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After 50 billion Euros of Solar investment, Italy stops solar subsidies as it reaches grid parity

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Italy stops solar subsidies

Italy has become one of the first countries to stop solar subsidies almost completely. This came after the country received over 50 billion euros of investment in the last 5 years to set up 17 GW of solar energy capacity. The country saw huge growth in solar energy as its generous solar feed in tariffs offered returns of over 30% in a country, with a bond yield of 1-2%. Thousands of solar plants were built across Italy by small power developers, investors and even the Mafia. However, this massive boom led to a ballooning of subsidies and the country curtailed its solar subsidy program by putting limits in 2012. Now with solar costs having declined sharply to reach grid parity, the country is planning to put a complete stop on solar energy subsidies.

Italy has one of the highest electricity rates of solar energy in the world, at over 20 eurocents per kWh. Solar energy now costs barely 10 eurocents per kWH, due to the precipitous decline in the prices of solar panels. This means supporting solar energy makes no sense, as people will install it without any support from the government. In parts of Europe now solar energy plus storage is starting to become competitive with retail price of electricity. This is putting pressure on utilities who want solar producers to pay a monthly charge of using the power grid.

The decline in the price of solar power has been one of the major changes for the world in the 21st century. Solar power is all set to become the largest energy source by 2050 as per IEA. I think we will see that much earlier, given the sharp reduction in solar power costs and it reaching grid parity already in major geographic regions. With the price of solar power going down continuously with each passing year, things can only become better for solar and worse for other sources of electricity such as coal and gas.

Reuters

Italy is planning to halt incentives to solar power producers, a junior minister said on Monday, after years in which generous public support to the sector has fed investor interest including from abroad.

“The government believes there is no need to offer (solar) plants further support.”

Subsidies rose from 750 million euros ($843 million) in 2010 to 3.8 billion euros in 2011 and 6.7 billion euros in 2013.In the past five years, investors have poured more than 50 billion euros into Italian renewable energy, building about 17 gigawatts.

PG

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in

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