Germany to trim solar power subsidies on July 1

www.businessweek.com
February 23, 2010

Germany is planning a deep cut into solar energy subsidies this summer in a move aimed at lowering consumer costs, the governing coalition parties said Tuesday. The price paid for electricity from solar panels on roofs will be cut by 16% and that from larger solar energy stations by 15% starting July 1, Hans-Peter Friedrich of the governing CSU said. Currently, the power grid owners are forced by law to buy solar energy at 39 euro cents (53 U.S, cents) per kW hour, while the market price is only about 5 euro cents per kW hour. They are allowed to pass the difference on to consumers.

The prices were already cut by 9% at the beginning of the year. The new cut is meant to bring down the subsidy's cost for consumers by euro1 billion a year, according to Environment Minister Norbert Roettgen. The solar industry protested against the plans, saying yet another decrease would drive companies into bankruptcy and cost thousands of jobs. The decision puts the survival of the whole industry at risk, the German solar energy federation BSW said on Tuesday.

Plans to further trim solar subsidies were first presented by Roettgen in January. Initially, he had planned to make the cuts effective three months earlier, by April 1. Germany has been heavily subsidizing solar energy and other renewable energies since 2000, prompting an industry boom. The production of photovoltaic energy rose from 32 million kW hours in 2000 to 4.4 billion kW hours in 2008, according to industry reports. Solar subsidies rose from almost nothing to euro1.5 billion ($2 billion) in 2007.