Italy Eyes Concept of Selling Sun's Energy

Italy is blessed with some of Europe's most brilliant sun and cursed with some of its highest electricity rates, but the nation has long lagged behind its more inclement neighbors in harnessing energy from the sun's rays.

But the government, hoping to cash in on Italy's most abundant natural resource, is trying to change that. It approved incentives this summer that could see solar panels blooming on Italy's rooftops like bougainvillea on sun-kissed terraces.

The measures could mean that Italian homeowners, condominium buildings and private businesses can profit by selling solar power to energy companies at a handsome, government-guaranteed price.

Under the incentive system, approved last month, surplus energy produced by photovoltaic panels can be sold at triple the average rate set by electricity giants like Enel and Edison (search) or by local energy distributors.

The fledging incentives are similar to arrangements long used in Germany, which had more than 100,000 photovoltaic units as of 2004. Spain and Greece, two Mediterranean countries known for sunny climes, also outstrip Italy in solar energy production.

"The direction to go is really that, guaranteeing purchases of renewable sources of energy," said Alberto Fiorillo, who works on energy policy at Legambiente, an Italian environment group. "Considering Italy is nicknamed the country of the sun, we are way behind."

Because of their high electricity rates, many Italians opt for the lowest cost utility contract in their homes in return for lower caps on available electricity. In practical terms, that translates into choices like whether to run a washing machine or start dinner in the electric oven.

Industry Minister Claudio Scajola predicted that the average family could save as much as $1,100 annually in electricity bills. If there is energy to spare, the family can sell the excess.

Enel SpA, Italy's largest utility, estimates a single family installing $24,366 worth of panels across about 300 square feet of sun-exposed surface could recoup its expenses in 10 years and reap 8.6 percent annual yield on the investment.

"The expectations, in effect, are considerable, and we are having a hard time keeping up with the phone calls and requests for information that we have been getting since when the decree was made," Enel's marketing director, Giacomo Gargano, said shortly after the incentives were approved.

A blackout in 2003 that left almost all of Italy without power — in some places for as long as 18 hours — jolted many Italians into awareness over the vulnerability of a nation that imports some 85 percent of its energy.

Italy rejected nuclear power in a referendum in 1987, a year after winds blew radiation from the Chernobyl, Ukraine, explosion across much of Europe.

The enthusiasm of the utility companies for solar power stems in part from the Kyoto Protocol, an international agreement aimed at reducing greenhouse gases in the battle against global warming.

Under the pact, backed by the European Union (search), utilities are allowed to "trade" purchases of clean energy like solar power for credits that essentially allow them to go on polluting.

A few years ago, government-allocated funds for solar panels drew some interest, said Luigi Milan, whose company, Electro Solar (search), was begun in 1999. But when the funding dwindled, so did new installations.

Before that spurt, "most of my business came from places like Africa, which didn't get electricity regularly, such as schools and dialysis clinics," said Milan.

And when it did come from Italy, it was from "tiny islands that didn't have their own electricity supplies," Milan said in a telephone interview from Carmignano di Brenta, in northeast Italy where Electro Solar is based.

Italy's new solar program envisions incentives for installation of panels for a total output of 100 megawatts over the next few years, a goal described as modest by utilities and environmental groups. Enel noted that the 100 megawatt goal represents only 25 percent of what will be installed in Germany this year alone.