* Current solar incentives to be extended for 3 months
* New decree to be signed on Friday
* Regions reject government draft in nonbinding
* Major sector operators, investors unhappy with plan
(Updates share reaction, analyst comment)
By Alberto Sisto
ROME, April 28 Italy will approve new, hotly
debated support scheme for solar industry on Friday extending
current incentives until the end of August, despite a rejection
of Rome's plan by regional leaders, ministers said on Thursday.
Italy's solar sector, one of the biggest in Europe, has
boomed since 2007 when the government boosted production
incentives. Italy will cut the generous support to ease the
burden on consumers, who pay for the incentives in power bills.
Under pressure from regional heads who wanted the
government to soften incentive cuts and asked for an extension
of the current incentives, which were due to expire in June,
for the whole of 2011, the government has made some
Environment Minister Stefania Prestigiacomo said the
government was prepared to offer a three month extension of the
current incentives, which are among the most generous in
"The decree will contain an extension until Aug 31,"
Industry Ministry Undersecretary Stefano Saglia, in charge of
energy issues, told reporters after Italy's regional heads
rejected Rome's draft proposals following a meeting on
The government has to consult the regions before going
ahead with the decree but is not bound by their view.
Industry minister Paolo Romani told reporters the decree
will be signed on Friday: "I'll sign it off tomorrow."
Environment Minister Prestigiacomo also needs to sign the
decree for it to come into force.
The three-month extension of the incentive regime would
help some investors to complete their projects but it would not
trigger any new investment in the sector, said Jean-Francois
Meymandi, analysts at UBS Investment Bank.
"It does not make any change in terms of new installed
capacity and it just consumes more of the budget allocated to
solar energy," Meymandi said.
Shares in German solar wholesaler Phoenix Solar (PS4G.DE),
which has a significant exposure to Italy when compared to its
domestic peers, was the top gainer in Frankfurt's technology
index .TECDAX, up 4.78 percent at 1525 GMT.
"This (decision) also extends the current uncertainty when
the Italian market needs clarity to get new projects financed,"
said Bryan, Garnier & Co analyst Julien Desmaretz.
U.S.-listed solar stocks were mixed following the
announcement, as any benefit from an extension of the current
subsidy scheme was pitted against downbeat earnings
announcements from Chinese solar wafer maker ReneSola Ltd
(SOL.N) and photovoltaic power inverter maker Satcon Technology
The shares of Chinese companies Suntech Power Holdings Co
Ltd STP.N, Trina Solar Ltd (TSL.N) and LDK Solar Co Ltd
LDK.N were all up about 3 percent, although analysts said the
most important question of whether Italy would install a cap on
solar incentives had yet to be decided.
"Until that is resolved, these deadlines do not mean
anything," said Susquehanna Financial Group analyst Mehdi
The government has agreed to soften slightly the planned
incentives cuts for a transition period until the end of 2012,
one government source said without giving more details.
The size of roof-top installations which will be exempt
from incentive caps under the new scheme is likely to be lifted
to 1 megawatt from 200 kilowatt planned before, another
government source said.
Rome's new support scheme would in part cap subsidies for
solar developers at 6-7 billion euros ($8.8-$10.3 billion) per
year by the end of 2016, when installed capacity is expected to
be around 23,000 megawatts. [ID:nLDE73I1V0]
The scheme envisages the transition period until the end of
2012 to safeguard investments under way when the new decree is
Sector operators and investors have said incentive cuts
this and next year of up to an estimated 60 percent, as well as
additional bureaucratic procedures were disruptive for their
business strategies and would put brakes on the booming
On Wednesday, a group of foreign solar power investors said
it had opened legal proceedings against Italy over the planned
incentive cuts. [ID:nLDE73Q222]
(Additional reporting by Svetlana Kovalyova in Milan,
Christoph Steitz in Frankfurt and Nichola Groom in Los
(Writing by James McKenzie and Svetlana Kovalyova, editing by