IMPACT OF FiT ON IMPACT OF FiT ON

DEVELOPMENT OF DEVELOPMENT OF

ITALIAM PV MARKETITALIAM PV MARKET

1st PV MED CONFERENCE1st PV MED CONFERENCE

Catania, October 6th, 2005Catania, October 6th, 2005

SUMMARY OF PRESENTATION

• PV Market Today – A Disaster

• Drastic Change of Scenario in 3Q05– FiT approved

• PV Market Tomorrow– A brilliant future

THE ITALIAN PV MARKET • A Young Market – Net Metering permitted only since Dec. 2000

• Subsidy Programme launched in 2001– Managed by Min.Env./ Regions– Grants up to 75% of Investment Costs– Max PV Price fixed (7,25 – 8,00 €/W)

• No Installations made in 2001• First Installations in 2002• New Subsidy Programme launched in 2002

THE PV MARKET TODAY• Stagnant Market– 5 MW per Year

• Large Gap towards Germany– 5 MW/y vs. 336 MW/y in 2004

• Uncertainty for future Subsidies– No longer Rooftop Program– No Government Subsidies

• Strong interest versus Renewable Energies• No Future for PV

PV DEVELOPMENT IN ITALY

00,5

11,5

22,5

33,5

44,5

5

1993 1995 1997 1999 2001 2003 2005

MWp/year

WHERE WE ARE?WHERE WE ARE?

• Law 387 on RE approved in Dec 2003– Feed-in Tariff Incentive established

• “Incentive Tariff which allows remuneration of investment costs”

– Feed-in Tariff Start-up linked to two decrees • Ministry for Industry Decree (by August 15th 2004)• Electricity Authority Guidelines (by May 15th 2004)

• MI Decree approved on August 5th 2005• EA Guidelines issued on Sept 15th • Development of FiT started on Sept 30th

ADVANTAGES OF FEED-IN TARIFFADVANTAGES OF FEED-IN TARIFF

• Appropriate Tool to stimulate Industrial Investments

• Adequate Return on Capital Employed

• No Financial Burden for Government

• No Bureaucratic constraints

• Clear Financing Rules

• Easy Access to Credits / Bank System

• One unique set of rules for Whole Market

• Plant Performance becomes Driving Force

ADVANTAGES OF FiT (cont.d)ADVANTAGES OF FiT (cont.d)

• Market Exploitation expected in spite of critical points

• Great Attention towards PV

• Development of full PV Chain

–Modules Assembling Factories

• Quality of Service key selling point

FiT CRITERIAFiT CRITERIA

• FiT Users Individuals

Registered Companies

Pubblic Bodies

• PV Plant Size > 1 kWp <1.000 kWp

• Tariffs Plant Size, kWp Tariff, €/kWh

< 20 kWp 0,445

> 20 kWp < 50 kWp 0,460

> 50 kWp < 1.000 kWp 0,490

• Tariff Duration 20 Years

• Tariff Degression 2%/Year from 2007 on

• Tariff Update Tight to Inflation Rate yearly

FiT CRITERIA (cont.d)FiT CRITERIA (cont.d)

• Electricity Value Plant Size, kWp Value, €/kWh

< 20 kWp Net Metering

> 20 kWp < 1.000 AEEG 34/05

• Tender Mechanism for Plants > 50 kWp

• Bank Guarantee for Plants > 50 kWp

• Maximum PV Power Plant Size, kWp Power, MWp

< 50 kWp 60

> 50 kWp < 1.000 40

FiT CRITERIA (cont.d)FiT CRITERIA (cont.d)

• FiT Request By end of quarter

• Documentation Preliminary Project

Technical Memorandum

• Tariff Compatibility Yes with incentives from Local Bodies up to

20% investment

No with Green Certificates

• Body for FiT Management To be designated by Energy Authorityon Sept 18th

FiT CRITICAL POINTSFiT CRITICAL POINTS

• Modest Power Target 100 MWp

Will be increased to 300 MWp

Further Increase committed by Ministry of Industry

• BIPV No special tariff

• FiT Request Process Time consuming

• Tender Process It favours utility companies

• Hybrid System May generate conflict with local Utility

THE PRELIMINARY 3Q RESULTSTHE PRELIMINARY 3Q RESULTS

• Strong Interest towards PV

• Very large number of FiT requests

– More than 4.000

– Most likely 100 MWp

• No information available on split between

– small plants (to be installed by 2006)

– large plants (to be installed by 2007)

• Most likely 50/60 MWp will be installed in 2006

P V P L A N T S E X P E C T E D T R E N DC o n s e r v a t iv e F o r e c a s t

0

50

100

150

200

250

300

2004 2006 2008 2010 2012 2014

M W p /Year

M W p C u m u lative

P V P L A N T S E X P E C T E D T R E N DO p t im is t ic F o r e c a s t

0

100

200

300

400

500

600

2004 2006 2008 2010 2012 2014

M W p /Year

M W p C u m u lative

CONCLUSIONSCONCLUSIONS

• FiT incentive right tool to exploit PV Market

• Great PV Market Growth expected

– 500% in 4 Years

• Net Jobs created mainly in Sicily

• Quality of Service mandatory

BACK-UPSBACK-UPS