Italy’s attempt to drive growth in its renewables sector has given rise to a new line of business for the Mafia, and the government is trying to crack down, according to a fascinating report in The Washington Post.
Italy, along with many other countries in Europe, has been ramping up the development of renewable energy over the last few years, partly in response to targets set by the European Union. In 2011, Italy led growth in solar power and was second only to Germany in total installed solar capacity. (See quiz: “What You Don’t Know About Solar Power.”)
But that growth offered little price relief to Italy’s electricity consumers and sparked a battle with competing oil- and gas-powered plants. As a heat wave pounded the country last summer, its parliament passed new regulations that cut incentives for renewables while offering new subsidies to fossil fuel plants. (See related photos: “Eleven Nations With Large Fossil Fuel Subsidies” and interactive map: “Fossil Fuel Burden on State Coffers.“)
“Without this decree, [oil-fired] plants would close down,” an official from the state-run utility, Enel, said in a Financial Times report on the new scheme. Italy was forced to activate some of its oil-fired plants last winter, when its reliance on natural gas imports from Russia resulted in a shortage.
The exposure of alleged Mafia ties adds a new layer of adversity for many renewable power projects. The Post account says that about one third of Sicily’s wind farms and several solar plants have been seized by authorities in the wake of a sting that also involved the freezing of $2 billion in assets and at least a dozen arrests. Prosecutors said that the wind and solar industries — new sectors of growth and profit for the country, thanks to government subsidies — became a lure for crime families who strong-armed their way into land leases, elbowed out competition, and bent regulations in an effort to control the industry.
The mob may not be the only entity that was moved to impropriety by Italy’s renewable energy boom. An affiliate of the Chinese solar panel manufacturer Suntech is battling criminal charges that its subsidiaries skirted regulations while building five solar plants in Italy; Suntech is also claiming that it was the victim of fraud in financing its Italian solar projects, and in December said that it would need to revise its financial statements for the past three years, taking a hit of between $60 and $80 million because of a funding guarantee that it discovered “does not exist.”
In Sicily, the Post reports, most new construction of renewables projects has stopped. But a slowdown had been on the horizon already, thanks to the new regulations. In December, the European Photovoltaic Industry Association (EPIA) sent a letter to EU Commissioner for Energy Günther Oettinger decrying recent policy measures in a number of countries, saying that “lack of confidence in the support measures heightens the perceived risk in investments in renewables.” Italy, it said in a background paper, has had three different incentive systems in less than two years.
“These sudden changes of legislation [in Italy] have generated many uncertainties on the part of operators and in some cases limited access to credit,” the EPIA wrote. As investigations into the wrongdoing in Italy continue, continued generation of uncertainty seems more likely than generation of new solar or wind energy, for now.