I have become increasingly concerned that Italy could follow the same boom to bust scenario we saw in Spain last year. The Spanish market rocketed past all of the market forecasters forecasts to reach more than 2.5GW of solar power installations. Now I am not so surprised that the cap was put in place and installations in 2009 could actually be below the 500MW limit. A boom to bust cycle that isn’t good for the industry is something Italy could mimic. This also raises the issue of whether elements of the PV industry are self destructive and action by the industry to do something about it to ensure Spain remains an isolated case and not an example other countries will experience.
It was in October, 2008 that I started taking a greater interest in the potential growth rates of the Italian market, prompted by a growing number of PV manufacturers pointing to Italy as an emerging market where these companies expected to grow their market share. Indeed some such as Suntech shocked many of its competitors in December, 2008 when it announced it had already secured 130MW in orders in Italy for 2009, implying more was to come.
By then I had checked various market research firms forecasts for the Italian market and one thing was very clear, those forecasts were too conservative. Taking Suntech’s quoted MW figures and applied to these forecasts, the China based PV producer had taken about a third of the available market for 2009 almost overnight.
Rivals such as Sunpower had already followed business plans and acquired PV installers and distributors in Italy as a base to expand sales in the country, yet had been reluctant to give guidance on the expected sales in Italy. Companies such as Trina Solar had already built a good business in Italy in 2008 while other rivals had started establishing sales operations in the country.
This growing activity set off the alarm bells in my head as it was quickly becoming obvious to me that if the conservative forecasts proved accurate then many companies would be disappointed in 2009 as the market had already been claimed by a few that included Suntech, Trina and Sunpower.
On the other hand such aggressive moves into the Italian market could mean that installations go through the roof and the Italian Government imposes a draconian cap in 2010.
Looking at the two forecasted scenarios recently released by the European Photovoltaics Industry Association (EPIA) for the Italian market, the ‘moderate scenario’ projection points to 400MW installed in 2009. The ‘policy-driven’ scenario points to an additional 100MW installed, brings the total to 500MW for the year.
The problem is that a recent report from an Italian agency notes that 338MW of PV capacity was installed in 2008 and that could reach 900MW in 2009. Despite previous industry concerns over bureaucratic bottlenecks that would limit rapid growth in Italy, that concern would seem to have diminished significantly fuelling concern as to what will be the limiting factors on the projected 900MW market turning out to be much more?
As the year progresses we may be able to spot some of the potential bottlenecks such as labour force or credit constraints but we may also find that installations are tracking higher and therefore barriers to growth do not materialise.
Though many companies are banking on Italy filling some of the void left by Spain, I doubt anyone wants to see Italy become the next Spain.
Author: M. Osborne