"These requests are being satisfied mainly by Greece and Tunisia as prices sought by Italian exporters are too high," he added. "The increase in diesel oil prices has driven up domestic demand for olive cake residue."

Energy giant Enel's (ENEI.MI) power plant in Brindisi, southern Italy, burns olive waste as well as coal, Cilenti said.

"It seems that in the near future, some small power stations (in Italy) could be reset to burn biomass, including olive cake residue," he added, without giving details.

Many of Italy's ageing power stations are oil-fired.

Olive cake residue is the by-product that remains after olives have been pressed and olive oil extracted.

According to Rome-based Assitol, Italy produces around 500,000 tonnes a year of the residue, which is favoured by power stations for the high temperatures it generates with minimum ash.

Britain's cash-strapped coal power stations are gearing up to burn olive residues, straw and woodchips to earn valuable green certificates, which they hope will provide a cushion against low power prices.

The certificates, which generators can trade, are worth more than twice as much as the power they sell.

Fourteen coal power stations have registered to use biomass including U.S.-based AEP's (AEP.N) Ferrybridge and Fiddler's Ferry plants which have been burning olive residues commercially since September.

Interest in co-firing was sparked by the launch last year of the government's Renewable Obligation scheme which created a guaranteed market for green power.

Britain's electricity suppliers have to provide three percent of their power from green sources this year, a figure which rises to just over 10 percent in 2010.

Cilenti listed the following Italian companies as potential exporters of olive waste: Sansifici Vecere S.r.l. of Treglio in Abruzzo, central Italy; Copersalento of Lecce, southern Italy; Industrie Olearie Lucane S.a.s. of Naples; and Italcol S.p.A. of Castelfiorentino, near Florence.