Wednesday, August 8, 2012

Germany Reaches Compromise On Solar Subsidy Cuts With States

German lawmakers have reached a compromise on proposed cuts to solar power subsidies, the environment ministry said late Wednesday after another parliamentary arbitration committee meeting between the federal government and federal states.

The deal includes a new total cap on any subsidies paid once solar PV installations reach 52 GW, the ministry said in a statement.

"It was a good day for energy transition in Germany," environment minister Peter Altmaier said. "We now have to focus on making renewable energy competitive. I am optimistic that solar power will reach maturity in a couple of years without any subsidies."

"At the same time, we ensure with increased support for research that Germany's solar industry will have a fair chance on the global market," the minister added, according to the statement.

The upper house of parliament, the Bundesrat, which represents Germany's 16 federal states, on May 11 voted to renegotiate legislation that would allow the government to make deep cuts in subsidies for solar-generated power.

Some German states, especially where the solar industry plays an important role as an employer, oppose the cuts, arguing they would hurt an industry already suffering from strong competition from China.

The arbitration committee agreed that subsidies for solar panel will be cut 20-30% retrospectively from April depending on the size of the installation, it said.

Medium-sized rooftop installations will receive more funding than was initially planned by the Bundestag, it said.

The annual target of 2.5-3.5 GW of new installations without further cuts will remain, it added. Initially, the government wanted to cut this gradually.

Furthermore, the government will ensure the creation of a technology open incentive program with low interest credits to support decentralized storage solutions, it said.

Germany has become the world's largest market for solar PV with an installed capacity of 27 GW since the government introduced generous feed-in-tariffs more 10 ten years ago. But, as prices for solar panels have dropped sharply, creating an installation boom over the past two years, the costs for those incentives have increased manyfold.

Solar power contributed around 10% to total electricity demand during May when monthly solar PV output rose for the first time above 4 TWh, up 40% compared with the same month last year, according to the energy lobby group BDEW. Hourly solar PV output hit a fresh record on May 25 when it reached 22,120 MW, data from EEX's transparency platform show.


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