Italy to revise renewable incentives

MILAN Wed Mar 2, 2011 10:42pm GMT

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MILAN (Reuters) - Italy's new decree on renewable energy, part of the European Union's efforts to fight climate change, will revise production incentives to help cut Italian power bills, Industry Minister Paolo Romani said on Wednesday.

The prospect of scrapping incentives, especially in Italy's booming photovoltaic sector, which has attracted investors from around the world ranging from utilities to private equity funds, has stirred industry concerns about future investment.

"We are working on a decree to redraw the incentive system for production of energy from renewable sources which will allow our country to reach EU targets and, at the same time, bring bills in line with other major European countries," Romani said.

The incentives reform will guarantee industrial investments and employment levels without putting an additional burden on consumers, Romani said in a statement. He did not give details on how the incentives will be revised.

Italy's industry, environment and agricultural ministers met to discuss the draft bill at a meeting late on Wednesday and make some adjustments to take into account interests of the renewable energy industry.

The revision will not include an 8,000 megawatts cap on solar power production incentives, news agency ANSA reported after the meeting. It did not cite sources.

Investors and industry players had feared such a cap could have slowed down the growth of Italy's photovoltaic sector.

The government is due to decide on the renewable energy decree -- which adopts the EU 2020 targets on the national level -- on Thursday, Romani said.

HIGH COST OF INCENTIVES

In a television interview on Wednesday, Romani said solar power production incentives would cost Italians 35 billion euros ($48.60 billion) over 10 years.

A drastic reduction of incentives, including an expected retrospective cut in support to wind power generation, would not be acceptable, said Marco Bentivogli, in charge of environment and energy issues at metal workers union FIM Cisl.

Italy's solar market has boomed since 2007 when production incentives, among the most generous in Europe, were launched.

It has attracted the world's biggest PV module makers, such as China's Suntech Power Holdings Co, Trina, Yilgli Green Energy and U.S. firm First Solar.

Under the new decree, Italy is also expected to put some limits on the use of farmland.

Analysts said such limits could slow down the growth of solar market in Italy and hit revenues of PV module makers.

($1=.7202 Euro)

(Additional reporting by Catherine Hornby, Stefano Bernabei and Giuseppe Fonte in Rome; Editing by Jason Neely and David Gregorio)