* Says payout still in line with dividend policy

* Shares close 1.66 pct down (Adds comments from conference call, analyst comment)

By Svetlana Kovalyova

MILAN, March 6 (Reuters) - Enel Green Power (EGP) , Italy's biggest renewable energy group, is cutting its dividend after posting a surprise fall in net profit last year due to a heavy tax charge.

EGP Chief Executive Francesco Starace said the 2011 dividend would still not be less than 30 percent of consolidated net profit, in accordance with its policy.

EGP, controlled by Italy's biggest utility Enel, will propose a dividend of 0.0248 euro per share, down 8.8 percent from 0.0272 euro the year before.

EGP stock extended falls after the results and closed at 1.4840 euros per share, down 1.66 percent on the day after falling to 1.4630 euros a share.

"Dividend, operating and net profits are below expectations," said one trader.

EGP said its net profit fell 9.7 percent to 408 million euros ($540 million), below a Thomson Reuters I/B/E/S estimate of 483 million euros, taking a hit after Italy raised taxes for energy companies as part of efforts to boost state coffers.

EGP's ordinary net profit, which does not include one-off items, fell 8.8 percent to 412 million euros.

BOOSTING CAPACITY

EGP which generates power from wind, sunlight, water and the earth's heat, said it would speed up expansion of its installed capacity in 2012.

At the end of 2011, the group had 1,913 megawatts' worth of new projects in execution, with 1,252 MW under construction and the rest ready to build.

"We are entering 2012 with a very strong pool of projects covering almost two years," Starace said. EGP is due to present its new business plan on March 23, he added.

EGP added 889 MW of capacity in 2011 due to internal growth excluding acquisitions, to a total capacity of 7,079 MW at the end of last year.

Analysts have been concerned whether EGP would be able to keep up the current pace of capacity growth.

"Almost 2,000 MW of projects in execution, out of which almost half will start up by the end of 2012, is a very positive thing," said one analyst who declined to be named.

Starace said EGP would press ahead with the sale of non-core assets such as waste-to-energy and co-generation plants in Spain, Canada and Portugal this year and aims to exit Bulgaria's renewable energy market, which is too small for the group. ($1 = 0.7557 euros) (Additional reporting by Elisa Anzolin; Editing by Hans-Juergen Peters; Editing by Will Waterman)

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