March 28, 2012 / 12:20 PM / 6 years ago

UPDATE 2-Italy set to cut solar incentives -sources

* New solar power support scheme to be approved April -sources

* Feed-in tariffs to be halved by decree -industry body

* Renewable industry bodies hope Rome will soften planned cuts

By Stephen Jewkes and Svetlana Kovalyova

MILAN, March 28 (Reuters) - Italy, the world’s No. 2 solar market, will cut incentives for solar power generation this year with a new decree due to be approved in April as the government moves to lighten power bills for consumers, sources close to the matter said on Wednesday.

Changes in Italian solar energy policy are keenly watched by international investors and the world’s major solar module makers such as Chinese group Suntech Power Holdings, Trina Solar, Yilgli Green Energy Holding and U.S. firms First Solar and SunPower Corp.

Rome has decided to slash incentives which are expected to hit a 6 billion euro ($7.97 billion) annual cumulative limit already this year, instead of 2016 as previously expected, after a spike in new capacity last year, according to a draft decree seen by Reuters.

“Expectations are for the approval of the new scheme around mid-April,” a government source said.

Italy’s industry and environment ministers are set to approve a new decree on incentives for photovoltaic (PV) generation - which turns sunlight into power - “within a few days or a couple of weeks”, the second source said.

The decree, which would replace the present scheme, aims to cut incentives for large-scale PV installations which generate power beyond self-consumption needs while supporting small and large plants which generate power to satisfy the needs of power producers, the second source said.

The government cut production incentives for solar power last May to help consumers who support the scheme through power bills.

The draft of the new decree seen by Reuters said the average Italian family would have to pay 120 euros in 2012 to support renewable power, up from 30 euros in 2009.

The draft could still be changed in the coming days, a source close to the environment ministry said.

Italian renewable energy associations have asked the government to discuss and review the planned changed, an industry source said.

SHARP CUTS

According to Italian PV association GIFI, which had viewed a draft of the decree, feed-in tariffs, a widely used form of incentive for the sector, will be halved as of July 1, even for small-size installations.

Incentive spending will be capped at 100 million euros every six months, while a registry for all installations with capacity above 3 kilowatts will become necessary, GIFI said.

Italy’s solar market, the world’s second-biggest after Germany’s, has boomed since 2007 when the government boosted production subsidies.

With 9,000 MW of new installed capacity in 2011, Italy was the fastest-growing solar market in the world last year, despite the incentive cut.

Talk of a change in the support scheme has left the solar industry in disarray, Italian operators said.

Banks are suspending financing of solar power projects while clients are scrapping orders, GIFI said.

“The costs are exorbitant for consumers and the scheme has not created any solar industry chain in Italy. We still import panels from abroad,” the government source said.

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