Germany eyes cutting solar incentives faster

BERLIN Thu Jan 26, 2012 4:54am EST

BERLIN (Reuters) - German environment minister Norbert Roettgen wants to bring forward reductions in the country's incentives for solar power by three months to April 1 in light of the continued strong expansion in the world's largest market.

But Roettgen said he wants to leave the corridor for new photovoltaic installations unchanged at between 2.5 gigawatt to 3.5 gigawatt per year, rebuffing a demand from the Free Democrat coalition partners to cap new installations at 1 gw per year.

Roettgen, a conservative ally of Chancellor Angela Merkel, said he was opposed to capping installations in Germany at 1 gw per year as Economy Minister Philipp Roesler, the leader of the FDP coalition partners, has demanded.

"My goal is to change the law effective April 1," Roettgen told journalists after a meeting with Christian Democrat members of parliament to discuss speeding up cuts in the "feed-in tariff" (FIT), the lifeblood for the industry until photovoltaic prices fall to levels similar to conventional power production.

"It's important that we act quickly," added Roettgen. "A concrete cap would choke off the industry," he said, referring to the sector where more than 100,000 jobs have been created in the last decade.

Roettgen warned against trying to cut too much too soon. He said that it was important that the changes are backed by the upper house of parliament, where support from opposition parties will be needed to pass the measure quickly.

GERMANY ADDS RECORD 7.5 GW IN 2011

Germany added a record 7.5 gw of photovoltaic installations in 2011 after setting a previous record of 7.4 gw in 2010. Germany now gets about 4 percent of its electricity from solar power. Germany has a total of about 25 gw of installed photovoltaic capacity -- about half of the world's total.

The German government has set a target of 66 gw by 2030.

Another senior CDU member of parliament, Joachim Pfeiffer, told reporters after the meeting that the CDU deputies were in broad agreement with Roesler's proposal and the need to move forward cuts in the FIT.

But Pfeiffer said there were different proposals on how much the FIT should be lowered this year with a range from a little bit more than 10 percent to as much as 40 percent.

The FIT has been falling by between 15 and 30 percent in recent years, depending upon how much solar capacity is added in the previous year.

Producers of photovoltaic electricity are guaranteed fixed rates for 20 years from the point the solar power systems are installed. The FIT in 2012 is 24.43 cents per kilowatt hour, down from 49 cents for systems installed in 2007.

Electricity in Germany costs about 23 cents per kw/h, meaning grid parity has nearly been achieved faster than expected.

The costs for solar power are paid for by consumers, who pay about 2 cents per kw/h on top of their electricity bills for photovoltaic producers. Germany gets about 20 percent of its electricity from renewable sources such as wind, biomass and solar.

"We want to see the photovoltaic sector continue to develop with innovation," Roettgen said. "I believe that this is do-able."

Roettgen said that he would work on the details of accelerating the FIT together with Roesler, the Economy Minister. He said they would meet next week to work on it.

Roettgen said that there was not yet any concrete plan for the level of cuts he aims for on April 1. It was also still unclear if the future reductions would be made each month in smaller steps or remain larger and on a semi-annual basis as they have been in recent years.

Hans-Josef Fell, a member of the opposition Greens party and expert for energy issues, said that it would be difficult to see changes passing by April 1. He added that the plans would also upset investors.

"It's unrealistic to believe that a new draft law can be ready at the end of February and that the law will take effect on April 1," Fell said. "It's all just an early April Fools' joke."

Roettgen said he is especially eager to see cuts in the large field solar power installations that already receive lower incentives. He said they were causing problems for the grid. About a third of last year's installations were on fields and not on rooftops.

(Writing by Erik Kirschbaum; Editing by Jon Loades-Carter)

(This January 25 story was corrected in the sixth and last paragraphs to change the name of minister cited to Roettgen, from Roesler)

FILED UNDER: