As the European Photovoltaic Solar Energy Conference proceeds in Spain, speculation about the country'ssolarincentive program is running rampant.

The program, which currently offers a high price for solar electricity for up to 400 megawatts of new capacity installed each year, is set to expire at the end of September. It has helped make Spain a major solar market.

Now the country is considering a number of proposals to replace the program, leading to uncertainty among companies that say a smaller program could dampen the solar industry (see Spanish Solar Group: Don't Change Feed-In Tariffs and Solar Firms Struggle to Forecast 2009).

In July, Spanish newspaper Cinco Dias reported it was considering a program that would cap installations at 300 megawatts for 2009 and increase the cap by 10 percent the following year (see Spain Could Reduce Solar Subsidies).

Later the same month, Spain's national energy commission approved a 300-megawatt cap, but the decision would have to pass through parliament and the prime minister to take effect (see Spanish Energy Commission Votes to Shrink Solar Incentives).

But things might be looking up.

According to Spanish financial Website Cotizalia, unnamed market sources predict the cap could be raised to between 400 and 450 megawatts per year, and energy secretary Marín Uribem confirmed that an increase could be coming.

And a research note earlier this week from Piper Jaffray analyst Jesse Pichel said that Spanish companies expect the government to increase to cap to 500 megawatts for 2009 (see Solar Industry Convenes in Spain, Makes News).

Meanwhile, at the solar conference in Valencia, Spain, the European Photovoltaic Industry Association said its members - which make up more than 95 percent of the European photovoltaic industry - unanimously agree that photovoltaic energy could provide 12 percent of European electricity demand by 2020.

The projection implies that Europe could exceed its goal of getting 20 percent of its energy from renewable sources by 2020.