Italy: About to Give Solar the Boot?

Currently, Italy's tariffs are even more favorable to solar projects than tariffs in Germany.

Kinross said that in the immediate future, Italy will be one of the key solar growth drivers. "Three years ago, it wasn't even on the solar map, and now people are talking about passing the 1.5GW cumulative threshold this year," Kinross noted.

Something else that Italy itself has been talking about is capping solar tariffs, as Spain did. The Italian government has already said that it will not put a cap in place before the end of 2010. That seems like a good thing, since the Italian government had made previous comments that once solar capacity reached the 1200MW mark a cap would be implemented.

The critical issue is that beyond 2010, no one knows what Italy will do in terms of a cap. "This is basically the same mistake that Spain made," Navigant's Kinross said.

What's more, the risk that with Germany planning such a drastic move, Italy could surprise solar and do a political about-face on its promise to not cap solar in 2010 cannot be discounted either.

The bigger issue in Italy, however, is that solar projects will flood the market between now and the end of 2010. Even if Italy sticks to its plan to extend deliberations on the cap at least through the end of 2010 -- and regardless of the 1200MW threshold -- there could be plenty of solar projects that don't make the deadline to be included under the existing favorable tariffs before the cap is put in place in 2011.