Italian ministers reach deal on solar incentives

Reuters News
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Posted: May 04, 2011 11:21 AM

By Alberto Sisto and Massimiliano Di Giorgio

ROME (Reuters) - Italy's environment and industry ministers reached an accord on plans to cut solar incentives, the environment minister said on Wednesday, after delays that had aroused complaints from international investors and solar firms.

The draft decree, which caps spending on Italy's generous solar power incentives, has been in the works over the last couple of months.

But differences of opinion between Industry Minister Paolo Romani and Environment Minister Stefania Prestigiacomo on certain elements of the decree slowed the decree's signing.

"We found an agreement last night, and it's now just a matter of hours for a decree to be finally signed," Prestigiacomo told reporters.

Prestigiacomo said the draft decree would be presented to the cabinet on Thursday.

Italy's solar market, the world's second largest after Germany, has boomed since 2007, when Rome boosted production subsidies. But Italy decided to cut incentives this summer to ease the burden on consumers, who support the scheme through power bills.

Delays in finalizing the new incentive scheme, which was originally due to be approved by the end of April, have raised investors' concerns about their strategies in Italy and weighed on shares of major global solar companies.

Ole Enger, chief executive of Norway's Renewable Energy Corp., said on Wednesday investments in Italy's solar market had slowed down considerably and the global industry would suffer in the short term from Italy's failure to immediately replace its subsidy program.

In a sign of potential new delays, Italy's Economy Minister Giulio Tremonti may intervene because he "wants to be sure about the impact of the incentives on inflation," a source close to the discussions told Reuters.

"We are deeply discouraged and disappointed by continuous delays in the publication of the decree," Valerio Natalizia, chairman of Italy's biggest photovoltaic industry association GIFI said in a statement on Wednesday.

EXTRA SUPPORT FOR SMALL-SIZE SYSTEMS

According to the draft decree seen by Reuters on Tuesday, the government has tightened the planned cap on the money it intends to spend for solar power incentives from June this year to the end of 2012, compared with an earlier draft.

An industry source who has knowledge of the talks surrounding the package of measures, estimated the decree would reduce incentives from levels contained in the current program by 22-30 percent in 2011, 23-45 percent in 2012 and by 10-45 percent in 2013.

Two other sources said big plants up and running before August 31 would have access to the current support scheme. The current incentives are valid until the end of May, but Prestigiacomo said last week they would be extended by three months.

Prestigiacomo said on Wednesday the decree contained extra support measures for roof-top and ground-based photovoltaic installations, which turn sunlight into power, of up to 200 megawatts capacity, as a further boost to small-sized producers.

The decree also includes a provision for payment of compensation in case of delays in grid connection, Prestigiacomo said, addressing a common problem in Italy.

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

(Writing by Svetlana Kovalyova and James Mackenzie, editing by Jane Baird)