The photovoltaic market - Italy

1.2 The global market

Global demand for solar energy is important. The Net Zero Emissions by **** (***) that shows a pathway for the global energy sector to achieve net zero CO* emissions by ****, with advanced economies achieving net zero emissions before others. According to this scenario, solar energy production must reach * times what it was in **** by ****.

In that year, the market was valued at $***.** billion. In ****, it grew to $***.** billion, with further annual growth projected at a CAGR of *.* percent through ****. This is expected to bring the value of the market to $***.** billion.[***]

Solar energy market growth World, ****-****, US$ billion Fortunebusinessinsights

China was responsible for about ** percent of solar PV generation growth in ****, due to large capacity additions in **** and ****. The second largest growth in generation (***).

Solar PV has proven resilient in the face of disruptions caused by Covid-**, supply chain bottlenecks, and rising commodity prices recorded in ****, achieving another record annual capacity increase (***)[***].

Policy support remains a key factor in PV deployment in much of the world. Various policies, such as auctions, feed-in tariffs, net metering, and contracts for difference, are driving capacity growth. Below are some important policy changes and targets affecting PV growth in ****-**** [***]: China released its **th Five-Year Plan ...

1.3 The domestic market

Historical trend:

Solar energy production in Italy made an initial leap forward in ****-****. This increase was influenced by the gradual commissioning of more than *,*** MW related to the"Save Alcoa" decree, and the implementation of the"conto energia," a European incentive program to promote the production of electricity from photovoltaic systems. Thereafter, installations of new systems slowed, resuming growth in ****.

Power connected by year, solar energy Italy, ****-****, GW Italysolar

****:

Total annual energy production from PV systems in **** was **.* TWh, covering about *.*% of Italy's electricity demand. Residential PV systems accounted for **.* percent of new installations, while commercial and industrial installations accounted for **.* percent and utility-scale installations accounted for **.* percent. Italy's southern regions, including Sicily, Calabria, and Apulia, continued to lead the country in terms of installed PV capacity and power generation. During the fourth quarter of **** alone, Italy added *,*** MW of new PV capacity, bringing the total installed capacity to **,*** MW.

Number of new PV systems connected to the grid by month Italy, ****, in numbers Italysolar

****:

January: electricity demand in Italy reached **.* TWh, an increase of *.*% compared to January ****. Electricity production reached **.* TWh, registering a *.* percent increase over the same month in ****. Natural gas-fired power plants made the ...

1.4 Export-Import

Italy is a net importer of electricity, the values increased significantly in **** and ****, mainly due to higher prices, but also, to a lesser extent, due to the larger amounts of energy the country imported. From **** to ****, Italy's electricity imports increased significantly, from $*,***.** million in **** to $**,***.** million in ****. Exports also increased over the period, although to a lesser extent than imports. They increased from $***.** million in **** to $*,***.** million in ****. The coverage ratio, which is the ratio of exports to imports, remained fairly constant during the period under consideration, fluctuating between *.** and *.**. In ****, it was *.**, similar to the value in ****. This indicates that Italy continues to import much more electricity than it exports. Between **** and ****, the value of Italy's electricity imports increased by ***.**% while the value of exports increased by ***.**%.

Electricity import-export Italy, ****-****, millions of $ UNcomtrade

In ****, the most important countries for Italian electricity imports were Switzerland, France, Slovenia, Montenegro, and Austria. Switzerland and France alone compose more than ** percent of the total.

Most important countries for electricity imports (***) Italy, ****, US$ million UNcomtrade

Italy is also a net importer of photovoltaic panels. The following data show imports, exports, and coverage ratios for three types of photovoltaic generators in thousands of dollars: DC ...

1.5 The impact of Covid

Globally, the solar energy industry was negatively impacted in the short term by the pandemic, mainly due to disruptions in supply chains and reduced investment. Social restriction and distancing measures have caused delays in the implementation of solar projects and panel installation, as well as disruptions in supply chains. As a result, the production and distribution of solar industry components, such as PV modules and inverters, have been affected. [***]

In Italy in ****, there was a drastic reduction in the number of installations and a sharp slowdown for the "commercial" segment (***). [***]

However, another tangible direct effect of the pandemic period was how air pollution declined, which led to an increase in the yields of existing solar panels.

