Italy decision on solar incentives delayed

ROME/MILAN Wed Apr 20, 2011 11:52am EDT

Solar panels are seen in a farm near the Sicilian town of Castelbuono, southern Italy, September 28, 2009. REUTERS/Giuseppe Piazza

Solar panels are seen in a farm near the Sicilian town of Castelbuono, southern Italy, September 28, 2009.

Credit: Reuters/Giuseppe Piazza

ROME/MILAN (Reuters) - Italy delayed plans to cap spending for solar power generation and to reorder its solar incentive scheme on Wednesday when a key meeting was put back to next week.

Italy's solar sector, among the biggest in Europe, has boomed since 2007 when state-backed production incentives were first launched. But Italy has decided to scrap the existing generous solar incentives starting in June.

It has drafted a new support scheme for solar power generation. The decree would in part cap subsidies for solar developers at between 6 billion euros and 7 billion euros per year by the end of 2016, when installed capacity is expected to be around 23,000 megawatts.

A draft decree on the new scheme was presented to a meeting of Italy's regions and the state but it was moved back to April 28, a government source said. Reuters saw the decree on Tuesday.

"The state-regions conference has put back to next Thursday its opinion on the government's decree on renewable energy incentives," the source said.

The opinion of the body is non-binding but industry sources say it could introduce changes to the draft decree.

"It was the least the regions could have asked given they received a document that is so complicated," Gianni Chianetta, president of industry body Assosolare, told Reuters.

Incentive cuts in 2012 compared with 2010 could be more than 60 percent, which are unsustainable, Chianetta said.

To become law the decree needs to be signed by the Industry and Environment ministries and published in the official gazette.

Solar incentives are paid for by consumers through energy bills and the government is trying to cut those costs.

The government says under existing norms solar incentives would cost around 3.5 billion euros per year as of 2011 based on forecast installed capacity of 8,000 megawatts.

Junior Industry Minister Stefano Saglia said even after the proposed review Italy would still be "at the top" in Europe for renewable incentives.

Shares of U.S.-listed solar panel makers, who have benefited from sharp growth in the Italian solar market, fell Tuesday on the news. Analysts said the program was worse than many in the industry had anticipated.

Italy's booming solar sector has attracted the world's biggest photovoltaic module makers such as China's Suntech Power Holdings Co, Trina, Yilgli Green Energy and U.S. firm First Solar.

(Editing by Alison Birrane)