Bloomberg News

Germany Solar Rush Likely as Plans to Cut Subsidies Debated

January 26, 2012

Jan. 26 (Bloomberg) -- Germany may see a rush of solar panel installations in the coming weeks after lawmakers from Chancellor Angela Merkel’s coalition failed to agree on an overhaul of the country’s clean-energy subsidy system.

A proposal backed by Economy Minister Philipp Roesler to limit total installations and introduce a quick one-time subsidy cut of about 35 percent found support in both parties but didn’t achieve unanimous backing, said Klaus Breil, a lawmaker with the Free Democratic Party junior coalition partner.

“The meeting ended without result,” Breil said by phone after the meeting last night. “This delay means we’re headed toward installations of 4 gigawatts through April as subsidies are currently way too generous.”

The comments underscore tensions inside Merkel’s government over support for renewable energy, which provides a fifth of Germany’s electricity. Roesler’s proposal goes too far for Environment Minister Norbert Roettgen, of Merkel’s Christian Democrats, who is seeking to increase the frequency of subsidy cuts but has in the past opposed a fixed limit.

Germany last year installed a record 7.5 gigawatts, more than double the government’s target, making the nation the world’s largest market for the technology.

An installation cap may threaten German solar companies such as Q-Cells SE and Conergy AG, which are already struggling with rising competition from China where the world’s three largest panel makers are based. Reducing support also may undermine the government’s efforts to develop more low-carbon power sources to replace nuclear stations that Merkel plans to close by 2022.

“If the government implements Roesler’s plans, the energy transformation is bound to fail,” Carsten Koernig, head of the BSW-Solar lobby, said in an e-mailed statement.

Horst Meierhofer, another Free Democratic Party lawmaker, said a majority of coalition lawmakers would back incentivizing solar power for own consumption instead of feeding it into the grid, cutting support for large-scale solar power plants and setting a fixed end date for solar subsidies.

--Editors: Reed Landberg, Alex Devine

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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