* Bundesrat upper house set to block solar incentive cuts
* Shares in German solar firms rise
(Adds background, details)
By Markus Wacket
BERLIN, June 3 Germany's Bundesrat upper house of parliament is unlikely to pass cuts to solar incentives on Friday, so a mediation committee would be needed to resolve the matter, government sources told Reuters on Thursday.
If the parliamentary committee is called, the proposed cuts, which include a 16 percent reduction in so-called feed-in tariffs for new rooftop solar installations, would not be able to take effect on July 1 as planned, the sources said.
The impasse has arisen because states in eastern Germany, along with the big western states of Baden-Wuerttemberg and Bavaria, where the solar industry is strong and provides thousands of jobs, have decided to block approval, sources said.
The Bundesrat, which represents Germany's 16 states, is due to vote on the planned changes on Friday.
The cuts, which have been passed by the Bundestag lower house, could still be applied retroactively, the sources said.
Stocks in German solar firms such as Q-Cells QCEG.DE and Solarworld SWVG.DE were up on Thursday, outperforming a rise in the DAX .GDAXI share index.
Other changes planned by Chancellor Angela Merkel's centre-right coalition were a 15 percent cut in support for most open-field solar installations. Support for farmland solar systems is due to be scrapped entirely.
Furthermore, cuts of 1 percentage point in addition to those set out in the German renewable energy act (EEG) would be made by the beginning of 2011, if newly installed capacity exceeded 3.5 gigawatts within a year. (Writing by Dave Graham, editing by Will Waterman)