Italian Solar Market is Hot

Italians love their wine, pasta, morning espresso and solar energy. The Italian market is so hot that Solar technology company SunPower Corp. (Nasdaq:SPWRA, SPWRB) has agreed to acquire European and Israeli solar power producer SunRay Renewable Energy, in large part because of their “strong pipeline in Italy” for solar projects. This will add to SunPower's existing Italian presence, established with their previous acquisition of Solar Solutions.

SunRay recently received the European Solar Deal of the Year award from Project Finance magazine for the largest solar PV power plant financed in 2009, the 24 MW Montalto power plant in Italy, which launched SunPower's relationship with SunRay. The project is valued at $205 million and is the biggest PV project to date in Italy. The magazine recognized the project in part because of the company’s ability to secure financing despite the credit crisis and to effectively manage the Italian permitting and litigation system.

But that complex permitting and litigation system hasn't stopped the growth in Italian solar. In the month of November alone, Italy’s solar capacity increased by more than 100 MW, bringing the country’s total solar capacity to 795 MW. New data may show that solar capacity was as high as 1000 MW by the end of 2009 and the country is expected to hit 1.5 GW of solar capacity by the end of this year. Puglia has the most solar capacity with 96.6 MW and Lombardy has the most installation with more than 8500.

Italy’s solar boom has not just been a result of the available sunshine in the southern European country. The government also established incentives in 2007 which sparked solar investment. Italy's feed-in tariff program guarantees operators up to 0.49 euros per kilowatt hour of produced power for 20 years, making solar a good place for investors to put their money. And a safe one in a volatile financial market.

"It is like investing in government bonds, but it yields more," said Gianluca Bertolino, board member of GIFI, which represents about 70 percent of the PV business in Italy.

Thanks to the feed-in tariff, investment in the Italian PV sector yields from 4.5 percent in the country's north up to 10 percent in the south, according to estimates of internal rate of return (IRR) in the sector by GIFI and Intesa Sanpaolo. – World Environment News

It is expected that these tariffs will be reduced this year. Some anticipate that Italy’s solar market is far enough along to continue to have healthy growth, while others fear a bursting solar bubble.

Given the level of new investment and the degree to which Italians seem to have integrated solar into the culture – there are even plans to build a 200 foot high statue of a saint, covered in Photovoltaic panels - the hot Italian solar market is unlikely to cool off.