Italy considering solar capacity cap

Italy Solar Incentive Cap signals a shift in the renewable energy decree, with installed capacity limits, feed-in tariff cuts, and photovoltaic market reforms aimed at curbing consumer-funded subsidies and stabilizing Italy's booming solar sector.

Italy is considering introducing an installed capacity cap for solar power incentives in its new decree on renewable energy, government and industry sources state.

The government, which has decided to scrap the existing generous solar incentive scheme from June, has been drafting a new incentives support scheme.

"We have spoken to the Industry ministry and the feeling is it might introduce a cap on installed capacity, though the decree has not been finalized," a source at one of Italy's energy associations said.

Investors fear an annual cap on incentivized capacity could slow down the country's solar market even as the solar goal is tough but reachable for developers.

Just recently a junior minister said the government aimed to complete the renewable energy decree by now, but the sources said discussions will require a few more days while Italy extends solar incentives into August to ensure continuity.

A government source told Reuters the decree was still in the works. When completed it needs to be signed by the Industry and Environment ministries but then needs to go before a committee of representatives of regional governments for its opinion.

The committee is due to meet on April 20 though as yet no agenda has been set, a spokeswoman for the body said.

Solar incentives are paid for by consumers in their energy bills and the government is seeking to lower these costs.

In March a trade union official, after a meeting with the government, told Reuters that Rome was considering capping the overall money it spends on solar incentives every year rather than using an actual installation cap.

But two industry sources said the government is now leaning more toward introducing a yearly cap on installed capacity.

La Repubblica newspaper, citing the latest version of the draft decree, said the government was considering reintroducing a cap on installed capacity of 1550-1800 megawatts for 2011 and up to 2,800 megawatts in 2012 as solar capacity could reach 7,000 MW nationwide, officials warned.

The article said incentives for solar power generation in 2011 would be cut by 25 percent immediately as Italy is set to cut solar incentives further in 2012.

"I don't think the final version is ready yet. We are proposing for 2012 a 5 percent cut for plants under 1 megawatt and a 10 percent cut for plants over 1 megawatt," GIFI President Valerio Natalizia told Reuters.

Italy's biggest solar industry body GIFI is a key party in talks with the government on new incentives. GIFI has also proposed the tariffs be reduced on an annual basis, under a German model, from 2012.

Italy's solar sector, among the biggest in Europe, has boomed since 2007, when some of Europe's most generous production incentives were launched, but the green boom may stumble over incentives if policy turns sharply.

It has attracted the world's biggest photovoltaic module makers such as China's Suntech Power Holdings Co, Trina, Yilgli Green Energy and U.S. firm First Solar as the country moved to double solar capacity in 2010 under generous terms.

Italy's biggest renewable operator is Enel Green Power while utilities such as Edison and CIR energy unit Sorgenia have renewable businesses.

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