Italy next solar hot spot, Spain cools

Italy could be Europe's next big solar power market after Spain, which will slash generous subsidies later this month, a leading solar industy figure told Reuters on Tuesday.

Ernesto Macias, managing director of Spain's biggest solar panel maker Isofoton, was hopeful that the solar market in Italy could expand to reach 1,200 MW next year, the cap on solar power output entitled to subsidies under existing regulations.

"I personally think Italy will reach its cap in 2009. Much will be derived from Italy, so we will saturate Italy," said Macias, also head of the European Photovoltaic Industry Assocation (EPIA).

"But what we need is a plan to coordinate between the various countries, and we are working with the (European) Commission on that," Macias added, on the sidelines of a solar power conference in Valencia, eastern Spain.

Spain's solar power market this year has grown to 1,000 megawatts -- one of the world's biggest -- on the back of "feed-in" tariffs designed to gradually make solar electricity competitive with convential power sources.

But the scheme has left the government with a multi-billion euro bill on top of the ballooning costs of subsidising household electricity bills, and the tariffs are due to end later this month.

Solar power stocks globally have fallen on Spanish plans to cut back to 300 MW the capacity of new solar power plants entitled to feed-in tariffs next year, which will also be cut.

Macias was less hopeful about growth prospects in Germany, where leading solar panel makers Suntech say they have been unable to meet demand due to growth in Spain.

"There is a lot of uncertainty in Germany due to the reduction in feed-in tariffs. That could force prices down and untimately benefit Asian industries," he said.

COMPROMISE STILL POSSIBLE IN SPAIN

Regarding Spain's subsidy cuts, Macias said the industry had been "out of control" and a new scheme was needed, but the current proposals put a fledgling industry.

However, he still saw room for negotiation on the proposals.

"I don't want caps, but if I want to compromise, to open talks, OK, we will accept a cap of 400 MW for plants bigger than 100 kilowatts. But please don't apply any caps on the retail market," said Macias.

Macias saw growth opportunities for solar panel makers in rural electrification projects in lesser developed countries, a market he estimated at 300 MW worldwide last year.

He said the advantage of solar power was that avoided the need to build costly power grids and had low maintenance costs.

"It is also an energy that doesn't need fuel -- no need to transport coal, oil or gas, and there you have competitivity," he sad.

EPIA and a number of European renewable energy companies and industry groups have formed the "Alliance for Rural Electrification" to promote what they say are affordable and sustainable small-scale generation projects in poorer countries. (Reporting by Martin Roberts)

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