Georg Hotar, CEO of Photon Energy in the Netherlands, has blasted plans by the Italian government to retroactively cut the country's feed-in tariff for PV systems, calling the decision "irresponsible and impossible to rationalize."
The planned changes to the current FIT legislation are expected to affect some 8,600 operators of PV systems with capacities of more than 200 kW that receive about 60% of the total remuneration paid by Italy's Gestore dei Servizi Energetici (GSE), which manages the country's electricity services and support schemes for renewable energy sources.
Photon Energy owns two PV plants in Italy with a combined capacity of 1.25 MW that have been fully equity-financed. "The announced measures will not leave our PV plants vulnerable to default but will materially decrease our returns and their value, Hotar said. "We will only be able to quantify our losses once the final version of the law is approved."
The proposed legislation, presented by the government on June 18, would force PV operators to choose one of two options: an 8% reduction in the feed-in-tariff paid by the GSE for the remainder of the support period or opting for the FiT to be spread even more thinly over a total of 24 years (compared to the original 20 years). Effectively a reduction of 17-25% is expected to apply depending on the residual time, according to Photon. Operators have until November 30 to decide on one of the two options, which would then enter into force January 1, 2015.
"To add insult to injury, we are invited to choose the method of execution for our investments," Hotar said, adding that the decision would not only cripple equity investment and damage the country's reputation but could also push many companies into insolvency.
The measures would also mean a halt in payments for actual monthly production by the GSE, which would instead make monthly payments based on only 90% of predicted annual production, which Photon says would put additional cash flow pressure on PV plant owners. After one year, a final statement would follow based on the amount of energy actually produced; operators would then either owe money to the GSE if production was less than initially predicted or receive additional payment if more was generated.
"GSE's intention to charge a fee for its ‘services' as of 1 January 2015 completes this travesty," the company added. "Combined with the steep fall in revenues over the past 12-18 month (in some regions over 60%), this will push many PV plants close to or into insolvency.
"Italy has joined the ranks of other European Banana Republics such as Spain, Greece, Bulgaria, Romania, Slovakia and the Czech Republic by spreading the anti-solar cancer of retroactive measures against operating PV assets, Photon added in a statement released on Thursday.
Describing the measures as a "reckless attack on investors" that is destroying Europe's second-largest PV market, Hotar added that the "European Commission is not only letting it happen but is instrumental in removing Bilateral Investment Treaties between EU member countries, which have traditionally been a last line of defense for investors.
"Investors, together with a plethora of Italian and international banks, have deployed some 50 billion in good faith and are now the victims of a highly irresponsible government," Hotar added, pointing out that with government debt over 120% of its GDP, Italy is strongly dependent on the bond market and its perception by financial investors.
"How the investment community will like state-sanctioned robbery will become evident shortly in the bond market."
German company New Energy Projects, which has operated in Italy for four years in consulting and management of renewable energy projects, has expressed similar, albeit more tempered reaction, saying it hopes Italy's parliament amends the bill in the coming weeks in the interest of PV investors.
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