Change in solar power generation due to lockdowns World, ****, % Spglobal

2.1 The question

This section will analyze both the total electricity demand in Italy and the percentage of generation created by photovoltaic sources.

During the period ****-****, electricity demand in Italy was generally increasing, with some seasonal fluctuations. During the summer (***), demand tends to be higher than during the spring and fall months. This is mainly due to the increased use of air conditioners and heating during the hottest and coldest months, respectively.

Monthly electricity demand Italy, ****-****, TWh Terna, Businesscoot elaboration

Demand composition:

In ****, Italy's photovoltaic power saw a total production of **,*** GWh, enough to meet *.** percent of demand. Between **** and ****, total electricity demand in Italy increased initially, then decreased slightly. Photovoltaic power generation increased in ****, increasing its share of total demand compared to ****. This indicates progress in the development and use of renewable energy sources such as solar PV in Italy.

Electricity demand and photovoltaic production Italy, ****-****, TWh Terna, Businesscoot elaboration

Data on photovoltaic power generation by power class show that most of the energy comes from the *** kW ≤ P < * MW class. The other power classes contribute to varying degrees, indicating a diversity in the size and capacity of PV installations.

Photovoltaic energy production by power class Italy, ****, % Italysolar

2.2 Demand drivers

In the International Energy Agency's projected scenario, the cumulative capacity of photovoltaics will nearly triple. It should reach more than *,*** GW by **** in the main case, overtaking hydropower in ****, natural gas in ****, and coal in **** to become the world's largest installed electrical capacity. Hydropower drops to third place in terms of installed renewable capacity due to the rapid expansion of wind power.

Energy capacity by technology World, ****-****, % iea

The drivers driving demand for solar energy in Italy are similar to those for other renewable energy sources, but expectations worldwide are therefore that this technology will grow faster than others, thanks to the lower cost to the increasing efficiency of photovoltaic generators.[***]

The main drivers can be divided into two categories:

Sustainability, Security and energy independence.

Until a few years ago, sustainability was seen as the only driver for the growth of the renewable energy market; however, the recent Russian-Ukrainian conflict has raised issues of energy dependence, especially in Europe, which contributes to a further push in the transition to sustainable and independent power generation. Energy security is another driving force in promoting renewable energy. Using renewable energy sources locally can reduce dependence on fossil fuel imports, improving countries' resilience to ...

2.3 The geographical composition of demand

This section will analyze both the geographic distribution of electricity demand and the distribution of PV installations.

Electricity demand:

To analyze the distribution of demand, regions are grouped into clusters:

TURIN: Piedmont - Liguria - Aosta Valley, MILAN: Lombardy, VENICE: Friuli Venezia Giulia - Venezia Mestre - Trentino Alto Adige, FLORENCE: Emilia Romagna - Tuscany, ROME: Latium - Umbria - Abruzzo - Molise - Marche, NAPLES: Campania - Puglia - Basilicata - Calabria, PALERMO: Sicily, CAGLIARI: Sardinia.

Data on energy demand in **** by regional cluster in Italy shows that Milan has the highest energy demand (***) due to its lower population and industrialization. The other regions show intermediate values, with variations due to differences in population, economy, and local infrastructure.

Electricity demand by geographic area Italy, ****, TWh Terna

Photovoltaic plants:

The following map shows the number of photovoltaic installations in Italy by region. A higher concentration of installations can be seen in the northern and central regions of Italy. The regions with the largest number of installations are Lombardy (***).

Analyzing the distribution by total plant power, we can appreciate some differences, particularly for Puglia, a region in which we find plants with larger average sizes.

