Italy Cuts Feed-in Tariff for Solar

Italy has become the latest European country to introduce cuts to their solar photovoltaic (PV) energy subsidy. In a move that will certainly upset the industry and put its development in peril, the Italian government has recently made it official that the country’s feed-in tariff program will be subject to 18 to 20% cuts as of 2011, a figure that will be increased by 6% in each of the following two years. Hence Italy joins the long list of European Union (EU) Member States that in the last few months have seen their financial support to the solar industry reduced in the context of the austerity measures that are currently being pushed through.

Feed-in tariff schemes are policy mechanisms designed to encourage the adoption of renewable energy sources and to accelerate the move toward competitiveness.

As I have already discussed on the blog, these types of programs are strongly required to ensure that the solar PV industry keeps growing. . Only this way can we keep moving forward towards low carbon electricity-generation systems, which are urgently required to stop climate change and to increase countries’ energy security. Reducing these programs can only lead to a loss of investor confidence - although some research institutes (i.e. EuPD) report that investors remain confident in Italy. Yet it remains to be seen how the market will develop.

Meanwhile, in light of these events, EU Energy Commissioner Günther Oettinger has come up in defense of the industry by announcing his intention to standardize supporting mechanisms for green energies at the EU level. In particular, the Commissioner seems to be interested in setting minimum levels of renewable energy that have to be fed into the grid, so that a system that would in effect guarantee a minimum level of support for the industry throughout the continent. But these suggestions are at a very early stage and will need further detailed discussions since FiT systems have proven over the last few decades - if set-up correctly- to be the strongest market development instrument. At Applied Materials we will engage in this discussion and support actions that create a favorable environment for the renewable energy industry in Italy.