Today’s alternative energy news includes recent changes to Italian solar subsidies, restrictions on biomass electricity generation, and comments by Bill Gates on energy innovation.

After 10 years of booming growth, solar generation in Italy is hitting a speed bump this year. The drop in incentives has been a topic of debate in Italy for at least a year now, but the most recent decree appears to be the final word.

Italy will cap incentives on new solar plants at $446 million between June and December 2011, equal to new capacity of about 1,200 megawatts, according to Reuters. In the 2012, incentive spending will be capped at about $416 million, equal to about 2,700 megawatts. These caps are lower than earlier proposals of about $660 million for the second half of 2011 and about $550 million in 2012.

These incentives are paid in the form of feed-in tariffs, and are given in addition to annual subsidy payments for construction. Subsidies will be capped at roughly $9-10.4 billion by 2016. Italy officially claims installed solar capacity of 3,700 megawatts with a target of 8,000 megawatts before all feed-in tariffs are eliminated. But the official numbers could be way off.

Solar companies with exposure in Italy include Suntech Power Holdings Co., Ltd. (NYSE: STP), Trina Solar Ltd. (NYSE: TSL), Yingli Green Energy Holding Co. Ltd. (NYSE: YGE), and First Solar, Inc. (NASDAQ: FSLR).

Germany, too, expects to cut solar PV installations from about 7,000 megawatts in 2010 to 5,00-6,000 megawatts in 2011, with an expectation of annual new capacity of 3,000-5,000 megawatts by 2020. The government is planning for total solar PV generation of 52,000 megawatts by 2020, from about 17,000 megawatts today.

The governor of Massachusetts has proposed new rules governing biomass electricity generation in the state. Three large-scale plants would likely not be built under the proposed rules because they would no longer qualify for the renewable energy credits that had originally made them cost competitive. Smaller, distributed heat-and-power plants would still be eligible for the credits.

The turn-about is the result of a state study that concluded that biomass burning was not carbon-neutral. That is, the amount of carbon dioxide released from burning biomass exceeds the ability of forests to absorb the greenhouse gas. The government expects wind and solar projects to replace the biomass projects as the state aims to produce 15% of its electricity supply from clean energy by 2020.

The founder of Microsoft Corp. (NASDAQ: MSFT) told a conference audience that small-scale energy projects are cute, but they won’t solve the world’s energy problems. For than, said Bill Gates, big projects are called for.

Gates doesn’t believe that improving energy efficiency will make enough of a difference in carbon emissions to cut those emissions by the 90% or so necessary to have an effect on climate warming. Utility-scale solar and wind projects get the nod from Gates, as do new nuclear generation technologies like the traveling-wave reactor being designed by TerraPower, a company Gates has invested in, which could run for 50 years without needing to be refueled.

Last year Gates called for a carbon tax of 1% or 2%, the proceeds of which would fund basic R&D in energy.  Gates is believer in big ideas and big projects with big risks that offer big rewards. Energy efficiency projects don’t make the cut for him.  This week was saw that USEC Inc. (NYSE: USU) posted a slightly wider loss as the US centrifuge player reported earnings, but it also added that it and B&W are adding more parts and services in The American Centrifuge Project as the nuclear build out continues.

Paul Ausick

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