Solar Power Demand
Date: 04-Sep-08
Country: SPAIN
Author: Martin Roberts
Solar power firms face a drastic slowdown in the Spanish market next year and some are pinning their hopes on Italy, but Italian officials and manufacturers are cautious over growth prospects.
Gerardo Montanino, operations director at GSE, the Italian government department overseeing feed-in tariffs, said he expected modest growth.
The GSE forecasts no more than 450 MW of solar power will be installed in Italy by the end of next year and Montanino told an energy conference in Valencia that a 1,200 MW cap on Italian subsidies would probably be reached in 2012.
Italian manufacturers said they faced considerable red tape. Angelo Nogara, managing director of Solkraft Italia, said many Italian solar plants had to wait a year after being built to be connected to the grid.
He also cited the case of a local authority asking for a study on the acoustic impact of a silent solar plant.
"I hope we can have 1,000 MW, but I am not sure because of bureaucratic problems," said Nogara, who is also international affairs officer at Italian industry group Assosolare.
Generous subsidies in Spain will expire this month after encouraging the installation of 1,000 megawatts in new solar plants this year.
That has made Spain the world's biggest market after Germany, where the government expects 1,350 MW of new solar plants to go on line in 2008.
Now the Spanish government wants no more than 300 MW of new plants to be eligible in 2009 for "feed-in" tariffs designed to make solar power competitive, and these will also be cut.
GERMANY, FRANCE
David Wortmann, head of renewable energy at the German government's investment agency, is also cautious about growth prospects, there. Germany has no cap on feed-in tariffs, but they are set to slide and will depend on how much is installed.
"It is adventurous to make predictions, but we could say around 1,500 MW next year," Wortmann said on the sidelines of the conference.
That would keep Germany as world market leader but implies growth of just 150 MW, or not nearly enough to offset an expected drop of 700 MW in Spanish demand.
On a brighter note, US-based analysts Piper Jaffray this week anticipated strong growth in France in 2009 and 2010, partly on the back of expected cheaper solar panels and as subsidies there bed in after a launch in 2006.
"As 2008 supply constraints caused by high Spanish (subsidies) cease, France should benefit from increased module supply at competitive prices," they said.
"We believe France should be a key driver for solar together with Italy during 2009-2010. We believe France will increase its (approx) 50 MW installed capacity at an annual pace of (about) 500 MW in 2009 and 2010."
Some solar power firms at an industry gathering in Valencia this week were still pinning hopes on a swift expansion in Italy next year from 170 MW currently installed to 1,200 MW, where the government says it will cap feed-in tariffs.
"That sort of growth you could almost say it's compensating entirely for the slowdwn in sales into Spain," said Steve Chan, Chief Strategy Officer at leading Solar panel manufacturer Suntech Power Holdings Co.
Spain accounted for 40 percent of Suntech's second-quarter sales this year.
Analysts estimate that Spain will account for 30 percent of sales for US solar panel maker SunPower, but chief executive Thomas Werner is also confident that Italy will plug the gap left by a sharp drop in the Spanish market.
"We are able to replicate our entire Spanish business in Italy, year-on-year. We have a presence in Italy already," Werner said in an interview.
Suntech's Chan said he also saw opportunities in Germany, where his company had not been able to meet demand this year due to the high volume of its sales to Spain.
(Additional reporting by Matt Daily in New York; editing by Gerard Wynn and James Jukwey)