The budget available to for Italy’s Conto Energia V PV incentive program could be cut to less than half of the intended amount according to the latest report from IMS Research.

Source: IMS Research (IHS Inc.)

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The budget available to for Italy’s Conto Energia V PV incentive program could be cut to less than half of the intended amount, wiping out any FIT budget for 2013 and significantly reducing the outlook for installations in Italy over the next three years, according to the latest report from IMS Research (recently acquired by IHS Inc.). The research firm’s latest quarterly PV Demand Database report reveals that whilst the new feed-in tariff (FiT) scheme could have supported an additional 7.5 GW of installations over the next two years, it is now likely that it will result in just 3 GW of additional installations, with the FiT closing as early as 2013.

The Gestore dei Servizi Energetici (GSE) announced on 12^th July that the annual cost of PV incentives had reached $7 billion, triggering the 45 day notice period for the introduction of the country’s new Conto Energia V feed-in tariff (FiT) on 27^th August 2012. The new scheme was intended to be accompanied by an additional annual budget of $850 million and is due to end when the total annual cost reached $8.1 billion. However, a large number of installations were completed in the first half of the this year in order to benefit from the previous Conto Energia’s generous rates and these are not yet all included in the official GSE statistics. As a result, this official annual cost figure has continued to rise since the announcement just over a week ago and already exceeds the $7 billion threshold by nearly $121 million.

“Based on various supply chain checks, IMS Research estimates that around 3 GW of installations will have been completed by the time Conto Energia V is introduced in August,” commented Sam Wilkinson, Senior PV Analyst at IMS Research. “Currently the official GSE statistics show 1.8 GW of installations and a cost of $7.4 billion. Once these figures catch up with reality, this will take the annual cost of incentives to around $7.7 billion, and will reduce the additional budget available for new Conto Energia V installations to just $363 million.”

The report revealed that the severely reduced budget available to the new incentive scheme has led to a significantly reduced long-term outlook for Italy. The latest forecast released by IMS Research predicts that installations in Italy will now decline for the second consecutive year in 2013 and fall to less than 3 GW for the first time in since 2009. “Whilst Italy has consistently been one of the largest markets in the world, 2013 will see it fall outside the top-three markets for the first time in five years,” added Wilkinson.

IMS Research predicts that had the full $847 million of additional budget been available to Conto Energia V installations, Italy could have maintained its leading position in the global market, installing over 7 GW over the next two years. “Unless additional budget is made available or further changes are made to the incentive scheme, it looks likely that Italy’s PV market will need to survive without incentives starting from 2013. Italy does have favorable conditions for PV and some installations will continue without incentives, particularly in the south of the country, but this will not be enough to maintain the market at its current size for some years,” concluded Wilkinson.