Italy set to phase in solar incentive cuts

The Italian government is poised to move forward with plans to cut incentives for solar energy in response to the falling cost of solar panels.

The cuts are expected to be formally confirmed today, although industry sources told news agency Reuters that they expected feed-in tariffs to be reduced by up to 30 per cent next year.

Under the plan, which is thought to have been approved at a meeting yesterday of Italy's Unified Conference of State and Regions, subsidies for large-scale solar photovoltaic installations with a capacity of more than 5MW will be cut by 30 per cent over the course of next year, with incremental reductions being phased in every four months. Further six per cent cuts will be imposed in 2012 and 2013.

Incentives for smaller solar PV installations such as rooftop systems will similarly be cut by 20 per cent during 2011, with six per cent cuts again following in 2011 and 2012.

A cap on the number of projects eligible for feed-in tariffs over the next three years will also be set, with only the first 3,000MW of new capacity able to receive incentives.

However, subsidies will be extended to emerging concentrated PV technologies that were not previously eligible for incentives.

Gianni Chianetta, chairman of the Assosolare industry body, told Reuters that the group was "fairly satisfied" with the proposed cuts, arguing that they would give solar firms the certainty they needed to begin work on investment plans for next year.

Italy has emerged as one of the world's fastest-growing solar markets following the 2007 introduction of a generous feed-in tariff mechanism.

However, the cost of solar panels has fallen significantly in the past year and the Italian government has followed the example set by Germany and Spain in moving to scale back incentives.

Solar companies in Italy will now be hoping for a surge in orders during the second half of 2010 as households and business rush to take advantage of the current incentive scheme before it expires at the end of the year.