Thursday, March 15, 2012

German Solar Incentive Cut to be Delayed: Sources

Plans by Germany to cut solar power subsidies by up to 30 percent will be postponed to April 1 from March 9 and may be watered down for large-scale power plants, according to members of parliament in the centre-right coalition.

The deputies in Chancellor Angela Merkel's Christian Democrats (CDU), their Bavarian sister party the Christian Social Union (CSU) and the Free Democrats (FDP), junior coalition partners, agreed in a position paper, obtained by Reuters, to delay the cuts by three weeks.

The paper also said there was agreement among deputies ahead of a March 6 meeting in parliament on the issue.

The government wants to cut the expansion of solar power after Germany added a record 7,500 megawatts capacity in 2011 to bring its total to 25,000 MW, nearly as much as the rest of the world combined.

So-called feed-in tariffs (FIT) have helped Germany's solar industry blossom over the past decade, leading to a myriad of listings and creating about 150,000 jobs. The government wants to see the FIT cut by up to 30 percent in a one-off move, after a series of annual cuts of about 15 percent in recent years.

Resistance to the March 9 cuts has been especially strong in the CSU but also in the CDU itself. The CSU, based in Bavaria where solar power is especially popular, opposes steep cuts for plants over 1,000 megawatts.

The MPs in the ruling coalition had complained that the proposed March 9 date for the incentive cuts would damage confidence among suppliers and dealers.

Investors in solar power plants receive the FIT from utilities for a fixed 20-year period. Cuts in the FIT apply only to new installations.

On Wednesday, Merkel's cabinet endorsed plans to cut the state-mandated incentives for photovoltaic electricity in the world's largest market for solar power by up to 30 percent on March 9, backing the proposed cuts by Economy Minister Philipp Roesler and Environment Minister Norbert Roettgen.

The opposition Social Democrats (SPD) and Greens criticized the cuts as did some deputies in Merkel's Christian Democrats (CDU) and their sister party in Bavaria, the CSU. Bavaria has strongly benefited from the solar boom.

The government wants to add 2,500-3,500 MW capacity annually, which is why it is cutting the incentives so aggressively after a 15 percent drop on January 1 and after capacity was expanded by over 7,000 MW in both 2010 and 2011.

The incentives would fall to 0.195 euro per kilowatt hour from 0.2542 euro for small plants up to 10 kilowatts (KW), to 0.165 euro for plants up to 1,000 KW and to 0.135 euro for plants of up to 10 MW.


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