Interview with Andrea Brumgnach, ME | Making Energy: “The Future is On-Roof”
ME | Making Energy is one of the main Italian EPC&M (Engineering, Procurement, Construction and Maintenance) contractors in the photovoltaic field. ME has gained widespread experience in the photovoltaic field, with over 100 MW in systems installed all over Europe.
1. How was the year 2011 for the Italian PV market as a whole? How many MW of new PV power systems are being installed in 2011, to your knowledge?
If we look at official figures, we can say the Italian PV market has been the largest market in the world in 2011, with more than 8 GW installed. However, an in-depth analysis of what happened during the year clearly shows different peaks and standby phases in our market. At the beginning of 2011, we experienced major success in terms of new capacity installed as logical consequence of the 3rd Conto Energia and the “Salva Alcoa”.
Then suddenly, after 3rd March, the market ground to a halt as it awaited the issue of the new Conto Energia in May. After the publication of the 4th Conto Energia in June and July, the market started again in two different ways: new on-roof plants based on the new Conto Energia, and ground-based PV plants competing for grid connection before the end of August in order to keep them safe from the register mechanism introduced by the 4th Conto Energia.
Furthermore, from the beginning of September, the market started to slow down again due to the financial crisis and the subsequent difficulties faced by new PV initiatives in terms of accessing financing.
2. Based on your market position, market knowledge and vision, what are your expectations for Italy’s market development in 2012? What will be the trends and differences compared to 2011?
Today it’s hard to give an overview of the Italian market for the coming year. I believe we’re going to have strong stability in terms of the PV legal framework but at the same time we will step into 2012 with several open questions:
- Will the financial crisis come to an end in the first months of 2012?
- Will the Italian players be able to refocus their activity solely on on-roof projects?
- Will market players be able to survive this stormy period?
Looking at what’s going on in the German market, we see a number of major players running into serious financial and economical troubles. The same is happening in the Italian market. In terms of the size of the Italian market in 1012, my expectation ranges between 2.5 and 3 GW, assuming that there will again be unrestricted access to financing. However, if the banks and government are unable to overcome the current adverse financial scenario, I’m afraid to say the Italian market size next year may well be much smaller than this.
3. The spectacular growth of the Italian market in 2011 does not show any signs of having been affected by the current economic crisis. What practical consequences are visible in the PV market?
As I said before, in the last months the financial crisis has been the main responsible cause of the contraction of the Italian market, which showed a reduction in growth rate in terms of capacity installed compared to the first three quarters, at a level of less than 200 MW/month. We should always keep in mind that more than 90% of new PV investments are based on bank financing (i.e. leasing, corporate or project finance). The market is still alive, and PV players are still busy making offers, but as customers approach the final stage of sourcing financing for their initiatives, then the game stops, waiting for a never-ending decision process.
4. For a few months now, Berlusconi is no longer the Italian Prime Minister and the new Mario Monti Government has been formed. How will this impact the Italian Solar PV industry and market in 2012 and 2013?
The new Italian Government is facing a very hard challenge: Italy must win back the trust of the world’s financial markets, secure State financial sustainability and re-boost the economy. In order to do so, Mr. Monti will have to reform our internal policy in terms of pension, access to work, liberalizations, and will need to wage a serious war against tax evasion and local mafias.
This is something that has a major impact also in the PV market. Without financial stability, customers will not invest. We know the same applies to the whole of the Eurozone. I hope that the new government will be able to show the world that Italy is a very reliable country – and I’m confident that the new government will reach this goal.
5. Grid parity will be achieved in Italy in 2012 for residential households, at least in Southern Italy. What changes do you expect to see in the market?
In the South of Italy we have already reached grid parity for residential plants. If PV plant costs continue to decrease, it is most likely that we will achieve grid parity in 2012 for commercial plants also. The point is: are the Italian customers ready to understand what it means? Normally, the residential market is not only attracted by the “investment IRR” but just because “PV is green.” This market segment could really welcome the concept of grid parity. However, in the case of the commercial and industrial segments, customers consider solely IRR aspect of the investment. We are talking about a cultural change; a new way of thinking about energy supply needs. Personally, I don’t think that the Italian market is ready to understand what grid parity means; this is something that needs time, probably years, to be well understood. That’s why I see the 4th Conto Energia as a far-seeing law, because we have the opportunity to continue to develop the market for several years, showing and explaining, at the same time, that the Feed-in Premium is not the only reason to invest in PV.
6. Will large (>1 MW) ground-based PV power plants be developed and built in 2012 in Italy? What will the focus be for the Italian developers, investors and contractors?
I think that we are close to the end of the large ground-based plants' business, at least in Italy. For sure, over the coming years we will see few new big ground-based plants, but this part of the market is at the end: the future is on-roof. That’s why I think that one of the most important challenges for market players is related to their ability to understand and attack this market. It concerns all of the players: developers have to understand what it means to develop on-roof; investors need to understand that a roof is just as viable as a ground project, and contractors have to improve their skill and knowhow in order to be able to design and implement roof plants. This is really challenging: how many players will be able to turn towards this market segment? We will see next year.
7. What are your expectations for the Italian PV market in 2013-2015 (in MW new installed PV power)? Will it continue the spectacular growth it experienced in 2011?
2011's market performance will be hard to achieve again in the future. However, I’m sure the PV market will be able to continue at a steady rate in the next years, probably something between 2 and 3 GW per year. Of course, this will only happen if Europe quickly works out a way to overcome the current deep financial crisis.
