The industry cheer raised over news of Italy’s meteoric rise toward grid parity and its quest for photovoltaic dominance has been dampened lately by concerns from analysts that a speculative bubble may be forming and that the Italian solar PV market may follow the “stop-and-go story” of Spain’s. Italy’s solar incentives, among the most generous in Europe, include a feed-in tariff that guarantees investors up to 0.49 euros per kilowatt-hour of produced power for 20 years and a 1,200 MW cap on the capacity able to be covered by the incentives. Sector experts expect to see a total installed capacity of 1,200-1,300 MW by 2010, up from 450 MW today, and some even believe grid parity possible by next year. Sounds too good to be true? A number of analysts seem to think so: they doubt that the Italian government will be able to sustain this fairy tale scenario, and are expressing their alarm by raising comparisons to the cautionary tale offered by Spain.

Amidst their optimism, a variety of industry leaders have thrown cold water on the heated excitement of their peers. Anton Milner, chief executive of Germany’s Q-Cells, stated that “Italy must stop the overheating and abuse of the market, a stop-and-go story we saw with Spain,” while forecasting cost reductions of 40 to 50 percent in producing solar energy within six years. And, according to this Financial Times article, the relative lack of long-term clarity “over the level of tariffs to be set after 2010” and the exodus of investors unleashed by the “collapse of the Spanish market,” caused by the credit crunch and property slump, are contributing to the dangers of this bubble. Does the word “speculative bubble” remind you of a certain problem in 2007 and 2008?

“Solar is the new real estate in Italy,” complained one project developer, saying that all sorts of property companies were piling into the sector.

While measures have been taken—

Gerardo Montanino, head of GSE, the state-run power management agency, said incentives were too high in Italy at 68-75 cents a kilowatt hour, about double the level in Germany. Tariffs are expected to decrease in 2010 by 2 per cent.

—“hefty” financial penalties have been introduced to ensure the timely completion of solar projects and government officials have declared themselves up to their necks trying to separate the genuine investors from the speculators (as well as from suspected Mafia involvement), the death of Spain’s own glorious-and-costly subsidy scheme offers a lesson many have taken to heart. Yet, as history has shown again and again, we can only learn from our mistakes, and, while it takes time to find a working scheme, it’s certainly not the end of the day for the Spanish PV market—and neither, hopefully, will it be for the Italian solar sector. Thoughts?