2.4 Hydrogen, a new source of demand

Hydrogen is a versatile energy carrier that can contribute to the decarbonization of various sectors, such as transportation, industry, and heating [***]:

Transportation: it can be used as fuel for fuel cell vehicles, which reject only water as a byproduct. These vehicles have the potential to significantly reduce emissions of greenhouse gases and air pollutants in the transportation sector. It can also be used to power trains, ships, and heavy vehicles, such as trucks and buses, due to its use in synthetic fuel production. Industry: it can be used as a feedstock in the production of chemicals, such as ammonia and methanol, and steelmaking. It should reduce CO* emissions associated with these processes. In addition, it can be used as a high-temperature heat source for industrial processes, such as cement production and petroleum refining, contributing to the decarbonization of these energy-intensive sectors. Heating: it can be blended with natural gas or used as a pure fuel for residential and commercial heating. This can help reduce dependence on fossil fuels in the heating sector and reduce greenhouse gas emissions.

Although hydrogen has significant potential, it currently accounts for only a small portion of global energy. To exploit hydrogen's full potential, significant investment in ...

3.1 The market structure

Italy's power generation sector (***) is averagely concentrated. In ****, the last year for which Istat makes sectoral data available, the number of companies was ****, a slight increase from ****. Previous time series are not comparable because Istat used different counting methods.

Number of companies in the sector: power generation Italy, ****-****, in numbers Istat

Employment, on the other hand, was dynamited, suggesting a gradual fragmentation of the sector, with a slightly larger number of smaller firms. This phenomenon could also be related to the emergence of small-to-medium enterprises operating in the renewable energy sector. In addition to this, the sharp decline that occurred in **** should not be taken in consideration that much, as the pandemic was the main factor in this decline.

Number of employees in the sector: power generation Italy, ****-****, in thousands Istat

While you analyze the legal forms of these enterprises, it seems like there is an important number of S.r.l., followed by the category of freelancers, sole proprietors, and self-employed. The number of S.P.A.s is ***.

The legal form of enterprises in the sector: power generation Italy, ****, in numbers. Istat According to the polls produced by Solar Media-PV Tech, the top ** manufacturers control ** percent of ...

3.2 The value chain

3.3 Distribution

Companies that manufacture and install photovoltaic modules work in both B*B and B*C markets. In Italy, many companies are interested in installing this technology at their production sites to cut energy costs. This trend has become especially pronounced since the outbreak of the conflict in Ukraine, which has caused energy prices to rise.

To get an idea of the share of the B*B and B*C market, it is useful to analyze the distribution of solar panels in Italy, between residential, commercial, and industrial sectors and utility-scale. Utility-scale indicates the sector specifically dedicated to power generation, with large solar installations, typically with a power output of more than * MW, supplying energy directly to the grid.

Distribution of solar plants by sector Italy, ****, in numbers Italysolar

The percentage distribution of solar installations in Italy shows that the majority (***) sector accounts for *.* percent of installations, while the utility-scale sector, with larger installations, has a very limited share at *.* percent.

Going to analyze the data regarding the total power of these installations, however, the distribution changes significantly, with the C&I sector gaining the first place with more than ** percent of the connected power.

The power distribution of solar installations by ...

3.4 The main players in the market

Section *.* listed the principal manufacturers of photovoltaic panels worldwide, which dominate the market by offering relatively cheap and large-scale products. Despite this, there are a few companies in Italy that focus mainly on certain market niches and produce generally high-quality panels. The main made-in-Italy companies are [***]:

Sunerg Solar: Founded in ****, is engaged in the development and production of high-efficiency photovoltaic modules and is located in Citta di Castello, Perugia. Solsonica: produces high-quality photovoltaic modules, mainly for the residential and industrial markets, and is located in Rieti. SPS Istem: a company that specializes in the production of high-quality photovoltaic modules and offers customized solutions to meet customer needs, is located in Verona, Italy. V-energy: a company that offers sustainable and innovative solutions for renewable energy production, is located in Milan. Eclipse: produces photovoltaic panels and energy storage systems, and is located in Milan.

4.1 The offer

Photovoltaic modules are devices that can convert sunlight into electricity. They consist of a set of photovoltaic cells, usually made of crystalline silicon, that absorb photons of sunlight and generate an electric current through a process called the photovoltaic effect. When photons strike the surface of photovoltaic cells, some are absorbed by the semiconductor material (***). Therefore, an inverter is needed to convert the DC generated by the solar panel into usable AC. [***]

Two main technologies currently dominate global PV markets and supply chains: crystalline silicon (***) thin-film PV technology makes up the rest.

