(New throughout, adds background, details; adds byline)
By Catherine Hornby and Alberto Sisto
ROME, April 11 Italy will scale back financial
incentives for solar and other renewable energy that have
inflated consumer power bills more than expected, and also will
raise national renewable energy targets for 2020, two ministers
said on Wednesday.
Italy's green power industry has boomed in recent years as
investors from around the world ranging from banks and private
equity funds to utilities poured billions of euros into the
sector, lured by generous support measures.
With incentives ballooning above expected limits, Rome has
decided to cut the support, which has burdened household and
industrial consumers who pay for it through power bills that are
among the highest in Europe.
Under the new decrees approved by Industry and Environment
Ministers, renewable energy incentives will be cut by about 3
billion euros a year below levels they would have reached under
the current support scheme, the ministries said presenting the
Production incentives for solar power generation, keenly
watched by investors, will be slashed by about 35 percent on
average while incentives for non-solar energy sector will be cut
by about 10-15 percent, said Leonardo Senni, head of the energy
department at the industry ministry.
"The measures appear to be more penalising for the solar
sector and fairly neutral for other renewable energy," one
analyst said on condition of anonymity.
Under the new support scheme for solar power generation, new
spending on incentives will be capped at 500 million euros a
year while a total cumulative annual incentives spending limit
is set at 6.5 billion euros.
Incentives for non-solar renewable energy will be capped at
5.5 billion euros, according to a draft decree seen by Reuters.
Renewable energy operators had expected more generous
"The new measures are rather disappointing. They can
undermine investments in the sector," said one solar market
operator who declined to be named.
With generous incentives in place since 2007, Italy's solar
market has become the world's second-biggest after Germany and
was the fastest growing market in the world in 2011.
It has attracted major solar module makers such as Chinese
group Suntech Power Holdings, Trina Solar,
Yingli Green Energy Holding and U.S. firms First Solar
and SunPower Corp.
MORE AMBITIOUS 2020 TARGETS
Betting on continuing strong growth of renewable energy,
Italy expects green power generation to cover up to 35 percent
of total electricity demand by 2020, well above the current 26
percent target, as Europe combats climate change.
The government's goal is to programme a more balanced growth
of renewable energy, the ministries said.
"The message is we believe in renewable energy and because
of that we want to make a more sustainable system," said Senni
from the industry ministry.
"We made some changes in the system of incentives, and the
system of volume planning, prioritising technologies that have a
particularly positive impact in reducing carbon dioxide
emissions and favour the Italian economic system and
Under the new scheme, geothermal and hydro-electric power
plants with capacity above 20 megawatts and other non-solar
power plants with capacity of more than 5 megawatts will have to
go through an auction to get incentives.
The new measures for solar power will come into force once
the current 6 billion euro cap on incentives for the sector is
exceeded, as expected between July and October. New schemes for
non-solar renewable energy will kick in from the start of 2013,
the ministries said.
The decrees are yet to be backed by Italy's energy regulator
and a state body overseeing relations between the central
government and Italy's regions.
($1 = 0.7622 euros)
(Additional reporting by Svetlana Kovalyova, writing by Michel
Rose and Svetlana Kovalyova; editing by Jason Neely)