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German upper house rejects reduction of solar panel subsidies | Germany | Deutsche Welle | 04.06.2010

A plan by Germany's center-right coalition government to reduce, and in some cases eliminate, state subsidies for solar panels was stalled Friday when the upper house of parliament voted to reject the legislation.

The ruling, which was to take effect on July 1, would have cut Germany's generous subsidies by 16 percent for solar panels placed on house roofs, where most panels are kept in Germany.

It would also cut subsidies for panels in open space areas by 15 percent and eliminate subsidies for panels on arable land all together. The government has also planned for further cuts in 2011 and 2012.

The upper house, or Bundesrat, is made up of Germany's 16 state governments. Members who voted against the legislation said it went too far, and called for a new bill with cuts not exceeding 10 percent.

A short recap of the background: due to prices falling more rapidly than the annual reduction of the feed-in rate, Germany's feed-in law for photovoltaics was a bigger success than expected. The energy major firendly Merkel-II government wanted to stall it with unscheduled cuts. However, opponents argue that such ad-hoc cuts create uncertainty and thus would lead to a collapse of the market, and a market collapse would mean job loss for the states where the new photovoltaics industry sprang up.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Fri Jun 4th, 2010 at 03:13:01 PM EST
[ Parent ]
A little more as commentary.

Last year, Germany installed 3.8 GW of new photovoltaic capacity -- way more than the 2.5 GW expected even by the industry in September. Now, the new CDU/CSU-FDP government was elected in September, and its intention to go after solar was announced right at the start, so was to be expected: the effect of people bringing forward investment before the expected turn for the worse of conditions.

However, the actual plans for a feed-in rate cut weren't brought forward until early this year, and the planned inter-annual cut was delayed until July after the very negative initial reactions. So, I began to wonder: using the extra time and the extended buy-before-the-rate-cut rally, maybe the industry will actually manage to survive this year's cut even if implemented? After all, they continued to cut prices:

In fact, the industry reported end of May that sales in the year to date actually grew vs. 2009.

So, the Bundesrat's stopping of the law may have came after its reasoning against the magnitude of the cuts turned obsolete. On the other hand: the government's plans also foresaw further rate cuts of unspecified magnitude at the end of this year and the next -- hence, had the July cuts failed to kill the photovoltaics boom, the government would have the legal means to kill it for real half a year later.

  • Sidenote 1: photovoltaics is just one side of solar, another is solarthermal. Unfortunately, the government already succeeded in crashing that market with new regulations.

  • Sidenote 2: while most photovoltaics installed in Germany were and are rooftop solar, one trend of the 2009 boom I didn't like was a relative increase of large-scale solar farms. This happened despite a lower feed-in rate for such installations. But, even in rain-soaked green Germany, many of these installations are on unusable land: former industrial or military areas, rubbish dumps, highway sound barriers. So I would not have anything against an elimination of feed-in tariffs for panels on arable land.


*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Jun 4th, 2010 at 04:14:35 PM EST
[ Parent ]

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