Wednesday, March 9, 2011

Italy Fears Solar Production Incentive Caps

Italy's government rushed on Friday to quell concerns among banks and investors about the impact of new renewable energy rules on funding for the sector, pledging to reach an agreed solution on new solar incentives.

Italy removed a much-feared cap on production incentives for solar power generation in a new renewable energy decree approved on Thursday but included measures which could slow down solar growth.

"The rapid definition of new incentives is my priority. Therefore I want first to meet the main banks and businesses involved," Industry minister Paolo Romani said in a statement.

"The next decree will give those willing to invest precise guidelines in terms of quotas, parameters and incentive levels," Romani said.

Pio Forte of UniCredit Leasing said on Friday that the banking world was concerned that the decree could impact funding for renewable energy.

Six associations representing solar operators have said they were concerned about the consequences for Italy's booming solar industry and thousands of jobs. The sector had attracted investors from around the world including major makers of solar panels.

Under the new decree, Italy's current generous solar power incentives, which were meant to run until 2013, will apply only to photovoltaic plants that connect to the grid by the end of May.

The government's decision to change the rules of the game, especially retroactive changes in the photovoltaic incentives, would block not only future renewable energy projects but also those in the works, renewable energy body APER said.

A new support scheme will be drafted by the end of April for solar plants that connect to the grid after June 1, but this will set an annual cap on the cumulative capacity eligible for incentives.

The world's biggest PV module makers such as China's Suntech Power Holdings Co (STP.N), Trina (TSL.N), Yilgli Green Energy (YGE.N) and U.S. firm First Solar (FSLR.O) are major suppliers to Italy.


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