German Solar Power Market Faces Overhaul

BERLIN, Jan. 22 (UPI) — The world’s biggest solar energy market faces a major overhaul as the German government plans a significant cut to solar subsidies.

After talks with officials from the solar industry, Berlin proposed a 15 percent cut to the sum it pays for power from photovoltaic panels on top of the 5 percent already agreed.

The so-called feed-in tariff requires large utilities to buy up power generated by solar panels at prices several times the market value. This has led to German companies leading the global solar power market but also in an excess capacity within relatively chilly Germany: The country in 2009 accounted for more than half of global panel installations.

This will likely spark a rush of installation in the first three months of the year and a significant drop in the second quarter, when the cut is due to take effect, experts say.

Experts hope that a drop in subsidies will put pressure on companies to reduce prices for their solar panels, meaning that the market share could still grow. Power from the sun accounts for only 1 percent of Germany’s energy mix.

The news caused major solar companies, including German giant Q-Cells and Chinese cell maker Suntech, to take hits in Thursday and Friday trading. Shares of Arizona-based First Solar also lost — the company generates up to 70 percent of its sales in Germany.

The German decision follows a French one earlier this month to cut subsidies for rooftop solar panels by 24 percent to avoid “energy speculation.”

The building of generation capacity — whether it is rooftop panels or larger plants — has exploded recently.

In Germany, several solar power companies have plans to erect large-scale solar panel fields across the country to cash in on money from the country’s renewable feed-in-tariff program. Q-Cells, the world’s largest PV cell producer, founded a company for that sole purpose.

All that means Germany has to pay much more than anticipated for its solar boom.

More than 3,000 MW worth of solar panels were installed in 2009, more than four times the amount initially planned by the industry, according to German news magazine Der Spiegel. This is costing consumers dearly: In 2009 German taxpayers funded electricity produced from solar panels with more than $15 billion.

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Categorized | Electricity, Solar
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