On 27 August 2012, Italy’s new PV funding scheme – Conto Energia V – became effective. As required by Conto Energia IV, the new law came into force 45 days after the annual cumulative funding level of €6 billion was reached.

The Conto Energia V changes the incentive tariff structure. It strongly reduces funding levels and narrows the scope of eligible system types. It is limited to an additional annual funding amount of €700 million and is envisioned to be the last Conto Energia.

The law offers an “all-inclusive tariff” for all PV electricity fed into the grid. In contrast to the previous law, the operator cannot sell the electricity if they receive an incentive tariff; electricity that is self-consumed gets a premium rate.

Both incentive tariff types are complemented by a bonus for the use of European modules and one for systems being built in combination with the removal of asbestos.

Projects of above 12 kW must be pre-registered. This register is subject to semi-annual funding caps. During the first semester of the law being effective, funding is limited to €140 million, with €120 million reserved for the following semester.

Aside from installations below 12 kW, there are four system-type groups that do not need to register: systems of up to 50 kW that are carried out in combination with the removal of asbestos, systems using concentrator technologies, building integrated installations with innovative characteristics, and systems built by public entities. However, the funding of each of these groups is capped at an additional annual amount of €50 million.

The capacity of all new projects built under Conto Energia that do not need to be registered will be subtracted from the budget of the register of the next semester. This also applies to systems connected to the grid during the 45 day period before the Conto Energia V had become effective.

On 7 September 2012, about €256 million of the €700 million reserved for the Conto Energia V had already been reached. Therefore, it is expected that the Conto Energia V will phase out in Q4’12.

After the end of the tariff-based funding, some PV investors will still be able to benefit from the possibility of a tax deduction for investments into renewables and from “Scambio sul Posto”, a net-metering type of scheme for systems up to 200 kW.  However, it remains unlikely that these measures will save the Italian PV market from going through a further ‘shakeout’ phase. Many PV installers in Italy have exited the PV industry already or are expected to do so in the next 12 months. This is most evident within companies for whom PV had represented the main source of revenues.

Italy had been widely considered for some time as perhaps one of the first large PV markets that could survive, independent of incentives. But any post-incentive market in Italy is likely to be more complex than before. It is expected to be based mainly upon rooftop systems involving self-consumption (in combination with storage), other renewable types, and overall ‘energy management’. This will require companies to develop new business models.

But managing the integration of PV into an overall energy ‘system’ is not something that can be expected from any individual country. The same can also be said regarding any full transition to a self-sustaining PV market environment.

However, one option available to the Italian government (without having to commit to any additional finance) is to reduce the bureaucratic procedures that have been a contributing factor to the increase in residential installed PV system prices. This move could actually boost this particular market segment to a level that reflects the strong potential Italy has for continued PV adoption.