Italian Renewable Energy Companies React to Planned Incentive Cuts

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Researched by Industrial Info Resources Europe (Galway, Ireland)--Italian renewable energy associations are protesting planned incentive cuts for wind, hydroelectric and biomass power generation. The groups warn that cutting the incentives could halt investments and endanger efforts to reach the country's 2020 objectives.

A draft decree covering incentives for wind, hydroelectric and biomass power, which is expected be finalized in February, could bring even worse conditions for Italy's renewable sector than the moves planned by Italy's previous government. For additional information, see November 10, 2011, article - New Italian Wind Incentive Scheme to be Agreed by End of 2011.

The latest draft of the decree proposes a reduction of the maximum annual spending to support renewable power generation to between €5 billion and €5.5 billion ($6.5 billion and $7.1 billion) from €6 billion to €7 billion ($7.9 billion to $9.2 billion) under the earlier draft, The Italian Wind Energy Association (ANEV) and renewable associations Associazione Produttori Energia da Fonti Rinnovabili (APER) and Federazione Nazionale Imprese Elettrotecniche ed Elettronciche (ANIE) said in a joint letter.

These figures do not include incentives for solar power generation, which is covered by the decree passed in 2011, under which solar incentives were cut for installations not completed by the end of 2010 or connected by mid-2011. The decree on solar incentives resulted in a rush of installations and connections, seeing new photovoltaic capacity in Italy soaring to 9,000 megawatts (MW) in 2011,compared to 2,300 MW installed in 2010.

Total spending on incentives for renewable power generation amounted to about €8 billion ($10.5 billion) at the end of 2011, including €5.5 billion ($7.1 billion) for solar power. This spending is expected to rise to a peak of €12 billion ($15.7 billion) in 2016, including €6.7 billion ($8.8 billion) for solar power, according to a joint letter from the associations to Italy's Prime Minister Mario Monti and government ministers.

Guaranteed tariffs paid to producers of renewable power will be slashed considerably, with cuts varying for different sources of power generation. The government also plans to introduce a system of lowest-bid auctions to award incentives, which are currently given to producers if their projects meet certain criteria. The Italian government has also set the capacity threshold at which renewable plants would have to participate in competitive auctions for tariffs at 6 MW, ignoring renewable energy requests to raise the threshold to a minimum 50 MW.

"The sector is very alarmed. There is a lot of uncertainty; there is a risk that the new measures could block construction of new plants," said APER director Marco Pigni.

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