Germany Cuts Solar Subsidies By 15%

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Germany's environmental minister has proposed a 15% cut in feed-in tariffs for the solar power industry.

The cut is slightly less than the proposed 16% to 17% cuts that were discussed earlier this week, but the announcement is already having a negative impact on the share values of leading solar-panel manufacturers. The new cuts come on top of a 10% reduction in annual subsidies for 2010.

France has already announced that there will be a 24% cut in solar feed-in tariffs for rooftop systems, from 55 eurocents to 42 eurocents. For additional information, see related news item from January 17, 2010 - France and Germany Cutting Solar Subsidies.

Environmental minister Norbert Roettgen has proposed a 15% cut for rooftop and open-field subsidies, as well as a 25% cut in tariffs for solar farms on farmland. The rooftop solar cuts will take effect from April this year, with open-field and farmland cuts coming into effect from July. Additional cuts of 2.5% will be made from 2011 if installations exceed 3,500 megawatts (MW) in 12 months, while an additional 2.5% could be introduced if capacity exceeds 4,500 MW. If, however, installations drop below 2,500 MW in the same period, the feed-in tariff will be increased 2.5%.

Supporters of the cuts claim they are long overdue, especially as the cost of producing solar panels has fallen up to 50% in the past year. However, other groups have voiced disappointment with the cuts.

"Should this happen, many solar producers, including Masdar PV, will revise their investment plans in Germany and look for new opportunities abroad," said Dr Rainer Gegewart, CEO of Masdar PV (Ichtershausen, Germany), the German subsidiary of Abu Dhabi Future Energy Company, or Masdar (Abu Dhabi, United Arab Emirates). Speaking at the World Future Energy Summit, Gegewart said, "We need to produce close to our markets, and Germany's market share will decrease strongly in the case of strong cuts in subsidies. We have seen in Spain what harm wrong national politics and incentives can do to the world market."

Masdar PV was established in 2008 with 142 million euros ($200 million) to manufacture panels in Germany.

Germany's solar industry association, BSW, also lashed out against the cuts which it called 'radical and sudden.' Speaking to Reuters, BSW managing director Carsten Koernig commented: "This feed-in tariff reduction amounts to between 25% and over 50% from December 2009 to January 2011, depending on the market growth and segment. A radical cut like that will rob German companies of the foundation for business. There will not be any scope for investment in the tough international market conditions."

Germany is the largest solar power market in the world. Recent estimates indicate that the country had up to 10,000 MW of installed 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.

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 now expanding coverage across the world.

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