Germany to reduce subsidies for solar power by as much as 15 percent beginning in July

The German government and the nation’s solar industry have struck a deal that will have subsidies for the industry slashed by as much as 15 percent beginning on 1 July 2011.

In a joint announcement, Environment Minister Norbert Röttgen and Günther Cramer, President of the BSW solar industry association, said high demand for photovoltaics panels will allow the government to trim subsidies without hurting the industry.

The cuts were expected to go into effect in January 2012; however demand for PV technology in Germany has been so strong that the price of solar panels has fallen about 50 percent over the last two years, the two men said.

The above-market rates paid for solar power will be lowered in July by 3 percent to 15 percent for new installations if more than 3.5 GW are forecast for this year. The estimate will be based on data for projects connected to the distribution grid in March through May.

“In the interests of power users in Germany, solar energy must be cost-efficient and adjusted to market-price developments,” Environment Minister Norbert Roettgen said in a briefing with reporters. “A solar market that grows too quickly and overheats would push up power costs.”

Industry analysts said the agreement suggests the government and industry insiders say a critical need for the solar energy sector to grow in a more sustainable fashion going forward.

The Environment Ministry said it will implement cuts of 15 percent if capacity forecast for this year is more than 7.5 GW. The reduction will be of 12 percent if new projects exceed 6.5 GW, 9 percent if they top 5.5 GW, 6 percent for more than 4.5 GW and 3 percent if over 3.5 GW, according to the agreement.

This agreement on flexible adjustment to financial support makes it possible to avoid introducing a fixed cap to the market, Gunther said.

“A fixed cap would not only cancel out competitive market forces, but would also prove counterproductive to the objective of further reducing the price of photovoltaic systems,” he said.

For additional information:

BSW statement on agreement

German Ministry for the Environment, Nature Conservation and Nuclear Safety


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