UPDATE 1-Italy to cut solar incentives in 2011-2013

* Large solar installations to take the biggest hit

* 3,000 MW cap on incentives for 3 years

* Innovative, concentrated PV plants to get extra support

(Updates with official detail release)

By Svetlana Kovalyova

MILAN, July 9 (Reuters) - Italy will cut production incentives for Europe's third-biggest solar power market in 2011-2013 with major cuts next year, its Industry Ministry said on Friday .

Solar energy has boomed in Italy since the launch in 2007 of the support scheme which lured investors ranging from families to banks and utilities and the world's major makers of solar power systems, such as U.S SunPower SPWRA.O.

Italy's long-awaited solar power incentive plan includes gradual cuts in feed-in tariffs for photovoltaic (PV) systems of about 30 percent in 2011 and 6 percent in both 2012 and 2013, according to the ministry.

Italy's regional governors approved the government's three-year solar incentives plan on Thursday after a series of delays which unnerved investors and added volatility to shares in Italian solar companies and international makers of PV systems which turn sunlight into power.

"We are fairly satisfied ... It is important to have the (national incentives) plan to be able to make investment plans for next year. The situation was critical before," Gianni Chianetta, chairman of the Assosolare industry body, told Reuters.

Italy is slashing incentives to bring them in line with falling prices of solar power systems and ease the burden on electricity bills while aiming to boost PV capacity to 8,000 megawatts in 2020 from 1,350 MW at present.

GRADUAL CUTS

Under the new incentive plan which replaces the one expiring this year, the feed-in tariff for big PV installations with a capacity of more than 5 MW will be cut every four months for a total of about 30 percent next year.

Feed-in tariffs guarantee operators steady returns for every kilowatt hour of produced power for 20 years under the Italian incentive scheme, among the most generous in Europe. Incentives for smaller PV installations will be gradually cut by up to about 20 percent next year. One-off 6 percent annual cuts are set for 2012 and 2013 under the new plan.

A limit of 3,000 MW will be put on the new conventional PV capacity to be covered by incentives over the next three years.

On top of that, 200 MW of concentrated PV capacity and 300 MW of other innovative PV technology, previously not covered by incentives, will get support.

Italy is Europe's No. 3 solar power producer after Germany and Spain and its market has attracted the world's leading PV system makers, including U.S. First Solar (FSLR.O), Suntech Power Holdings Co Ltd (STP.N), Japan's Mitsubishi Electric (6503.T), German's Solon (SOOG.DE) and Conergy CGYG.DE.

(Reporting by Svetlana Kovalyova; Editing by William Hardy)