Italy solar power reform puts funding at risk

Reuters News
Posted: Jun 16, 2011 8:34 AM

ROME (Reuters) - A reform of Italy's solar energy incentives scheme has put 1 billion euros ($1.41 billion) of financing for the sector at risk of renegotiation, the director general of Italian banking association ABI said on Thursday.

The association said it was ready to help solar operators renegotiate funding after cuts to spending on generous solar power incentives were approved last month.

"There is a billion euros of financing linked to solar power projects that could face revision or renegotiation due to the changes to the incentive scheme," ABI's Director General Giovanni Sabatini said.

Italy approved a long-awaited decree on the cuts in May, ending a period of uncertainty which had irked international investors and weighed on shares of major global solar companies.

"We are committed to helping the process of renegotiation of financing operations for solar power plant construction," ABI said in a statement.

Italy's solar market, the world's second largest after Germany, has boomed since 2007 when the government boosted production subsidies but Rome has sought to cut incentives to help consumers who support the scheme through power bills.

The decree aims to cap subsidies for solar developers at between 6 billion euros and 7 billion euros per year by the end of 2016, when installed capacity is expected to be around 23,000 megawatts.

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

($1=.7072 Euro)

(Reporting by Alberto Sisto and Catherine Hornby; Editing by Jon Loades-Carter)