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German legislators reach "halfhearted" compromise on solar FIT subsidy support

Germany’s fiercely disputed solar subsidy policy has finally been agreed after federal and provincial governments reached a “compromise” agreement this week, although the industry has dubbed it “halfhearted”.

The deal still means significant overall cuts of 20-30% in the rates, or feed-in tariffs (FITs), paid for solar powered electricity generation while support has been capped at 52GW: If this capacity is reached (Germany currently has about 28GW of solar installed), plant operators will no longer receive any subsidies. The FIT cuts will still be backdated to 1 April 2012 and the funding limit for solar power plants of 10MW remains.

Approved yesterday by the Bundestag, or lower house of parliament, and expected to get the formal stamp of approval today by the upper house, or Bundesrat, the policy allows for annual capacity additions of 2.5-3.5GW until the 52GW limit has been reached. Under previous proposals, the expansion scale was to be gradually reduced. Moreover, as part of the current compromise, the federal government has agreed to submit a proposal, in time for further action, if the 52GW has been achieved.

Another compromise is that a new class size for medium-sized (10-40kW) roof-top installations has been introduced. These will receive a FIT of €0.185/ kWh for 90% of the electricity generated. Originally only a class size between 10 kW and 1MW was planned.

According to EuPD Research, the 10-40kw segment accounted for a quarter of the German solar PV market in 2011, with over 1.8GW installed. “A similar growth pattern can also be expected for this class size in 2012, which already shows an installed capacity of 600 MW in the first four months,” it says.

Meantime, while the 10MW per solar PV plant funding limit remains, for a “fusion of open space plants” a radius of 2km instead of 4km will come into effect.

Industry concerns

The deal will “provide a certain amount of relief in particular to investors of small and medium-sized solar power systems”, says the German Solar Industry Association, BSW-Solar. However, the association fears that the amendments do not go far enough. “Although we’re back in first gear, one foot is still on the brakes,” according to Carsten Körnig, the association’s Chief Executive Officer.

BSW-Solar insists the industry “is not fundamentally opposed to further reductions in the support for solar power” but it still considers the planned cuts to be excessive. “In the long run, the cost development for photovoltaics cannot keep pace with these cuts.”

It is also critical of plans to reduce the annual expansion of solar PV in Germany by half compared to the level of previous years, and to limit the support 52GW. “According to recent calculations conducted by Prognos AG, the continued expansion in the use of solar power in Germany will have a negligible financial impact,” it points out. “A doubling of the share of solar power in the German electricity mix from 3.2 percent (2011) to nearly 7 percent (2016) would lead to an increase in electricity prices of only 2.5 percent over the next four years.”

Meantime, the federal government has now guaranteed to introduce a market incentive programme for energy storage technologies. From 1st January 2013, €50 million is to be made available. 

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Photovoltaics (PV)  •  Policy, investment and markets  •  Solar electricity

 

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