UPDATE 1-Spain aims to slash solar power subsidies

(Adds details, background)

By Martin Roberts

MADRID, July 17 (Reuters) - Spain's government will ask the energy regulator to cut current subsidies to the solar power sector to curtail what it says is "unsustainable" growth, an Industry Ministry spokeswoman said on Thursday.

A review of the current subsidy scheme is scheduled for publication in September and the National Energy Commission CNE has the final say.

The spokeswoman added that proposals, to be submitted to the CNE in the coming days, will seek to limit the amount of new solar capacity entitled to subsidies to 300 megawatts per year.

That compares with a current cap of 1,200 MW, for which solar power generators receive a subsidy of 0.45 euros ($0.713) per kilowatt hour (KWh).

Under the proposed scheme, due to come into effect on Jan. 1, 2009, 200 MW of the limit will apply to solar panels on buildings, with the remainder covering ground-based installations.

Subsidies will fall to 0.33 euros/KWh for roof installations and 0.29 euros. That compares with a market price <SP/BASE> of the equivalent of 0.69 euros/KWh for prompt delivery and 0.72 euros/KWh for delivery in 2009.

According to government forecasts, Spain's photovoltaic panels will have a total installed capapcity of 1,080 MW by September and 1,500 MW by the end of the year.