Italy's total installed photovoltaic (PV) capacity is expected to rise to at least 15 gigawatts by the end of 2012, with growth slowing down under its new incentive plan, senior industry officials said on Monday.
Italy's solar market, the world's second-biggest after Germany's, has boomed since 2007 when the government boosted production subsidies. In May, Rome cut incentives to help consumers, who support the scheme through power bills.
The total capacity of PV installations, which turn sunlight into power, is expected to jump above 12 GW by the end of 2011, and so far this year about 6.5 GW have come on stream, bringing the current total to 10 GW, according to estimates by Italy's energy services agency GSE.
"It will be at about 15 gigawatts at least (in 2012)," Costantino Lato, director of GSE's research and statistics department, told an energy conference.
GSE said earlier this month the 6.5 GW spike in capacity so far this year was largely due to a special decree that extended earlier, more generous incentives, which expired at the end of last year, to plants that were installed by the end of 2010 but connected to the power grid by the end of June 2011.
The 2011 forecast was higher than the 4.5 GW to 5.0 GW that most solar analysts had forecast, but shares in solar companies, which have fallen sharply in recent months, were mixed on Monday.
Valerio Natalizia, chairman of Italian photovoltaic body GIFI, whose forecasts for 2011 and 2012 are in line with GSE's, said the growth would slow also because the new incentive scheme hits big PV plants harder than those with capacity below 1 megawatt (0.001 GW).
The government has introduced a cap on incentives and a registry for big PV installations only, saying such measures would limit speculation on the solar market. Operators say the registry will only increase red tape.
"We expect 3.0 to 3.5 gigawatts of new capacity in 2012, but a lot will depend on how the market reacts to a registry … and new incentives," Natalizia told Reuters on the sidelines of the same conference.
Smaller PV installations, especially roof-top ones with a capacity from 200 kilowatts (0.2 MW) to under 1 MW, will be the main driver of solar capacity growth under the new support scheme, Natalizia said.
As the pace of capacity growth slows, Italy's total installed PV capacity is likely to be slightly below a 23 GW goal foreseen by the government, he said.
Solar companies have struggled this year as a glut of supplies has pushed prices for their solar panels down about 40 percent, squeezing their profit margins.
That pressure is likely to last into next year, according to Adam Krop, analyst at Ardour Capital Investments.
"All the companies that we speak with talk about a (panel price) stabilization happening in third or fourth quarter," he said. "Yet we're still seeing prices declining."
Shares in Suntech Power Holdings, one of the biggest suppliers to the Italian market, rose 4.5 percent to $2.76, rebounding from lifetime lows on Friday.
Trina Solar shares, however, fell 4.8 percent to $7.32 per share, while First Solar slipped 0.2 percent to 70.12 per share.