German minister pushes for solar subsidy cuts

A senior figure within the German government has today confirmed he is pushing for cuts of up to 17 per cent in feed-in tariffs for solar power, further raising the prospect that deep cuts in renewable energy subsidies will be announced later this week.

"Regarding the photovoltaic (industry), cuts of 16 to 17 per cent can be made," German Economy Minister Rainer Bruederle told Reuters, although he was keen to emphasise that "this is my opinion, this is not yet the position of the government".

Cuts of 17 per cent had been trailed last week, but that did not stop shares in German solar companies falling on the news, with Q-Cells, SolarWorld, Conergy, SMA Solar and Phoenix Solar all down by between 1.2 and 3.8 per cent by the middle of the day.

The OekoDAX, a composite of Germany's biggest renewable companies, fell 2.5 per cent, while further falls in the share prices of US and Chinese solar panel manufacturers with significant exposure to the German market could also be on the cards.

The German government's pioneering use of feed-in tariffs has underpinned the development of the world's largest solar market by requiring utilities to pay households and businesses a set rate for the renewable energy they generate.

The government has been considering reducing the level of feed-in tariffs for some time, but it had been expected that the current wave of cuts would be around 10 per cent.

Further cuts are also on the horizon, with Reuters reporting last week that feed-in tariffs would be scaled back again in 2011 if German solar projects deliver more than 3,000MW of new capacity over the next year.

Germany's BSW solar industry association led the opposition to the proposed cuts, warning late last week that a double-digit reduction in solar feed-in tariffs in the middle of 2010 would end Germany's worldwide leadership in solar technology and could force a number of firms out of business.

The trade association's warnings were echoed today by Dr Rainer Gegenwart, chief executive of Masdar photovoltaics, which has just opened a solar panel factory in Germany. He told attendees at the World Future Energy Summit in Abu Dhabi that the scaling back of the subsidies would hit some firms hard.

"We as Masdar PV have the opportunity to ship volumes abroad, but many smaller companies that benefited from this growth market do not, and will disappear from the market," he warned.