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Long-term financing of solar power plants in Italy, together with new investments in substations and power grids, is the obvious answer to the current challenges facing the country.
ESFC Investment Group offers financing for large energy projects in Italy and other countries around the world.
We focus on renewable energy projects such as solar power plants, wind farms, geothermal facilities, electrical substations and their infrastructure.
Together with our international partners, we offer a wide range of financial and engineering solutions tailored to each client.
Long-term financing of solar power plants in Italy
Since the beginning of the solar energy sector in Italy, banks have played an important role providing long-term investment loans for the construction of solar power plants, the expansion of existing facilities, the development of electrical substations, the replacement of equipment and other expenses.Italian energy companies and their foreign partners enjoy all the benefits of European financial market and banking system with its diverse and easily adaptable financial instruments.
Many well-known financial institutions, both commercial and public, have organized special offers for corporate and private investments in photovoltaics with very low interest rates and convenient repayment schedules. In many cases, long-term photovoltaic loans are offered with a grace period, which helps to rationally distribute the debt load of companies in the early stages of the investment project, despite the very high initial costs.
Long-term loans for the construction of a solar power plant can be obtained both from Italian banks and from large international banks that are widely represented in this country and are interested in financing renewable energy projects.
Below we have listed some of the largest banks in Italy, which are involved in financing solar energy projects.
• Intesa Sanpaolo SpA is an Italian banking institution operating since January 1, 2007, resulting from the merger of Banca Intesa SpA and Sanpaolo IMI SpA Its origins date back to 1563 with the founding of the banking institute of San Paolo in Turin. Intesa Sanpaolo is the leading banking group in Italy in terms of number of branches and market share. In 2021, the company's turnover amounted to 20.79 billion euros.
• UniCredit SpA is considered one of the largest Italian banks in terms of the number of branches. It was established in 2010 as a result of the merger of UniCredit Banca, UniCredit Banca di Roma, Banco di Sicilia and a number of other financial institutions. This is one of the largest Italian banks with an international presence, which finances, among other things, large industrial and energy projects.
• Banco BPM SpA is an Italian banking group of cooperative origin, present throughout the country, with the exception of Alto Adige, operating since 2017. The group is characterized by strong local roots, especially in Lombardy, where it is the largest operator with a 15% share, as well as in Veneto and Piedmont. With assets of about 167 billion euros, 3.8 million customers, 1,700 branches, 22,000 employees and a market share of 7%, Banco BPM SpA is the third largest in Italy after Intesa Sanpaolo and Unicredit.
• Banca Monte dei Paschi di Siena SpA (MPS) is an Italian credit institution founded in 1472 to help the disadvantaged of the city of Siena. It is the oldest bank in operation and also the 4th largest in Italy. The group's operations, in addition to traditional banking, cover asset management, investment banking and innovative financial business (project finance, private equity and financial advisory).
• Crédit Agricole Italia is part of the Crédit Agricole Group and is 1 of the 10 largest banks in the world with a presence in 47 countries and over 51 million customers. Crédit Agricole Italia is present throughout the country with around 1,100 branches, around 10,000 employees and over 2 million customers. The bank actively finances capital-intensive business projects throughout Italy.
The list of major financial institutions in Italy also includes BPER Banca, Banca Nazionale del Lavoro, Banca Popolare di Sondrio, Credito Emiliano, Banca Sella and a number of others.
Investing in building a solar power plant can be a very expensive experience, despite the obvious advances in PV technology and engineering. The costs are especially high when it comes to the initial cost of photovoltaic equipment. A sound financial model of project financing with a flexible approach to bank loans allows sponsors to significantly limit costs at an early stage, making the entire project much more attractive and financially reliable.
However, the project participants need to do a lot of work to balance the costs with the potential profit and benefits of the photovoltaic system in order not to lose money.
Typically, the construction of solar power plants in Italy is based on project finance (PF) schemes, which involve servicing project debt from cash flows generated by the power plant itself after its commissioning. This is off-balance sheet financing, which is built around a Special Purpose Vehicle (Societa Veicolo di Cartolarizzazione, SVC) that takes on all the debts of the project.
Under project finance, financial institutions usually cover most of the investment costs of installing a photovoltaic system, up to 80-90% of the total costs.
