Italian PV association renews battle for »reasonable« feed-in tariff again

At the start of 2004, prospects for a market-driving Italian PV feed-in tariff looked good with the passage of a renewable energy directive. But a lack of government commitment to setting levels high enough has put the country's PV industry back on the offensive.

© RED 2002 Stuck: While the Italian solar program has resulted in only 4 MW of installations this year (pictured here a 3.1 kW system in Vicenza), the country's authorities seem to have no hurry in implementing a PV feed-in tariff.

The Italian photovoltaic industry association GIFI is on the warpath again. The reason is simple – although its long sought-after PV feed-in tariff for Italy is now a certainty, the level at which it will be set is not. And if it comes in too low, GIFI's members fear the country's PV industry could shrivel up and die.

Last December, the prospects looked good. After a campaign and media blitz, GIFI and EPIA, the European Photovoltaic Association, were able to convince parliamentarians to add a sentence to a European directive on renewable energy being adopted by Italy, calling for PV remuneration »at a level and duration that allows a reasonable economic return on the cost of investment and operations« (see PI 1/2004, p. 10).

But any dreams of celebration were cut short by a wake-up call at a July meeting with the Ministry of Industry (MOI). While a high-ranking member of GIFI declined to say what was being offered by MOI – which along with the Ministry of Environment (MdA) has been mandated to set the level of feed-in tariff – it couldn't have been too high. On Sept. 1, the GIFI board decided to renew its campaign to win legislative support for a »reasonable« feed-in tariff – a step GIFI certainly wouldn't have taken if the MOI recommendations had been to its liking.

In the past they certainly haven't. At a GIFI-sponsored workshop in March (see PI 4/2004, p. 18), Luciano Barra, an officer in the MOI's renewable energy department, called the tariff support for PV »too expensive,« instead indicating a preference for wind and small hydro (see PI 4/2004, p. 18). At the same time, Mario Gamberale, representing the MdA, said his department would probably push for a feed-in tariff of between 45 and 60 euro cents (55¢ to 73¢) for 15 to 20 years. GIFI, on the other hand, was proposing two tariff level scenarios: either 60 euro cents (73¢) per kWh over 20 years or 90 euro cents ($1.10) over 10 years.

GIFI pushing revised proposal

GIFI is now taking a revised proposal directly to those in the national and regional government who have backed it in the past via personal contacts and a media campaign. This time its recommendation is styled on the successful German PV feed-in tariff system, which offers different rates depending on application. The GIFI scheme calls for a base feed-in tariff of 48 euro cents (58.5¢) per kWh in undeveloped areas – that is, on the ground – for 20 years with added values depending on system size and use of BIPV, ranging from 60 up to 68 euro cents (73¢ to 82.2¢) (see table).

Oddly, GIFI is only proposing a tariff reduction for systems installed in 2006 of 1 percent and an extra 1 percent in subsequent years. An annual reduction of 5 percent, as in Germany, would certainly have been a better selling point legislatively. And why GIFI has limited payments to systems under 500 kW is a mystery – larger installations translate to more sales and a means of driving down installed costs, a winning point for gaining political support. On the positive side, GIFI wants the right to renegotiate a 200 MW cap mandated by a government White Paper if reached before the program ends in 2012. It is also recommending that net metering be instituted after the 20-year feed-in tariff has been paid out and that a simpler administrative method be approved for owners of small PV systems instead of the bureaucratic procedures they currently face with value-added tax and having to register as electricity producers.

If a PV feed-in tariff that makes the technology financially attractive is not in place by the start of 2005, says the GIFI source, »that could be the end of the PV industry in Italy."« So far, prospects do not look good. Not only did MOI and MdA miss an Aug. 15 deadline for making a tariff recommendation, the Italian Authority of Electricity and Gas has still not issued guidelines – due last May 15 – on the technical and financial conditions for connecting PV systems to the grid. And, says the GIFI source, that uncertainty of an extra financial burden is one of the reasons why GIFI has set its proposed feed-in tariff levels a few cents higher per kWh than in Germany. The request »may be reviewed,"« he says, once the connection costs are known.

The only thing certain at this point is that the feed-in tariff – at whatever level it is set – is destined to replace a bureaucratic MdA PV rebate program administered by the country's 20 regions, once known as the 10,000 PV roofs program (see PI 5/2001, p. 18), and an MdA PV grant scheme for BIPV systems on public buildings. Of the 29 MW of installed PV capacity in Italy as of the end of 2003, plus an estimated additional 4 MW in 2004, only about 10 MW can be credited to the government's botched attempt to support the PV market.

Whether Italy will see a PV boom in 2005 depends on the battles now being waged by GIFI. If successful, expect PV investments to pick up dramatically in Italy. If not, this could mark the end of another Roman Empire before it even begins.

William P. Hirshman
© PHOTON International, October 2004