One of the reasons solar stocks have been extemely volatile over the past couple of years is because of the uncertainty of cuts – and their impacts – to Germany and Italy’s cherished solar feed-in laws.
As we’ve reported numerous times over the years, those feed-in laws led to a solar boom in those countries. What would happen if they were severely cut?
Germany’s law was cut last year and didn’t result in the feared curtailment of that market – it had it’s best year ever partially because of the huge amount of solar deployed in advance of those cuts.
Now, it’s Italy’s turn. Italy just announced it would retain its current laws through August, rather than cutting them in June (the law expired in 2010 and has since been extended). It says it needs the cuts to reduce the population’s utility bills.
The new feed-in law has yet to be announced, but this transition will secure investments in projects that are in the planning phase. Investors and solar PV companies have been reviewing their strategies for Italy and have reportedly been reducing jobs there because of uncertainty.
Under the revised law, it’s likely the size of roof-top projects that are eligible for incentives will be raised from the current 200 kW to 1 MW., a government source told Reuters. And subsidies for solar developers would be capped at EUR 6-7 billion ($8.8-$10.3 billion) a year by the end of 2016. At that point, total solar capacity in Italy is expected to reach 23,000 MW.
A group of foreign solar investors initiated a law suit over the planned cuts last week, Reuters reported.
As with Germany, investors are expected to rush in before the cuts, resulting in a surge of solar capacity. Italy could end up with 7000 MW in advance of the deadline, a a senior official at the state energy services agency told Reuters.
2,300 MW of solar PV were added in Itay in in 2010, bringing the total to 3,400 MW.
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