If you are interested in project finance for the construction of a solar power plant in Italy, please contact ESFC Investment Group for details. We specialize in long-term investment loans for large energy projects, and our team is ready to develop a customized off-balance sheet financing model for your business needs.
Brief history of solar energy sector in Italy
In Italy, where the level of solar radiation averages about 5000 MJ/m2 per year, solar panels with a total area of 1 hectare are able to provide green energy equivalent to the energy of about 12 tons of petroleum products per year.This figure can increase every year due to the efficiency of photovoltaic technologies and further investments in this sector.
Italian energy sector from ancient times to the present day
For millennia, the history of energy in Italy has been linked to the use of solar energy in its various forms, as well as energy from biomass, solar, water, wind and how these forms of renewable energy fueled the development of past civilizations.Back in 1850, wood, charcoal and straw were the main sources of energy in Europe, with a few exceptions. "White coal", the energy of the water of the Alpine basins, contributed in many ways to the industrialization of Italy at the end of the 19th century.
In fact, Italy, due to a shortage of coal, missed the moment of the industrial revolution of the 1850s, based on iron and steel.
Industrial power generation in Italy began with the construction of the pioneering thermal power plant Santa Radegonda, which was put into operation in Milan on March 8, 1883. It was the first power plant of this type ever built in Europe.
However, the Italian electricity industry also developed thanks to the energy of mountain rivers. The first major hydroelectric power plant in Europe was built at Paderno d'Adda in 1898 by Edison. The impetus for the use of water power was the use of alternating current, which made it possible to economically transport electricity over long distances and, therefore, use the water resources of the Alps and avoid dependence on imported coal.
Italy was the first country to demonstrate in 1904 the possibility of generating electricity from geothermal sources.
Electricity production increased by 28.8% from 1883 to 1914, mostly from renewable sources.
The transition to fossil energy in Italy, primarily to oil and natural gas as sources for the production of electricity, heat and steam, was completed only after the Second World War. After that, the process was greatly accelerated.
The interest of Italian companies in the development of solar energy is largely determined by the technical progress that has been observed in recent decades.
The price of photovoltaic cells, which became commercially available in 1954, steadily declined as they became widespread.
Growing impact of solar energy
Solar energy sector in Italy only emerged in the 1960s and was initially limited to a few pioneers such as Giorgio Nebbia and Giovanni Francia.This continued until the first oil crisis in 1973, when the number of programs and activities in support of solar energy increased under the pressure of rising hydrocarbon prices.
Despite the remoteness from the leading scientific centers of the world, Italy was able to write itself into the history of solar energy. In 1963, Giovanni Francia, with financial support from CNR and NATO, built the world's first concentrating solar power plant in Genoa to produce steam at 450 ºC.
After the oil crisis, the Consiglio Nazionale delle Ricerche (CNR) launched a definitive energy project called PFE1. This project, together with PFE2 (1982), involved thousands of researchers and hundreds of institutions, companies, and universities.
It was the greatest attempt ever made in Italy to promote a new energy culture.
In 1977, the Italian section of ISES, founded in Naples in 1964, held its National Congress in this city with the participation of 300 people. Also in the late 1970s, other meetings and fairs on solar energy were held in Milan, Rome and Bari. At that time, there was scientific, public and business interest in investing in solar energy, but there were also calls for caution to ensure that this form of energy developed properly.
In the early 1990s, Italy was the most advanced European country in photovoltaic technology. It had the largest installed capacity, 14 MW, with 5.5 MW directly connected to the national grid. In Serre (Campania), since 1994, ENEL has put into operation the largest solar power plant in Europe at that time with a capacity of 3.3 MW.
In 2004, the cost of solar power plants was 5,000 euros per kilowatt, which is about 500 euros per square meter of photovoltaic cells capable of providing up to 130 kilowatt-hours of electricity per year.
The cost of building solar power plants in Italy can currently be less than 1,000 euros per kilowatt, which corresponds to 100 million euros for a large power plant with an installed capacity of 100 MW.
Today, solar power plants are able to successfully compete with traditional energy sources due to minimal operating costs and low equipment costs.
Investments in solar power plants in Italy are growing
In 2021, total investment in renewable energy in Italy was around 13.5 billion euros, up 48% from the previous year.During this period, 430 industrial-scale RES deals were planned throughout the country. This situation was outlined in the Irex Annual Report 2022, which monitors the renewable energy sector in Italy, analyzes current strategies and identifies future trends.
