German government to bring forward solar cuts

BERLIN (Reuters) - The German government is bringing forward plans to cut solar power subsidies by six months to July 1 as the sector’s rapid growth drives down costs and makes state aid less vital.

A construction worker fixes solar panels for a new solar power plant near Olching-Esting westward of Munich July 7, 2010. REUTERS/Michaela Rehle

The announcement on Thursday by Environment Minister Norbert Roettgen confirmed what government and coalition sources had told Reuters on January 17.

The July cuts could be as much as 15 percent if projections at the end of May suggest more than 7.5 gigawatts in new solar capacity will be installed in 2011, the sources said.

Germany added a record of around 7 gigawatt (GW) of photovoltaic capacity in 2010 -- equal to seven large power plants -- to increase its total to nearly 17 GW.

Germany is the world’s biggest market for photovoltaic, which turns sunlight into electricity, helping drive down the prices for photovoltaic systems.

The industry boomed after the Renewable Energy Act (EEG) in 2000, which guarantees investors above-market fees for solar power for 20 years.

The plans to bring forward the reductions were drafted together with the cooperation of the solar power industry in Germany and have received widespread political backing, even from opposition parties.

“This will be a significant contribution to cutting costs,” Roettgen told a news conference in Berlin. He said that each household in Germany will pay on average 60 euros in 2011 to finance the solar power incentives.

“That is getting close to the acceptable limit,” he said.

There are no plans to cap the incentives, he added.

In 2010 German incentives for solar power totaled about 13 billion euros ($17.5 billion).

The tariffs will be cut by a further 9 percentage points in January 2012, as already scheduled.

Germany’s BSW solar industry association lobby said it constructively accompanied the plans to move forward some solar support cuts to mid-2011 from 2012.

Utilities are obliged to pay higher rates per kilowatt hour of electricity produced for 20 years. That rate had been falling by about 8 to 10 percent per year before dropping an extra 16 percent in July.

The feed-in tariff fell another 13 percent in January 2011.

(Reporting by Markus Wacket; Writing by Erik Kirschbaum; Editing by David Holmes)

$1=.7413 Euro