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Solar Subsidy Cuts Sought by German Minister as Demand Slumps

January 06, 2012

Jan. 6 (Bloomberg) -- Clean-energy subsidies should be cut in Germany, the second-biggest solar market in 2011, even as the industry struggles to cope with falling demand and prices, Economy Minister Philipp Roesler said.

Subsidies for wind, solar and biomass installations need to be brought in line with market realities, Roesler, of the Free Democratic Party, said today in Stuttgart.

“It’s right that we now adjust” above-market rates paid to operators of photovoltaic power plants, Roesler told colleagues of the pro-business party. “Survivability means commercial viability.”

The comments underline tensions inside German Chancellor Angela Merkel’s government over the future of clean-energy subsidies as the nation’s solar companies struggle with slowing demand and rising foreign competition including from China. Berlin-based module maker Solon SE and Solar Millennium AG, with headquarters in Erlangen, filed for insolvency last month.

Environment Minister Norbert Roettgen, of Merkel’s Christian Democratic Union party, last month rejected Roesler’s proposal to curb future solar panel installations in Germany, Europe’s biggest economy, to 1,000 megawatts a year, down from a record 7,400 megawatts in 2010. Spreading insecurity across the clean-energy sector “is poison for the energy transformation,” he said.

Italy is projected to have surpassed Germany as the top solar market in 2011, according to Bloomberg New Energy Finance.

German Energy Revamp

Roesler said the German energy overhaul will require investments in new gas- and coal-fired power plants as well as about 4,500 kilometers (2,800 miles) of power lines. If done correctly, the plan offers “lots of new chances for growth,” he said.

Merkel shut more than a quarter of atomic capacity in March after the Fukushima crisis in Japan and plans to complete an exit from the industry by 2022. The country seeks to get at least 35 percent of its power from renewables by 2020 compared with about 20 percent now.

--Editors: Randall Hackley, Reed Landberg

To contact the reporter on this story: Stefan Nicola in Berlin at

To contact the editor responsible for this story: Reed Landberg at

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