Italy to cut renewable energy subsidies

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CERNOBBIO, Italy, April 2 (UPI) -- Italy will move to reduce taxpayer subsidies to its renewable energy sector after last year's boom in solar power, Industry Minister Corrado Passera says.

The official said Saturday in Cernobbio, Italy, that taxpayer subsidies doled out to the wind and solar power industries had generated "excessive" investments in the sector, The Wall Street Journal reported.

"Italy has important goals to meet and even surpass," he said, but added, "we need to do so without over-reliance on taxpayer resources."

The government, Passera said, will in the coming years "realign" the level of its incentives to those of other European countries.

The comments came a day after Paolo Andrea Colombo, chairman of Italian electric utility Enel SpA, said the heavy subsidization of alternative energy was hurting traditional producers such as his company.

"The development of renewables, combined with the stagnation of demand, is making it difficult to cover the production costs of conventional systems, putting at risk the ability to remain in operation," Colombo said.

The problem, Enel contends, is that that big investments were made in traditional power plants in order to ramp up production at levels that are no longer necessary with the boom in solar and wind, which account for 26 percent of Italy's electricity production.

Nando Pasquali, the chief of Italy's GSE energy services operator, said last week that preliminary 2011 estimates of the country's renewable capacity stood at about 41 gigawatts, with a total output of 84,000 gigawatt hours, the Agenzia Giornalistica Italia reported.

The estimate put the number of active generation plants at 360,000, with incentives totaling $10.7 billion -- more than enough to put Italy on target to reach the European Union's goal of generating 29.4 percent of Italy's electricity from renewable sources.

Last year saw a huge jump in the installation of solar power capacity -- a boom that happened despite the recession, the sovereign debt crisis and the fall of the government of Prime Minister Silvio Berlusconi. Some 9 gigawatts were connected to the country's grid last year, nearly quadrupling its total capacity and bypassing Germany as Europe's leader in the regard.

But the solar installation boom has put a burden on Italian ratepayers.

Some estimates contend the feed-in tariffs paid to photovoltaic user/generators will amount to $59 billion over the next 20 years, and so the government last year moved to reduce the tariffs for new plants.

Passera also said Saturday at the Ambrosetti Forum annual business conference that energy prices are too high in Italy, and talked up the possibility of developing more domestic oil and gas resources, Corriere della Sera reported.

"We must keep (energy prices) from growing further," he said, pointing to the further liberalization of the gas market as "a way to think about the reductions."

The country should tap "the potential of Italian resources that we have," such as "oil and gas fields not yet developed. This will help in both the short and medium-term," the industry minister said.