Germany moves toward trimming solar power incentives

 @ibtimes
on January 13 2010 1:33 PM

BERLIN - The government, photovoltaic companies and consumer lobby groups moved closer on Wednesday toward an agreement on trimming state-mandated incentives for solar power to reflect a steeper overall slide in costs.

Although no decision was reached at the meeting, officials at the two rounds of hearings at the Environment Ministry in Berlin said they expected a decision on moderate reductions in the feed-in tariffs to be made soon.

There's an agreement that the level of the support has to more closely track the speed of the expansion of photovoltaic power, said Holger Krawinkel, an energy expert for the federal consumer protection agency lobby who was at the talks.

There are still divergent views on the concrete numbers. The Environment Ministry will evidently put forth a proposal early next week.

A spokeswoman for the Environment Ministry said the ministry would likely make a new proposal next week, which would then be discussed by the ruling parties. It was not clear if the next cut in feed-in tariffs would be July 1 or on January 1, 2011.

Any added reduction in the state-mandated fees that utilities pay for photovoltaic power are expected to be moderate to avoid damaging this growing sector and its thousands of jobs.

A senior government source told Reuters last month there would be no radical changes in the system that made Germany the world's leader in photovoltaic energy even though there was over-promotion of solar in some of the large-scale projects.

Industry analysts and stock markets have nevertheless been nervously watching the moves from Berlin, fearful that any steep cuts could hit the sector and prices.

Clarity on the outcome of the talks is key and needed quickly as it will impact the companies' share prices. Also, it will be crucial whether the talks will result in a change of the EEG law or a one-off cut, as the former will take substantially longer to implement, said Theo Kitz, analyst at Merck Finck.

Germany is a world leader in green energy with a 15 percent share of all electricity produced and wants to double that to 30 percent by 2020. Germany's photovoltaic industry has boomed since the Renewable Energy Act (EEG) was created in 2000.

More than half the world's solar power is produced there and some 80,000 jobs have been created.

Utilities are obliged to pay 39 cents per kilowatt hour of electricity produced for 20 years for systems installed in 2010, which is down from 43 cents for systems installed in 2009.

The feed-in tariff has been falling by about 8 percent per year before dropping 10 percent in 2010.

The BSW solar industry association has offered a 25 percent cut spread out over a period of 12 months.

Solarworld chief executive Frank Asbeck and First-Solar managing director Stepan Hansen said after the meeting the talks were constructive. Also present were Q-Cells, Bosch Solar and Applied Materials.

(Additional reporting by Markus Wacket in Berlin and Christoph Steitz in Frankfurt; Editing by Mike Nesbit)

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