In the first half of 2022, 1211 MW of new renewable energy sources were installed in Italy, which is 168% more than in the same period of 2021. Investments in photovoltaic power are leading with a new installed capacity of 1061 MW. PV sector is followed by wind power and hydropower with new installed capacity of only 123 MW and 27 MW respectively.
Although the financing of solar power plants in Italy, along with other renewable energy projects, still faces serious bureaucratic barriers, the development of this sector is seen as the basis of a green transition and energy independence in the near future.
Overall, renewables covered 33% of Italy's electricity needs in the first half of 2022.
In the first half of 2021, green technologies covered only 39% of the need. Due to the severe drought that hit Italy and Europe this year, one of the worst droughts in the last 500 years for our continent, hydroelectric power production was not sufficient, but the needs of Italian consumers were met by an increase in the production of wind energy (+9%) and photovoltaic energy (+10%).
Photovoltaic investment in Italy shows rapid growth in 2022
The construction of solar power plants in Italy continued to show rapid growth between January and June 2022 with a new installed capacity of 1061 MW, an increase of 193%.During this period, almost 74,000 photovoltaic systems were connected to the grid across the country.
True, a third of the systems have a power of less than 10 kW, that is, small systems installed by homes, businesses, greenhouses, and warehouses.
Power plants with a capacity of 10 kW to 1 MW account for 31% of the total, while large investment projects over 1 MW account for about 35%.
Table: New installed RES capacities in Italy in the first half of 2018-2022.
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New installed capacity, MW
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| Jan-Jun 2018 | Jan-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2021 | Jan-Jun 2022 | |
| Solar power | 191 | 231 (+16%) | 267 (+16%) | 362 (+36%) | 1061 (+193%) |
| Wind power | 100 | 300 (+199%) | 43 (-86%) | 74 (+75%) | 123 (+66%) |
| Hydropower | 43 | 23 (-46%) | 43 (+86%) | 16 (-64%) | 27 (+72%) |
| TOTAL | 334 | 554 (+66%) | 353 (-36%) | 452 (+28%) | 1211 (+168%) |
As we can see from the table above, the development of PV projects in Italy in the first half of 2022 was the main driver for the country's transition to green energy.
It is obvious that Italy's unique geographical location and solar resources favor the development of the solar energy sector, which has been appreciated by local energy companies and investors.
In the first half of 2022, 35 new solar power plants with a capacity of over 1 MW were commissioned, of which 4 projects have an installed capacity of over 10 MW. These new large photovoltaic plants have appeared in the provinces of Cagliari (82.3 MW), Novara (12.6 MW), Catania (33 MW) and Trapani (66 MW).
More solar panels were installed in all regions than during the same period in 2021.
New installed capacity growth was larger in Basilicata (+611%), Sicily (+599%), Sardinia (+1.180%) and Valle d'Aosta (+2305%). In absolute terms, Lazio, Lombardy and Sicily performed best with 142, 147 and 139 MW of new installed solar capacity respectively.
With the new investments in 2022, the photovoltaic energy sector in Italy can expect to reach a total installed capacity of about 23.57 GW, corresponding to 1,087,190 active PV systems. Of these, two quarters belong to the commercial and industrial segment.
The largest solar power plant in Italy
Renewable energy sources are growing every year in Italy, but there are relatively few large multi-megawatt photovoltaic systems.In 2020, the first place in the Italian ranking, overtaking the solar power plant Montalto di Castro in 2010, was taken by a solar photovoltaic park located in Troia near Foggia with an installed capacity of 103 MW.
The largest solar park with an installed capacity of 103 MW, ordered by the Danish operator European Energy, was designed, built and launched by Siemens in 2019-2020. The company has developed a project for a photovoltaic system with technological solutions that fully comply with the new document attached to the new standards mandatory for connecting PV capacities to the national grid.
Siemens also provided the technology for the entire chain of the Puglia photovoltaic project, right down to the high-voltage substation that connects the solar park to the national grid.
In 2022, it became known that European Energy sold the facility to Italian holding Iren Spa.
Despite the lack of giant solar projects, Italy has many potentially profitable locations for the construction of such power plants.
Given the unique solar resources and the latest measures to stimulate investments in solar power plants, Italy opens up new opportunities.
