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Ministers Agree on Advanced Cuts to Solar Subsidies

The German government has cut the subsidization for photovoltaic plants by up to 30% as of March 9, 2012. These cuts will mainly be affecting large-scale open space plants.

 

Concerning the discussion on the reduction of solar subsidies, the Federal Environmental Minister Norbert Rottgen (CDU) and the Federal Minister of Economics, Philipp Rosler (FDP), have agreed on a compromise. Thus, the German government has cut the subsidization for photovoltaic plants by up to 30% as of March 9, 2012. These cuts will mainly be affecting large-scale open space plants. Plans to implement an installation cap, as aspired to by Philipp Rosler, have been dropped, but the current cuts are still significant and are coming into effect earlier than planned.

In a joint statement, Federal Environmental Minister Norbert Rottgen (CDU) and Federal Minister of Economics, Philipp Rosler (FDP), announced an agreement in the discussion on solar subsidization on February 23, 2012. Prior to this agreement, there were week-long discussions between both ministries about a reduction of PV feed-in tariffs and a possible cap of installations. As announced recently, the cut to solar energy feed-in tariffswhich was already proposed for the 1st of July in the German renewable energy law (EEG)is to be brought forward and will now come into effect on the 9th of March. The cut is set to be higher than the planned 15%, and large systems will be more heavily burdened than smaller ones. In the future, systems will be grouped into three size categories. Here is a short overview of the planned amendments:

-Systems up to 10 kW: 20.2% reduction to 19.5 cents/kWh

-Systems from 10 to 1,000 kW: Between 25 and 29% reduction to 16.5 cents/kWh

-Systems larger than 1,000 kW: Circa 26% reduction to 13.5 cents/kWh

-Systems over 10,000 kW: Future subsidies will be dropped entirely.

-New small systems will only be remunerated for 85% of the electricity produced, middle-sized and large systems will receive remuneration for 90%.

-The bonus for own consumption will be dropped.

-From May onwards, there will be a monthly cut (degression) of 0.15 cents/kWh for all new systems.

-From 2014, a continual decrease of the yearly installation corridor by 400 MW, and from 2017 the installation corridor will lie between 900 and 1,900 MW.

The market cap of one GWp per year and 33 GWp in total proposed by the Federal Minister of Economics Rosler has hereby been made redundant. The ministries assume that these changes will lead to new installations of 2.5 to 3.5 GWp per year in Germany.

 

Instruments Do Not Have Enough Time to Come into Effect

 

The solar energy experts from the independent market research institute EuPD Research commented on the announcements: “The recent and extraordinary changes will bring drastic cuts for companies along the entire solar value chain, which, in some cases, could severely threaten livelihoods. I also see in these proposals, a negative international signal,” says Markus A. W. Hoehner, CEO of EuPD Research.

We generally regard the intervention critically. The breathing cap worked, and would have further slowed down the market after the lack of growth between 2010 and 2011. Market instruments require time in order to come into effect, there was no real need to intervene in the market again, commented Chief-Analyst of EuPD Research, Markus Lohr. Currently, there is no definite commitment to an installation goal of 52 GWp. The question ishow can this goal be achieved cost effectively? If the reductions sink too low and the market is stalled, cost efficiency cannot be guaranteed. The subsidies agreed on February 23 will not mean the end of the German market, but they will leave manufacturers and installers with very little breathing space,” said Markus Lohr.

In the coming drop of the own-consumption regulations, the experts at EuPD Research see a chance and a reason to invest further in new storage technologies. This way, new secondary fields of business would be opened, which are often a lot more effective than direct subsidization.

 

Further Information: EuPD Research (www.eupd-research.com)

 

 

For more information, please send your e-mails to pved@infothe.com.

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