Germany may delay some solar incentive cuts

A power generating wind turbine is reflected in solar panels near Mainz, March 10, 2010. REUTERS/Thomas Bohlen

BERLIN (Reuters) - Germany may delay some proposed cuts in solar incentives, granting a longer-than-expected grace period to players in the world’s biggest solar market, according to a draft law obtained by Reuters on Monday.

Cuts in so called feed-in tariffs -- prices utilities are obliged to pay to generators of renewable energy -- for open-field sites are to be delayed by three months to October 1, the draft states.

However, coalition sources told Reuters that the new proposal was still subject to debate and that further discussions were needed.

After passing the cabinet this month, the measure will head to the Bundestag, or lower house of parliament, where Chancellor Angela Merkel’s center-right coalition has a comfortable majority.

The change would not mean a massive deviation from earlier plans as open-field installations only account for about a fifth of all solar power systems. The major part is installed on rooftops, where cuts are still to take effect from July 1.

Under the plans, support for converted farmland is to be entirely eliminated.

Plans to curb support to the solar sector -- which the Berlin government sees as overly subsidized -- have dealt a massive blow to companies such as Q-Cells, SolarWorld and Phoenix Solar, which have lost up to 40 percent in value since the plans first surfaced.

The move has also led to criticism from within the ruling government. Bavaria state Premier Horst Seehofer warned on Friday that the government’s plans were excessive.

Seehofer’s Christian Social Union (CSU) is the Bavarian sister party to Merkel’s Christian Democrats and one of three parties in her coalition.

Reporting by Markus Wacket and Erik Kirschbaum, writing by Christoph Steitz; Editing by Hans Peters