UPDATE 1-Italy solar incentives decree to be ready next week

* New incentives to involve a transitional period in 2011

* German-style support scheme to be introduced from 2012

* Industry body sees 20,000 MW of solar capacity by 2016

By Giselda Vagnoni

ROME, April 6 (Reuters) – Italy’s government aims to
complete a much-awaited decree on new incentives for the booming
solar energy sector next week, Stefano Saglia, undersecretary at
the industry ministry, said on Wednesday.

The government, which has decided to scrap the existing
generous production incentives for solar sector from June, has
been drafting a new support scheme amid heated debate in the
industry and investor concerns about the sustainability of their
business. [ID:nLDE72T1WF]

The decree will outline a transitional period lasting until
the end of this year while the new rules, modelled on Germany’s
support scheme, will come in force from 2012, Saglia told
reporters on the sidelines of a parliamentary hearing.

Italy’s biggest solar industry body GIFI and the country’s
largest renewable energy lobby APER have been favourable to the
so-called German model, under which incentives are automatically
reduced once installed capacity reaches a certain amount.

Italy, one of the world’s fastest growing solar markets, has
attracted investors ranging from families to major banks and
investment funds with generous incentives that, the government
says, have become too heavy a burden for consumers.

Italy has drawn the world’s biggest makers of photovoltaic
panels that turn sunlight into power, such as China’s Suntech
Power Holdings Co (STP.N: Quote, Profile, Research), Trina (TSL.N: Quote, Profile, Research), Yingli Green Energy
(YGE.N: Quote, Profile, Research) and U.S. firm First Solar (FSLR.O: Quote, Profile, Research).

Italy can install more than 20,000 megawatts of photovoltaic
capacity by 2016 — enough to cover 10 percent of national power
needs — if it adopts a German-style support scheme, GIFI said
in a statement on Wednesday.

GIFI, a key party in talks with the government on new
incentives, said it has proposed a transitional regime for the
rest of 2011 with monthly cuts in feed-in-tariffs — a key
incentive — starting from October.

In a sign of an alignment of the industry position with the
government plans, GIFI has also proposed the tariffs be reduced
on an annual basis, under a German model, from 2012.
(Additional reporting by Svetlana Kovalyova, editing by Anthony
Barker)

UPDATE 1-Italy solar incentives decree to be ready next week