* Green incentives to hit 9 bln euros under contemporary scheme * Investments on hold pending incentive regime changes * Foreign investors exit could hurt Monti administration By Stephen Jewkes and Svetlana Kovalyova MILAN, April 5 (Reuters) – Italy’s plot to scale back its generous renewable energy incentives will divide energy costs for families and industry however companies in the sector affirm the go will deter investment that is urgently needed by the administration to constitute jobs. Italy’s green ability industry has boomed in recent years as investors from encircling the earth poured billions of euros into the sector, lured by the support measures. However with state incentives ballooning to 9 billion euros ($11.81 billion) this year, Rome has chose to divide the support, which has further burdened household and industrial consumers who pay for it through ability bills that are among the highest in Europe. Solar incentives alone are expected to hit the 6 billion euro mark this year, four years earlier than expected. Rome says the average Italian family would have to pay 120 euros in 2012 to support renewable ability, up from 30 euros in 2009. Companies in the renewables sector affirm, however, that the latest choice, one of repeated changes in the system that have caused uncertainty, will pour cold aqua on inward investment. “There is zero interest from foreign investors in greenfield renewable projects (in Italy immediately). The fresh cuts will block decisions to invest since there’s just no certainty,” Pietro Colucci, chairman and chief executive of Italian renewables operator Kinexia, told Reuters. Funds into huge renewable energy plants with capacity over 0.9 megawatts came in at 7.84 billion euros, or about 0.5 percent of yucky domestic product(GDP) at the end year, according to energy consultancy Althesys Strategic Consultants. An exit by foreign investors would deal a blow to the administration of Prime Minister Mario Monti, who has been trying dense to regain trust of foreign investors shaken by the rule of his predecessor, Silvio Berlusconi. “How can you expect foreign investors to invest? It’s embarrassing trying to clarify to our partners Climate Alter Capital why the rules keep changing so often. There’s just no certainty,” said Giorgio Pucci, chairman and chief executive of Italian solar energy corporation Enerqos who attended an industry conference in Milan this week. With generous incentives in place since 2007, Italy’s solar market has become the earth’s second-largest after Germany and attracted major solar module makers such as Chinese collection Suntech Ability Holdings, Trina Solar, Yingli Green Energy Holding and U.S. firms First Solar and SunPower Corp. Berlusconi’s centre-fair administration divide solar ability incentives at the end May however the fresh support scheme had been meant to run until 2016. Industry Minister Corrado Passera said on Thursday the administration would very soon present details of the fresh support scheme for renewable energy. Separate bills on solar and other green energy incentives are expected in early April, sources familiar with the situation said. The Monti administration estimates that under the contemporary scheme incentives could cost 11-11.5 billion euros a year by 2020 with overall costs in a 15-20 year period – the duration of incentives – of over 150 billion euros, also heavy a burden. Major industry users are grateful for the administration action. “It’s a excellent initiative (by Passera) and I hope it works outside. Energy accounts for encircling 30 percent of our industrial costs. We’re not against renewables however we pay for it dearly through the bills. We demand a rebalancing to aid us gain competitivity on the industrial front in Europe and globally,” Massimo Medugno, managing director of paper makers association Assocarta, told Reuters. INVESTMENTS ON HOLD Rome’s reluctance to unveil details of how it is going to modify the incentives schemes has thrown the sector in disarray. “Investments have stopped. Banks have closed financing taps,” Gianni Chianetta, chairman of Italian solar industry lobby Assosolare, said, adding that the actual scale of hurt would only be known once the fresh plans were unveiled. Cuts to solar ability generation can slash the closely watched internal rate of giveback (IRR) to 2-3 percent in the north of Italy from more than 7-8 percent at present, making investments into the sector unprofitable, some industry operators said. Green energy supporters also mark to the benefits in terms of jobs. According to a study carried outside by research collection OIR-AGICI, if renewable energy development is not slowed, jobs in the sector will rise to 266,000 in 2020 from today’s 130,000. Foreign investors are focused on brownfield renewable projects, where plant is already hooked up to the grid and incentives locked in. The administration has said on distinct occasions the fresh rules will not be retroactive. However uncertainty on tariffs and the regulatory framework has virtually stopped project financing by banks, already impacted by the credit crunch, raising the likelihood of an end to the green energy boom of the at the end five years. “The renewable business is living a huge impasse for the age being. On solar, the financing of fresh construction is frozen due to uncertainty of tariffs and there is a excellent deal of concern from foreign banks over extended-term funding,” says Massimiliano Battisti, head of project finance at SocGen. Much bringing the European Investment Bank on board with its favourable funding rates is immediately more dense. “Since of the bank downgrades in Italy the EIB is asking for cash collateral of 100 percent to aid fund projects however the banks are using all their collateral to tap cheap money at the ECB’s LTRO,” Colucci said referring to the institution’s three-year, low interest loan programme. Glance at More…
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