Company News

UPDATE 1-German CSU wants delays in solar incentive cuts

* Opposition in centre-right coalition to quick April cuts

* CSU wants delay proposed cuts to incentives (Updates with CDU leader signalling flexibility in pars 6-7)

BERLIN, Jan 26 (Reuters) - The Christian Social Union, Bavarian sister party to Chancellor Angela Merkel’s Christian Democrats, wants to delay cuts in incentives for solar power planned for April 1.

Hans-Peter Friedrich, CSU leader in parliament, said the proposal by Environment Minister Norbert Roettgen to cut the feed-in tariff should be pushed back by three months to July 1 for rooftop systems and Sept. 1 for open field systems.

So-called feed-in tariffs -- prices utilities are obliged to pay to generators of renewable energy -- are the sector’s lifeline as long as grid-parity, the point at which renewables cost the same as fossil fuel-based power, has not been reached. The CSU is one of three parties in Merkel’s centre-right coalition with the CDU and the Free Democrats. It would be difficult, if not impossible, to pass a law without CSU support. Merkel’s cabinet will discuss Roettgen’s proposal on Feb. 3.

“We consider these cut-off dates to be inappropriate,” Friedrich told journalists in Berlin on Tuesday. He said the CSU in principle backs cutting incentives to “a reasonable level” in the face of rapidly falling prices for photovoltaic equipment.

A CDU leader signalled a willingness to be flexible. Volker Kauder, CDU parliamentary floor leader, told Reuters that the status quo will be preserved for all those who already have made concrete investment plans before the law is changed.

“There needs to be a right of continuance for those who started planning for investments or completed concrete planning with faith that the existing rules would apply,” Kauder said.

Last week Roettgen said he wants a 15-percent cut in feed-in tariffs for new roof-mounted solar power from April even though they already fell 10 percent in January. [ID:nnLDE60J0PA]

That would mean the guaranteed price per kilowatt hour for newly installed systems would fall from 39 cents to about 33 cents from April 1 after it fell from 43 cents on January 1.

Roettgen said the incentives for solar energy generated from open field and farmland sites would also be cut from July, by 15 percent and 25 percent respectively.

His proposals led to protest from the industry. Several companies warned jobs would be at risk in the sector, which has recorded strong growth in the last decade. About half of the world’s solar electricity is produced in Germany.

There has also been criticism of the proposed cuts from some conservative leaders in several eastern German states, where many solar companies have substantial production sites. Saxony’s state premier Stanislaw Tillich warned against steep cuts.

But consumer groups and pro-business leaders in the centre-right coalition want the incentives cut even further. Consumers pay an extra three percent for power each month on their bills because of the incentives for solar power.

Cuts in public support will weigh on companies like Q-Cells QCEG.DE, Phoenix Solar PS4G.DE and SolarWorld SWVG.DE, which depend on demand from Germany, the world's biggest market for solar energy as measured by installed capacity. (Reporting by Thorsten Severin, writing by Erik Kirschbaum; editing by Louise Heavens and Elaine Hardcastle)