UPDATE 2-Italy new solar incentives seen in April

Mar 25, 2010 - Svetlana Kovalyova - Reuters

* Incentive cut slightly below reduction in solar panel cost

* New incentive plan to set 3,000 MW cap for 3 yrs

* Regions resist large-scale solar projects

MILAN, March 25 (Reuters) - Italy aims to unveil a new incentive plan for Europe's third-biggest solar power market in April after a regional vote and expects the scheme to be one of the most generous in Europe, a senior government official said.

Several delays in the plan's presentation, expected since the start of 2010, have raised investor concerns about strategies for Italy and added volatility to shares in Italian solar firms such as TerniEnergia (TRNI.MI) and ErgyCap (ECY.MI).

Italian Industry Ministry Undersecretary Stefano Saglia said on Thursday technical details of the new incentive plan had been agreed by his ministry and experts from the Environment and Culture Ministries.

But the plan was still awaiting approval from the state body which oversees relations between central government and regions and whose meeting had not been called for a couple of months in the run-up to regional elections, due on March 28-29.

"I hope that the conference will be called immediately after elections ... as soon as April," Saglia told reporters on the sidelines of a conference.

Saglia, who oversees energy issues at the ministry, said Italy's new incentives would remain "the most generous in Europe" with a planned cut in support for the solar energy sector seen "slightly below the reduction in solar panel costs."

The plan would include a progressive cut of 5-6 percent in incentives "in 2011, 2012 and 2013 with bigger cuts for large-scale projects," Saglia said but declined to give more details.

Authorities in some regions and farmers lobbies have opposed development of large-scale solar projects, he said.

Solar energy sector which uses photovoltaic systems to turn sunlight into power has boomed in Italy since 2007 when the current support scheme was launched, attracting investors ranging from families to banks to sports car maker Ferrari. The existing scheme is due to expire this year after the capacity covered by the incentives hits a 1,200 megawatt cap. Under the draft plan, new installed solar capacity covered by incentives will be capped at 3,000 MW over a period of three years with a view of reaching 8,000 MW of installed solar capacity in 2020, Saglia said. (Editing by James Jukwey)