FRANKFURT (Reuters) - Germany's solar market remained stable last year compared with 2010, the country's main industry association BSW said, suggesting demand for modules remains high despite large cuts in support for the sector over the past two years.
BSW cited mild weather, low prices for solar modules, falling subsidies and the fear of further incentive cuts as the main triggers for booming demand, as customers try to take advantage of guaranteed incentives while they are still relatively high.
It said that according to preliminary estimates, new installations were expected to remain stable versus 2010, when solar installations reached a record 7.4 gigawatts (GW), which was nearly half of the world's total of 16.6 GW installed.
This suggests installations in the last quarter of 2011 likely reached about 4 GW after German network regulator Bundesnetzagentur previously said new installations in the January-September period stood at 3.4 GW.
The size of installations means that so-called feed-in tariffs -- subsidies that are needed for the industry to be competitive vis-a-vis fossil fuel based energy -- will be slashed by about 15 percent from July 1, 2012, BSW said.
Boosted by lavish incentives, Germany became the world's largest solar market by installations and a major sales market of sector bellwethers such as U.S.-based First Solar, China's Suntech, Norway's Renewable Energy Corp and Germany's SMA Solar.
To force the industry to lower prices and become more competitive, the German government has been looking for ways to scrap support for the sector and large cuts in feed-in tariffs over the past years had already aimed at shrinking the market.
In November, Germany's Economy Ministry released a paper with a proposal to reduce the growth of new photovoltaic installations to 1,000 megawatts (MW) a year, a move that would dethrone the country as the world's largest market for solar panels.
A similar move had caused Spain to shrink from the world's biggest market in 2008 to an expected No.8 position in 2011.
Reporting by Christoph Steitz; editing by Ron Askew