Italy's government is preparing new cuts in production incentives for renewable energy, which would hit green power producers hard and may jeopardise efforts to reach its 2020 clean energy targets, according to renewable energy groups.
Last year Rome slashed spending on solar power incentives to help consumers who support the scheme through power bills.
Now the government has drafted a decree on incentive cuts for power generation from wind, water and biomass, which is expected to be finalised by the end of February.
The latest draft of the decree foresees a reduction of the maximum annual spending on support of renewable power generation to 5.0-5.5 billion euros ($6.5-$7.1bn) from 6.0-7.0 under the earlier draft, renewable energy associations APER, ANIE and ANEV said in a joint letter.
"We hope to bring the maximum figure to at least 6bn euros, because 5bn euros are not enough to reach the 2020 targets," APER Director Marco Pigni told Reuters.
These figures do not include incentives for solar power generation, which are covered by the decree passed in 2011.
Total spending on incentives for renewable power generation amounted to about 8 bn euros at the end of 2011, including 5.5 bn euros for solar power, according to the joint letter from the associations to Italy's Prime Minister Mario Monti and government ministers.
The spending is expected to rise to a peak of 12bn euros in 2016, including 6.7bn euros for solar power, the letter said.
Guaranteed tariffs paid to producers of renewable power as a form of support would be slashed considerably, with cuts varying for different sources of power generation, according to the letter.
The government also plans to introduce a system of lowest-bid auctions to award incentives, which are currently given to producers if their projects meet certain criteria, and such innovation could paralyse the sector, associations said.
"The sector is very alarmed. There is a lot of uncertainty; there is a risk that (the new measures) could block construction of new plants," Pigni said.
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