Germany’s Environment Minister, Norbert Roettgen, has revealed that his government will cut feed-in tariffs for new roof-mounted photovoltaic solar arrays by 15% from April, confirming figures reported earlier this week by Reuters. Roettgen said that from July, the tariffs for solar energy generated from open field and farmland ground-based arrays would also be cut by 15% and 25% respectively.
"The drastic short-term reduction of the tariffs in the German renewable Act will have significantly negative consequences on the German solar industry," said Marko Schulz, board member at Q-Cells, one of the world's largest makers of solar cells, told Reuters.
The recent price slump in the global solar market prompted speculation that the German government would cut public support for solar energy, and industry players have been preparing themselves for a cut in the feed-in tariff. Installers have been rushing to build projects and manufacturers have seen sales rise considerably over the last six months.
Nonetheless, the feed-in tariff cut will impact heavily on solar companies such as Q-Cells and SolarWorld that rely on demand from Germany, which analysts say accounts for at least 50% of the world's photovoltaic market estimated at around $12 billion in 2009.
During his speech at the World Future Energy Summit currently being held in Abu Dhabi, Dr. Rainer Gegewart, CEO of Masdar PV, criticised the German Federal Government for its plans to reduce the feed-in tariff, warning that: "Many solar producers, including Masdar PV, will revise their investment plans in Germany and look for new opportunities abroad… Germany's market share will decrease strongly in case of strong cuts of subsidies. We have seen in Spain what harm wrong national politics and incentives can do to the world market".
Sven Kuerten, analyst at DZ Bank, said in a note he expected the German solar market to shrink by at least 25% in volumes and 40% in revenue in 2010.
While manufacturers are up in arms, others see the tariff cut as good for the sector as it will bring about consolidation, encourage technological innovation and drive the sector towards grid parity.
The Environment Minister also announced that additional cuts of 2.5% will be made from 2011 if installations exceed 3,500 MW in the previous 12 months. "There will be changes. We want to introduce the free market and not provide existence guarantees for participants. It'll be a boost for technology," Roettgen said.
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