The German government is proposing a cut of 15% on the subsidies it gives solar-power providers, Environment Minister Norbert Roettgen said Wednesday, reflecting what the government deems the sector's success, but the move drew sharp criticism from the industry.
The German government is proposing a cut of 15% on the subsidies it gives solar-power providers, Environment Minister Norbert Roettgen said Wednesday, reflecting what the government deems the sector's success, but the move drew sharp criticism from the industry.

This one-time cut is set to come into force in April for roof installations and in July for open field sites. Both cuts come in addition to an annual decline in subsidies that is already dictated by Germany 's Renewable Energy Act.

"The reduction in subsidies is a response to the success of photovoltaic," Roettgen said.

German Economics Minister Rainer Bruederle said Tuesday the feed-in tariffs that oblige utilities to pay a set rate for electricity generated by solar installations ought to be brought closer in line with market forces.

In addition to the proposed 15% cut, the government plans a further 10% cut in subsidies for German farmland installations, Roettgen said. Subsidies for personal use of solar power, on the other hand, are set to be raised.

The annual decline in subsidies is set to remain in place, Roettgen said. However, the government foresees a further 2.5% cut, if installations exceed 3,500 megawatts in 12 months. Another 2.5% cut is planned for all further 1,0000 MW.

Joachim Pfeiffer, lawmaker and economic spokesman for the ruling conservative parties' parliamentary group in the lower house, said changes are necessary to boost competition and end over-subsidy of the industry.

"We will have to examine in the legislative procedure whether the proposals by the Environment Ministry are sufficient to prevent an excess in subsidies and at the same time give incentives for innovations," Pfeiffer said. "Excess subsidies must be cut back."

Lawmakers can make amendments to bills in the lower house of parliament.

The Federation of Renewable Energy, or BEE, however, sharply criticized the plan. The new cuts, along with existing cuts implemented at the beginning of this year and cuts scheduled for early 2011, mean solar energy subsidies will be cut by one third.

"The solar industry can't handle this," the group said in a statement. "These proposed cuts shake the German solar industry's core and therefore the start into an age of renewable. If the environment minister wants to be able to implement his ambitious plans to nearly fully convert Germany 's energy supply into renewable energies by 2050, he has to provide reliable subsidy conditions instead of unsettling investors."

The German center-right government wants renewable energy to account for the lion's share of the country's energy supply, although a precise time frame for achieving this goal hasn't been provided yet.

As part of Germany 's energy mix, Chancellor Angela Merkel reaffirmed Wednesday that the government will extend the life spans of nuclear power plants, abandoning the existing policy under which all of Germany 's 17 remaining reactors will have to be shut down by around 2021.

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