PV module production by technology World, ****, % Iea

Polycrystalline silicon (***) had steady growth until **** but began to decline after **** until it no longer constitutes a major share of production in ****.

Technology Features Monocrystalline silicon (***) These modules are made using silicon wafers cut from monocrystalline silicon ingots, which are characterized by a uniform crystal structure. During the manufacturing process, the silicon is cast into a single crystal through a process called Czochralski. Monocrystalline modules are generally more efficient than polycrystalline modules, with efficiencies ranging from ** percent to ** percent or more. However, the manufacturing process for monocrystalline silicon is more expensive and complex. Monocrystalline modules are easily recognized by their uniform black ...

4.2 The prices

Prices of PV modules vary depending on the technology used. Monocrystalline silicon (***), but they also offer higher efficiencies. PV module prices have fallen significantly in recent years due to economies of scale, technological advances, and competition in the industry. [***]

PV module price trends World, ****-****, base ****=*** Iea

In percentage terms, PV module prices have fallen by more than ** percent over the past decade, making solar PV the most affordable technology for electricity generation in many parts of the world. In ****, the average selling price of modules increased for the first time, up about ** percent from ****, due to the rising cost of raw materials and transportation. Although module prices remained high in the first half of ****, continued innovation to further improve energy and material efficiency is expected to allow cost reductions. However, decreasing prices in the short term will depend on lowering costs of raw materials, polycrystalline silicon, and transportation costs.[***]

Regarding home systems, the following estimates of the average panel price depict the prices range [***]:

Below are some examples of prices for the Italian market:

5.1 Regulation

From a regulatory perspective, the use of renewable energy sources is encouraged:

EU Directive Sept. **, ****: This directive establishes a common regulatory framework for the advertising of renewable energy usage in the European Union, with the goal of achieving a renewable energy share of ** percent of gross final energy consumption by ****. Piano Nazionale Integrato per l'Energia e il Clima (***): This Italian plan to achieve the EU's energy and climate goals for **** includes an increase in the share of renewable energy in gross final energy consumption. The plan includes incentives and support measures for the development of the photovoltaic sector.

In the near future, the use of photovoltaic technology for energy production will be boosted more by the "fit for **" package. This is a set of legislative proposals put forward by the European Commission in July **** to reduce the European Union's greenhouse gas emissions by at least ** percent by ****, compared to **** levels. This goal is in line with the Paris Agreement and the EU's commitment to achieve climate neutrality by ****. The proposals have already been extensively discussed, and the Council is in dialogue with the European Parliament as part of negotiations to find a common agreement for the final adoption of the legislative ...

5.2 Italian bonuses and benefits

The main Italian incentives to install photovoltaic systems are [***]:

Renovation Bonus:

The main measure to incentivize the installation of a photovoltaic system is the Renovation Bonus, which allows you to enjoy a ** percent incentive that is disbursed in the form of an IRPEF tax credit, which can be divided into ** equal annual installments up to a maximum of **,*** euros. The deduction for photovoltaic systems is valid until December **, ****. In addition to the cost of installation, it also allows the deduction of expenses related to the costs of design, labor, and inspection, which will then be covered by the incentive.

Superbonus:

Thanks to the Superbonus, it is possible to obtain the incentive to carry out the photovoltaic installation, but in this case, it should be remembered that photovoltaics falls under trailing work, and is therefore subject to the execution of mandatory trailing work. In ****, the Superbonus decreased from ***% to **%, and unlike the renovation bonus, the IRPEF tax credit must be taken into deduction in * annual installments.

Reduced VAT:

The installation of a photovoltaic system provides for subsidized VAT at **% instead of **%. This new rate can be applied not only to the installation costs of the system but also to the design and ...

6.1 Segmentation

• Longi Solar
• JinkoSolar
• Ja Solar
• Sunerg solar S.r.l.
• Eclipse Italia S.r.l.
• SPS Istem S.r.l.
• V-Energy S.r.l.