IMPACT OF FiT ON DEVELOPMENT OF ITALIAM PV MARKET 1st PV MED CONFERENCE Catania, October 6th, 2005

SUMMARY OF PRESENTATION PV Market Today –A Disaster Drastic Change of Scenario in 3Q05 –FiT approved PV Market Tomorrow –A brilliant future

THE ITALIAN PV MARKET A Young Market –Net Metering permitted only since Dec Subsidy Programme launched in 2001 –Managed by Min.Env./ Regions –Grants up to 75% of Investment Costs –Max PV Price fixed (7,25 – 8,00 €/W) No Installations made in 2001 First Installations in 2002 New Subsidy Programme launched in 2002

THE PV MARKET TODAY Stagnant Market –5 MW per Year Large Gap towards Germany –5 MW/y vs. 336 MW/y in 2004 Uncertainty for future Subsidies –No longer Rooftop Program –No Government Subsidies Strong interest versus Renewable Energies No Future for PV

PV DEVELOPMENT IN ITALY

WHERE WE ARE? Law 387 on RE approved in Dec 2003 –Feed-in Tariff Incentive established “Incentive Tariff which allows remuneration of investment costs” –Feed-in Tariff Start-up linked to two decrees Ministry for Industry Decree (by August 15th 2004) Electricity Authority Guidelines (by May 15th 2004) MI Decree approved on August 5th 2005 EA Guidelines issued on Sept 15th Development of FiT started on Sept 30th

ADVANTAGES OF FEED-IN TARIFF Appropriate Tool to stimulate Industrial Investments Adequate Return on Capital Employed No Financial Burden for Government No Bureaucratic constraints Clear Financing Rules Easy Access to Credits / Bank System One unique set of rules for Whole Market Plant Performance becomes Driving Force

ADVANTAGES OF FiT (cont.d) Market Exploitation expected in spite of critical points Great Attention towards PV Development of full PV Chain –Modules Assembling Factories Quality of Service key selling point

FiT CRITERIA FiT UsersIndividuals Registered Companies Pubblic Bodies PV Plant Size> 1 kWp<1.000 kWp TariffsPlant Size, kWp Tariff, €/kWh < 20 kWp0,445 > 20 kWp < 50 kWp0,460 > 50 kWp < kWp 0,490 Tariff Duration 20 Years Tariff Degression2%/Year from 2007 on Tariff UpdateTight to Inflation Rate yearly

FiT CRITERIA (cont.d) Electricity ValuePlant Size, kWpValue, €/kWh < 20 kWpNet Metering > 20 kWp < 1.000AEEG 34/05 Tender Mechanismfor Plants > 50 kWp Bank Guaranteefor Plants > 50 kWp Maximum PV PowerPlant Size, kWpPower, MWp < 50 kWp60 > 50 kWp <

FiT CRITERIA (cont.d) FiT RequestBy end of quarter DocumentationPreliminary Project Technical Memorandum Tariff CompatibilityYes with incentives from Local Bodies up to 20% investment No with Green Certificates Body for FiT ManagementTo be designated by Energy Authorityon Sept 18th

FiT CRITICAL POINTS Modest Power Target100 MWp Will be increased to 300 MWp Further Increase committed by Ministry of Industry BIPVNo special tariff FiT Request ProcessTime consuming Tender ProcessIt favours utility companies Hybrid SystemMay generate conflict with local Utility

THE PRELIMINARY 3Q RESULTS Strong Interest towards PV Very large number of FiT requests –More than –Most likely 100 MWp No information available on split between –small plants (to be installed by 2006) –large plants (to be installed by 2007) Most likely 50/60 MWp will be installed in 2006

CONCLUSIONS FiT incentive right tool to exploit PV Market Great PV Market Growth expected –500% in 4 Years Net Jobs created mainly in Sicily Quality of Service mandatory

BACK-UPS