German Conciliation Committee suggests FiT cut compromise

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The Conciliation Committee of the Bundestag, Germany’s lower house of parliament, and Bundesrat, the federal council, finally reached a compromise on July 6 over the controversial reduction of Solar Funding. The committee recommended slightly reducing the proposed 16% cuts over a three-month transition period in order to resolve the political dispute over the changes to the country’s feed-in tariff. 

The original proposal was set out as straight 16% cuts to the feed-in tariff (FiT) rate for new rooftop solar installations as well as a 15% cut in support for most open-field solar installations. These changes were due to take effect as of July 1.

The Bundestag lower house passed the cuts back in May, yet the Bundesrat upper house halted these plans later in June. Now that the mediation committee has met, a suggestion has been put forward to reduce the cuts by 3 percentage points for the July to September period, applying them retroactively from July 1 as follows:

– For roof systems: 13%
– For open space facilities: 12%
– For land conversion: 8%

Then, from 1 October, the three tariffs will be further reduced by 3 percentage points.
The Federal Network Agency has reported that Germany installed approximately 714MW in the first quarter of 2010, making it the largest photovoltaic market in the world. However, the calculation of next year’s scale will be based on the current status considering June, July, August and September’s reported performance. “The market developments during the year 2010 will be determined by external factors and the market to artificially accelerated and braked again,” said Markus AW Hoehner, CEO of market research firm EuPD Research.

“There certainly exists a very broad consensus on the fact that 2010 will be for the German market, a record year,” continued Hoehner. The analysts at Bonner expect that the installed volume in Q2 2010 will be higher than 2.5GW. For the full year, the Bonn expect around 5.5GW.
The analysts also report, as expected, that since the FiT cut suggestion, the market segments have changed very little. The small and medium installation segment is still the strongest system by far as 55% of installed capacity and 91% of the installed systems account for the size class below 50kW. The average plant size in the first quarter of 2010 was 23.2kW compared with 23.8kW in the previous year. In view of regional build-up, Bavaria is the largest market, while Schleswig Holstein is the most dynamic observed.

The analysts are confident that even with the feed-in tariff reduction, the market is not set for collapse.

The Bundesrat will vote on this new proposal on Friday July 9, however if it rejects the bill, the Bundestag can still overrule the upper house decision, yet this will cause more disruption within Chancellor Angela Merkel’s government. 

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