France and Germany Cutting Solar Subsidies

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Solar-panel-manufacturing firms in Europe are reeling this week as key markets Germany and France implement cuts to their attractive feed-in tariffs.

France has announced that there will be a 24% cut in its solar feed-in tariff for rooftop systems, from 55 euro cents to 42 euro cents. More troubling is news that Germany's environmental minister is expected to make an overdue announcement on a big cut in its feed-in tariff for open-field and rooftop solar projects. On top of its annual reduction of 10% in subsidies to the solar sector for 2010, it is strongly believed that Germany will make an additional 16-17% cut in April, followed by an additional cut in 2011. The news has caused a sharp decline in the share value of solar panel manufacturers around the world. An official announcement will be made next week, according to Germany's ministry of the environment.

Companies such as Q-Cells SE (ETR:QCE) (Bitterfeld-Wolfen, Germany) and SolarWorld AG (ETR:SWV) (Bonn, Germany) have been meeting with German government officials this week and have proposed a 5% cut, hoping to offset a more serious reduction. This now seems unlikely to happen.

Germany is the largest solar power market in the world, with estimates of up to 10,000-megawatts (MW) of solar power generation at the end of 2009. For additional information, see related news item from December 22, 2009 - Germany's Installed Photovoltaic Capacity to Reach 10,000 Megawatts by End of 2009. Germany accounts for more than half of all the world's solar power. However, since photovoltaics (PV) is no longer an infant market in Germany, the massive subsidies it still enjoys have been targeted for serious cuts by the government.

Germany's solar industry organisation Bundesverband Solarwirtschaft (BSW) (Berlin), claimed that such a drastic cut will cripple many German solar companies. Speaking to Reuters, Carsten Koernig, managing director of BSW, said: "If there were an additional double-digit percentage cut in solar incentives beyond the existing cuts already in law, it would probably spell the end of many solar companies and be the end of Germany's solar technology leadership."

The solar market was sent into a downward spiral last year after the Spanish government announced a 500-MW cap on solar installations for 2009, alongside reduced feed-in tariffs. At the time, Spain accounted for 50% of worldwide installations in 2008. There were signs that things were picking up in late 2009, with panel makers finally shifting a glut of inventory and reporting an uptick in demand. For additional information, see news item from November 29, 2010 - Solar Market Sees Brighter Future.

France accounts for less than 3% of the European PV market but has been identified as a fast-growing segment. Last month, First Solar Incorporated (NYSE:FSLR) (Tempe, Arizona) and EDF Energies Nouvelles SA (EPA:EEN) (Paris, France), part of Electricite de France (EPA:EDF) (Paris), teamed up to construct a solar-panel factory with annual capacity of 100 MW in Blanquefort, France. First Solar will sell all of its panel output from the plant to EDF for the first 10 years. The deal is part of a 1 billion euro ($1.44 billion) solar drive by EDF Energies Nouvelles to boost its solar energy portfolio. Half of the money is being invested by the European Investment Bank to support the rollout of solar projects in France and Italy through 2012.

IIR's Renewable Energy Database provides extensive coverage on the Wind Energy, Geothermal, Hydroelectric, Landfill Gas-to-Energy and Utility-Scale Solar power plants throughout North America, and is now expanding coverage across the world.

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