Germany will further reduce subsidies for electricity generated by
photovoltaic solar facilities in an effort to contain the costs of
supporting the nascent but rapidly expanding technology, said Economics
Minister Philipp Roelser and his Environment counterpart, Norbert
Roettgen, at a joint press conference in Berlin Thursday.
The renewed reduction in subsidies comes after a further
massive expansion of solar power production capacity in Germany in 2011
and the strong rise in the associated costs for consumers.
The announcement drew heavy criticism from the industry, with
the country's solar energy association BSW warning that the renewed
reduction of subsidies could choke the showcase solar industry and
destroy thousands of associated jobs.
Shares in solar component makers such as Q-Cells SE and SolarWorld AG fell sharply after the announcement. At 1309
GMT Q-Cells traded down EUR0.01 or 2.2% at EUR0.30. SolarWorld traded
lower EUR0.35 or 8.8% at EUR3.63. Both shares underperformed a broadly
lower market.
Roesler and Roettgen said that on top of scheduled reductions
in financial support for solar energy, the government will enforce a
one-time cut of subsidies in March by over 26% for individual
facilities.
Additionally, the government plans to introduce a cap on the
amount of electricity produced by solar facilities that is eligible to
receive subsidies and switch the presently semi-annual scheduled
reductions to monthly reviews, they added.
Roettgen said the measures will be put to the Federal Cabinet
next week and it will then be up to lawmakers whether the cuts will
become effective as planned on March 9 or at a later stage, such as
April 1.
"We want photovoltaic...but it must grow at a sensible scope
as far as cost burden and the compatibility with the net is concerned,"
Roettgen said.
Power produced by solar facilities covered only around 3% of
Germany's total electricity production in 2011. But the technology
receives by far the biggest chunk of the multi-billion euro subsidies in
annual renewable energy sources.
Germany promotes photovoltaic solar energy facilities--mostly
rooftop installations--through feed-in rates that guarantee minimum
prices for the electricity they generate. Effectively, electricity
consumers are paying for subsidizing renewable energies.
Last year, Germany added around 7.5 gigawatts of new solar
generation capacity, more than ever before, according to preliminary
figures the country's network regulator published in January. In
December alone, 3 GW in new solar generation capacity were added--more
or less the same output capacity of three large nuclear
power stations.
Apart from the generous subsidies for solar energy in Germany,
the latest run on solar facilities was driven by strong demand from
consumers amid rapidly declining component prices due to tough
competition from low-cost Asian producers, particularly from China.