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Solar Grid Parity Dynamics in Italy: A Real Option Approach

Author

Listed:
  • Tommaso Biondi

    (Sinloc, Sistema Iniziative Locali S.p.A)

  • Michele Moretto

    (Department of Economics and Management, University of Padova, Fondazione Eni Enrico Mattei and Centro Studi Levi- Cases)

Abstract

Over the past three years Italy has witnessed a rapid growth in the photovoltaic energy market, followed by an equally sudden decline when the government decided to reduce the incentives. This sharp change in the trend of the market calls into question the achievement of Grid Parity and the possibility that the market is able to develop independently. Starting from the standard Grid Parity Model, widely used for the photovoltaic (PV) market, we internalize the uncertainty surrounding both the energy price and PV module costs, to forecast the dynamics of the Italian PV market. We show that these sources of uncertainty can delay the Grid Parity timing of several years compared to current forecasts, well describing the current market situation.

Suggested Citation

  • Tommaso Biondi & Michele Moretto, 2013. "Solar Grid Parity Dynamics in Italy: A Real Option Approach," Working Papers 2013.109, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2013.109
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    References listed on IDEAS

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    More about this item

    Keywords

    Photovoltaic Market; Grid Parity;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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