Investors from all over the world, including the world-banks, private equity firms, utilities, have invested generous amounts of billions of euros into the Italian renewable energy industry, especially in solar energy in the past few years, due to a favorable feed-in-tariff system.

Until now, Italy has attracted major solar equipment makers such as Chinese groups Suntech Power Holdings STP.N, Trina Solar TSL.N and Yingli Green Energy Holding YGE.N and U.S. firms First Solar FSLR.O and SunPower Corp SPWR.O.
After months of controversies, the Italian government approved last week the decrees stipulating the schemes under which the state will pay the producers for the next regulatory period, the so-called Quinto Conto Energia. The new decrees provide an annual cap on new expenditure on the schemes of EUR 500 million, of which EUR 200 million for the photovoltaic sector and EUR 300 million for the non-photovoltaic power generation.

Under the solar power decree, photovoltaic plants with capacity between 12 and 20 kilowatts will be exempted from having to log on to a register, measure which was introduced to keep a close scrutiny on the boom of the industry.

The new regulation is in line with a sustainable renewable energy development, aligning the Italian support measures to the EU levels and to the market prices of the technologies.

The Italian solar power market, which is the second-biggest in the world after Germany, has boosted since 2007, pushed up by generous incentives which are paid by consumers through energy bills. Under the new draft, the support for renewable power paid by an average Italian family will increase to 120 euros ($150) in 2012, up from 30 euros paid in 2009.

The new measures risks affecting all renewable energies, slashing the growth of new capacity next year and posing a threat that Italy may not meet its green power targets by 2020. Incentive cuts triggered several foreign firms to leave Italy because the changes to its support regime did not allow them to build medium- and long-term strategies, move which could represent the start of an investment blow in green energy.

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