June 8, 2011 / 3:17 PM / 8 years ago

First Solar sees slight recovery in Italy: exec

MUNICH (Reuters) - First Solar, the world’s largest solar company by market value, added its voice on Wednesday to those pointing to a slight recovery in Italy, the industry’s second-largest market.

“Demand has picked up spottily, but it has picked up from zero,” TK Kallenbach, president of First Solar’s components business, told a press conference at Intersolar, the world’s largest solar trade show.

Power One earlier made similar comments, saying demand in Italy had recovered after a new subsidy scheme for solar power had ended months of uncertainty for investors, even though the decree envisages lower incentives.

This comes a day after U.S.-based SunPower said changes to Italy’s solar subsidy “have had a significant impact on the global solar market,” adding it was shifting sales toward less profitable residential and commercial systems, where demand is greater, and away from utility-scale projects.

The solar sector has returned to the public eye after Germany decided to drop nuclear power for good following Japan’s plant meltdown, forcing governments to focus on alternative energy sources.

But despite improving sentiment for renewable technology, solar companies are grappling with falling government subsidies in its two largest markets Germany and Italy, pressuring margins and prices in the aid-dependent industry.

Last month, Italy approved a long-awaited decree that cuts spending on solar power incentives, while Germany’s cuts will kick in next month, as governments try to force the sector to become more competitive with conventional power sources.

The Italian market is expected to have a volume of 3-5 gigawatts (GW) this year, according to the European Photovoltaic Industry Association (EPIA), compared with 2.3 GW last year.

Italy accounted for 9 percent of First Solar’s 2010 sales, according a company filing with the Securities and Exchange Commission (SEC).

Arizona-based First Solar, which makes the world’s lowest cost thin-film solar modules, last month warned of tighter industry conditions in the second half of 2011, but added those were reflected in its guidance.

The company expects 2011 sales of $3.7-3.8 billion and earnings per share (EPS) of $9.25-9.75, in line with the Thomson Reuters I/B/E/S estimates for sales of $3.75 billion and EPS of $9.45. Second-quarter sales are seen at $591 million.

Additional reporting by Matt Daily in New York; Editing by Will Waterman

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