Italy Lets Solar Power Subsidies Shine a Little Longer

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Italy's government is offering a three-month reprieve on controversial solar power subsidy cuts in an effort to appease furious regional authorities and solar power operators.

The Environment Minister, Stefania Prestigiacomo, stated that the government will extend the current, generous incentive scheme until August 31, but that significant reductions in the feed-in tariff (FiT) are still on the cards. Last month, the government outlined draft plans to scrap the current feed-in tariff in June, despite the fact that the latest round of the scheme was due to run from 2011 to 2013. The government also informed the industry that it expects to kill off the tariff completely by 2017, arguing that solar will have reached parity with other electricity sources. For additional information, see April 19, 2011, article - Italy to Slash Solar Subsidies.

Italy has been a shining star for the European solar sector, ever since it introduced its generous FiT in 2007. At the end of 2010, Italy's installed photovoltaic (PV) capacity stood at 3,400 megawatts (MW), when it was ranked second in Europe in terms of adding 2,400 MW of new photovoltaic capacity last year. The government now claims it is time to rein in the subsidies, which are paid for by Italian electricity consumers. Italy has some of the highest electricity prices in Europe, and with the country 'indefinitely' postponing its much-touted return to nuclear power, prices may rise further in the future. For additional information, see April 25, 2011, article - Italy Pulls Plug on Nuclear Power 'Indefinitely'.

The new solar cap will limit subsidies to €6 billion-€7 billion ($8.9 billion-$10.3 billion) per year until 2016, after which the government plans to end FiTs entirely. By that time, installed solar capacity in Italy is expected to stand at approximately 23,000 MW.

Italy is following in the footsteps of other European countries that have severely cut solar subsidies in recent years. Most recently, the U.K. government proposed reducing its FiT for large solar power projects by up to 70% from August 1, despite the fact that the solar industry there is barely getting on its feet. For additional information, see March 25, 2011, article - U.K. Solar Industry 'Strangled At Birth'.

In January 2010, in Germany, which has the largest installed solar capacity in Europe, the government proposed a 15% cut in its FiT, while in France the feed-in-tariff for rooftop systems was reduced by almost one-fourth from 55 eurocents to 42 eurocents. For additional information, see January 17, 2010, article - France and Germany Cutting Solar Subsidies.

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