Italian government plans to slice country’s feed-in tariff rates

In a bid to stabilize the solar photovoltaics market, the Italian government recently announced that it will reinstate guaranteed purchases of green certificates in Italy for 2010; it now plans to cut the feed-in tariff payments for power from solar photovoltaic plants beginning in 2011, reports Bloomberg.

The proposal, which still needs approval from the Italian parliament, maintained the terms in a draft bill circulated June 1 calling for the tariff to decline by 6% every four months in 2011 and a further 6% in the two years thereafter.

However, Francesco D'Avack, solar analyst at Bloomberg New Energy Finance in London, predicts that by leaving the FiT rate at a fairly attractive level, the country may see a rush from developers to build solar plants in Italy just as in Spain and Germany in recent years.

"The Italian market risks entering a dangerous boom and bust cycle," D'Avack said. "All this could lead to unsustainably fast growth and a belated reaction by the government to keep costs in check. There are a couple of fat years ahead for developers."

If passed, the new law will establish a 3GW cap on solar capacity by the end of 2013 in addition to 200MW for BIPV projects and 150MW for CPV projects.

The new solar energy bill is due to come into effect on January 1, 2010 and substitute the 2007 version, which led to approximately 1.13GW in PV capacity being installed by the end of 2009, according to figures from grid regulator GSE. The government now aims for solar capacity to reach 8GW by 2020.

"The Conto Energia and the new guidelines for renewable projects, long-awaited by sector's players, provide a decisive push to the government's renewable energy strategy," said Stefano Saglia, under-secretary for energy at the ministry. "These measures boost innovation in a key sector for growth and competitiveness of the country and allow the harmonization and simplification of national and regional procedures."

The new guidelines will be sent within 90 days of the text's publication to regional and local authorities, which are the entities that approve projects in the country.