Italy set to relaunch solar mirror power sector

MILAN (Reuters) - Italy is to relaunch concentrated solar power (CSP) generation which uses sunlight and mirrors to make electricity and expects have 200 megawatts of new solar farms on stream in 2012, a top industry official said Friday.

Italy, which worked on CSP technology in 1970s but then shelved pilot projects, aims to catch up with the world's leaders California, Spain and Israel, Cesare Fera, chairman of new industry body ANEST told Reuters in a telephone interview.

ANEST was set up this month to promote CSP generation in Italy where photovoltaic (PV) technology which turns sunlight into power has boomed since 2007 thanks to generous incentives.

Work is underway to build four experimental CSP plants with a total capacity of about 10 MW on the island of Sicily and in central Italian regions of Lazio and Marche which should start up next year, Fera said.

"Then industrial-size plants will follow, in 2011 and 2012. Permitting process is already under way in Sardinia, Sicily and other regions. Hopefully authorizations will be done next year, then a year for construction and on stream in 2012," he said.

The current government support scheme puts a 200 MW cap on a cumulative capacity of projects to be covered by incentives which guarantee operators 28 euro cents per every kilowatt hour of power produced, he said.

Applications to build CSP farms -- which use mirrors to capture the sun's rays to create steam that turns a turbine to make electricity -- well exceed 200 MW and the limit will be reached in 2012, Fera said.

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"We must start thinking about post-2012 now," he said.

"One of the goals of our association is to convince the government to extend this limit to at least 2,000-3,000 MW. This will allow us to make big-size installations, to use top technology," he said.

CSP, which currently costs about 3-6 times more to make than gas-fired power widely used in Italy, is likely to become competitive with electricity produced by fossil-fired plants in about 7-8 year at best, Fera said.

CSP's sister PV technology is expected to become competitive with traditionally generated power in 2010-2012, ahead of European rivals thanks to abundant sunshine, falling PV module prices and high electricity prices in Italy.

But CSP technology has a lot of room to cut operating costs and has a considerable advantage over PV installations because it allows for storing energy, Fera said.

The global CSP capacity is currently at about 500 MW -- enough to meet power demands of 210,000 families, according to industry estimates -- with most of it installed in the United States, but it can grow fairly rapidly to 150,000 MW, Fera said.

CSP plants to be built in deserts have the potential to generate up to a quarter of the world's electricity by 2050, according to a report by pro-solar groups in May [ID:nLO523100].

Italy's limited free space due to its geography and dense population would put a natural cap on CSP growth at about 5,000-7,000 MW, Fera said.

(Editing by Nigel Hunt)