Italy Set to Cease Granting Tariffs for New Solar Project

Italy, the second-largest market for solar-power, will cease granting feed-in tariffs for new installations after July 6 because its subsidy program has reached its budget cap.

The annual cost of existing or approved photovoltaic plants reached its limit of 6.7 billion euros ($8.9 billion) on June 6, the country’s electricity and gas regulator said on its website. The law restricts above-market rates for solar energy a month after the threshold is reached.

The country is ending the program that has driven a boom in installations surpassed only by Germany. It follows Spain and Portugal, which stopped granting new subsidies last year to prevent further rises in annual costs and consumer bills. Germany, which plans to overhaul its subsidy system after elections set for Sept. 22, is considering a similar cap.

Italy’s solar subsidy plan, introduced in 2005, has driven the installation of more than 526,000 solar plants with more than 17 gigawatts, the latest official data show. In comparison, Germany had 32 gigawatts and France 3.6 gigawatts at the end of last year, according to data compiled by Bloomberg.

Italy’s solar market was the world’s biggest in 2011 and had already slowed down after a competitive registry was introduced for most projects. Without tariffs, the Italian solar market will depend on net metering and income tax deductions to drive sales. With net metering, consumers can sell power they generate themselves back to the grid.

Solar projects with about 727 megawatts in combined capacity qualified for tariffs this year through the country’s second and last register. All project with 12 kilowatts or more had to register to opt for the subsidies.

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