Italy's planned retroactive solar subsidy cuts have been branded "a fatal blow" to investor confidence in the sector.
Georg Hotar, CEO of solar developer Photon Energy, has hit out against proposed legislation by the Italian government to reduce feed-in tariffs (FiTs) for the sector, claiming it would "cripple" investor sentiment in Europe's second biggest photovoltaic (PV) market.
"Italy has joined the ranks of other European banana republics such as Spain, Greece, Bulgaria, Romania, Slovakia and the Czech Republic by spreading the anti-solar cancer of retroactive measures against operating PV assets," he said.
The proposals would see plants with a minimum capacity of 200KW forced to choose between an 8% reduction in the FiTs for the remainder of the support period, or for the FiT to be spread over a total of 24 years rather than 20 years as originally planned. Hotar said the proposals would result in a reduction in FiTs of 17-25%.
Also, the government will delay a proportion of the FiT and charge a fee for its services.
"Combined with the steep fall in revenues over the past 12-18 months (in some regions over 60%), this will push many PV plants close to or into insolvency," Hotar warned. "With Italy's reckless attack on investors, the second-largest European PV market has been destroyed."
He added: "Investors, together with a plethora of Italian and international banks, have deployed some €50 billion ($68.3 billion) in good faith and are now the victims of a highly irresponsible government," said Hotar. "How the investment community will like state-sanctioned robbery will become evident shortly in the bond market."
Photon owns two PV plants in Italy, with a combined capacity of 1.25MW, which have been fully equity-financed.
"The announced measures will not leave our PV plants vulnerable to default but will materially decrease our returns and their value," added Hotar. "We will only be able to quantify our losses once the final version of the law will have been approved."
Hotar urged solar firms to club together in the yieldco vehicle, called European Solar Holdings (ESH), he proposed earlier this year.
ESH would act as a "defence platform" by aggregating PV assets across Europe. One large body would also be more effective than numerous smaller companies at challenging and avoiding subsidy cuts, Hotar claimed.
Solar farm owners would exchange the assets for shares in the company, which would aim to float on the stock market in 2015. It hopes to accumulate a 1GW portfolio by 2017.
"Under these shocking circumstances our European Solar Holdings concept is the only workable mechanism allowing investors to defend themselves against retroactive regulatory and tax measures," Hotar added.
A spokesman for the company said there had been interest in the concept but declined to provide further details.
Peter Cripps
People:Georg Hotar