Italy: Complicated tariff times ahead

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Under its proposals, the government is looking to cut the feed-in tariff premiums by between 28 and 42 percent in the second half of 2011.

However, as analysts at Jefferies & Company Inc. point out, the cuts, when including the market sale of electricity at approximately €0.08 per kilowatt hour, actually work out at between 23 and 33 percent in the second half of the year, and just 12 to 15 percent in 2012.

They also state that while the cuts are bigger than expected, they are still more favorable than the tariffs in Germany.

In what has been seen as a positive move, under the draft regulation there will be no cap for small rooftop installations in the second half of this year, or in 2012. However, the definition of small is still to be worked out, and could include anything between 20 and 200 kilowatts.

The Jefferies analysts explain: “This will be a main focus of lobbying efforts in the region. We view a 20 kilowatt definition would be a negative, while a 200 kilowatt system (the sweet spot of the Italian market) would be a positive. This decision will determine if the commercial market can develop without a regulating cap.”

Large scale solar systems will be subjected to an annual cap in the second half of 2011 and for the whole of 2012. The mechanism has been described by the analysts as complicated due to its registry process and resulting ranking list for plants that are granted the feed-in tariff. “This complication,” they say, “is a negative for ground based systems.”

For systems installed this December, 2011, total revenue per kilowatt hour will decrease by 23 to 33 percent in comparison to the levels seen in the first half of this year, depending on the system’s size.

Broken down

If the proposals are implemented, Jefferies says the tariffs, including the €0.08 market price, will be adjusted as follows:

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