Tuesday, August 7, 2012

German Parties Agree on Solar Uncentive Cuts

Germany's parliamentary mediation committee approved cuts to incentives for the solar power industry on Wednesday which will see a capping of subsidies for plants with installed capacity of 52 gigawatts (GW).

The deal follows several weeks of negotiations after Germany's Bundesrat upper house suspended the government's plans to slash so-called feed-in tariffs after opposition parties and some federal states rejected the proposals.

"It was a good day for energy transition in Germany," German Environment Minister Peter Altmaier said, referring to the transformation of the energy sector ("Energiewende") following the country's decision to withdraw from nuclear power.

"I expect the development of photovoltaic to return to a more predictable path."

The heart of Chancellor Angela Merkel's original bill remains intact but some incentive cuts have been watered down.

The committee agreed that incentives for solar plants will be cut from 20 to 30 percent retrospectively from April depending on their size and incentives will be capped for installations with a capacity of 52 GW.

Medium-sized installations will be allowed more relief than originally envisaged, with plants of 10-40 kilowatts (KW) eligible for compensation of 18.5 cents per kilowatt hour.

Until now, all solar power had to be fed into the grid at guaranteed prices but under the new law, this will apply to only 90 percent of power generated from installations of over 10 KW.

Approval by the mediation committee, which includes representatives from Merkel's centre-right coalition and the opposition, effectively means the bill will now be passed.

Parliament still has to vote it through but that is little more than a formality.

Germany is the world's biggest market for solar power, with installed capacity of 24.68 GW as of 2011 accounting for more than a third of the world's total.

But several German firms have been left struggling in the last few months largely due to stiff competition from China and companies have warned against dramatic cuts to the incentives.

States run by the Social Democrats (SPD) and Greens, and some areas of Germany where solar power provides jobs and growth, had defended the subsidies.

Merkel's decision to speed up the phaseout of nuclear power a year ago following Japan's Fukushima disaster has made Europe's biggest economy more reliant on renewable energy sources. (Reporting by Madeline Chambers and Markus Wacket; Editing by Michael Roddy)

Source: http://www.reuters.com/article/2012/06/27/germany-solar-idUSL6E8HREOL20120627

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