Italy is traditionally one of the leading PV markets in the world. The solar photovoltaic (PV) technology has gained the largest support from Italian government compared to other renewable energy technologies. In effect, PV in Italy already covers 5% of the electricity demand and more than 10% of the peak demand.
Main reasons behind governance of solar PV energy in Italy are advantaged geographic location of the country and the government support system Conto Energia for solar PV projects since 2005 as a strategy to meet renewable energy goals determined in the EU Directive 2001/77/EC (European Parliament and Council of European Union 2001).
According to Photovoltaic Geographical Information System (PVGIS), the average annual solar radiation in Italy ranges from 3.6kW per square metre in the Po river plain area, to 4.7kW per square metre in Central-Southern Italy, to 5.4kW per square metre in Sicily. In other words, the whole national territory is distinctive for its favorable conditions for the installation of solar PV power plants.
Current Solar Market in Italy
Italy has installed approximately 60.1 MW of solar in the first two months of 2018, increased by 17% from 51 MW in the same period in 2017. About 60% of the newly installed PV plants that do not exceed 20kW comes from residential needs, which means that the market is still being driven by the rooftop business, regardless of fresh developments in the massive and private PPA segments. In terms of the industrial and commercial sectors, the largest part of PV systems ranges from 20kW to 100kW, which leads to a combined capacity of 10.9 MW. However, according to the Italian renewable energy association and the above figures, the average growth rate of the Italian solar market stayed nearly unvaried during the last three years. To promote the solar market, Italian government announced a couple of large-scale solar projects in February. But if these projects cannot be finalized this year or there is no more projects of the kind, it will be likely that growth in 2018 will range from 300 MW to 360 MW, as in previous years when the governmental regulation for self-consumption was the key driver in the market.
Key Drivers for 2018 Italian Solar Energy
Residential tax reductions of 50% still remains the powerful driver this year ever since 2012, as PV systems are classified as “projects aimed to achieve energy savings”. Meanwhile, commercial and industrial projects will be driven primarily by the super amortization and a tax exemption passed this year to 130%, creating a stronger financial incentive for PV investments. In early February, the European Commission has confirmed the capacity market in Italy, or the remuneration mechanism of flexible electric power to make sure the security of electricity supply in Italy. This arrangement will keep valid for the next decade, and at the same time, Italy will carry out market reforms in order to mitigate structural risks that may occur to fluctuate the solar market.
The development of the energy storage market (ESS) is steady and strong, anticipated at 7-8000 new installations of which about 90% will be categorized as all-in-one and modular single-phase solutions for residential needs up to 6kW. Italy is stepping toward decarbonization age with the benefit of the growing solar energy system. It will be interesting to see how long it will take for Italy to achieve the objectives approved by the EU: 35% of renewable energy supply by 2030.