Wednesday, January 27, 2010

German Solar Subsidies May be Cut.

Along with Japan, Germany has a thriving solar energy industry, assisted by generous government subsidies. However, the companies Q-Cells SE, Solarworld AG (SAG) face less cheerful prospects now if the German government goes ahead with cutting subsidies on the price of solar-generated power. There is also the knock-on effect to manufacturers of solar panels whose profits would be marginalised. Thus far the matter remains under discussion, and any actual reduction must first be debated in parliament but could come about in April.

10 billion euros ($14.1 billion) worth of investments in new manufacturing and research through 2013 are on the table, as part of a growth industry that employs around 50,000 people. It is likely that S.A.G. will cut its own investment in Germany when lower rates come into force this year, but expand in other markets, according to its chief executive. It is expected that Banks will insist upon capital being invested in solar plants, with a "massive" decline in ground-mounted systems compared with rooftop PV modules.

Subsidized rates for solar power for consumption in Germany, are guaranteed for 20 years, but the ruling coalition of the Christian Democratic Union, Christian Social Union and the Free Democrats are deliberating about by how much exactly the guaranteed prices for electricity generated using solar panels should be reduced. For pre-existing rooftop systems, about 39 euro cents (55 cents U.S.) per kilowatt hour will be earned from local utilities, in comparison with around 5 cents per kilowatt hour paid to generators using coal, natural gas or nuclear fuel for the provision of next year's base-load electricity.

The Environment Minister Norbert Roettgen is calling for a larger reduction in the price of electricity generated from solar plants installed on agricultural land than rooftop systems, which has enraged the chief executive officer of Conergy AG, Dieter Ammer, based in Hamburg. He says, "Both the size and timing of the cuts suggested by Roettgen are unacceptable. It took us 15 years to build up a solar industry here in Germany and this attractive industry is at risk."

The BSW industry lobby group has commented that the guaranteed prices for electricity from solar panels will fall by a quarter during a two year period, spanning 2011, and it is possible that the so-called feed-in tariffs could be reduced as early as April. This might result in a "boom" during the first quarter in an effort by providers to establish themselves with the guaranteed prices before they indeed fall.

Related Reading.

"Solar Spending in Germany May Suffer With Power Cuts (Update 2)", By Jeremy van Loon and Brian Parkin.


Yorkshireminer said...

This as I see it is nothing more than a hiccup a slowing of growth due to a reduction of subsidies. Getting grid parity is the aim, once that has been reached market dynamics will drive the introduction of PV all by itself. Economies of scale is really the driver to get to grid parity, for every doubling of output prices of modules are reduced by 20%. Quadrupling of German module production to get a reduction of 40% in the price of modules to give the industry grid parity does seem to be a problem for the German exchequer and rightly so. Reducing FIT just means that it will take a little longer too get there, but get there we will. They could of cause raise the price of electricity to pay for these exponentially rising subsidies but this is of cause politically suicide.

My subjective observations are that the industry is doing very nicely in Germany, most of the new housing that I see going up in Germany all seem to have a mixture of PV and water heating panels on the roof. Perhaps the people have factored in that they can afford a higher mortgage to pay for the panel installation because they don't have to pay for the energy they save. We will get there it will just take a little longer

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