A Bloomberg report released on February 22 claims that German chancellor Angela Merkel’s government will again revise the subsidy cuts for farmland converted to take solar systems. According to an unpublished draft put together by the government, this kind of installation will no longer receive financial support.
This change comes days before the government is due to meet on the 26th. Lawmakers in the federal parliament in Berlin, the Bundestag, will then discuss the planned changes to solar subsidies as part of a debate on renewable energies.
Unlock unlimited access for 12 whole months of distinctive global analysis
Photovoltaics International is now included.
- Regular insight and analysis of the industry’s biggest developments
- In-depth interviews with the industry’s leading figures
- Unlimited digital access to the PV Tech Power journal catalogue
- Unlimited digital access to the Photovoltaics International journal catalogue
- Access to more than 1,000 technical papers
- Discounts on Solar Media’s portfolio of events, in-person and virtual
The Bloomberg article also outlined that the halt on subsidies for converted farmland would take place from July 1, 2010, a month later than the expected cuts for all other solar PV installations in the country.
Vishal Shah, senior analyst at Barclays Capital, said, “This news flow matters to all solar companies.”
“Bulls would argue that a 100% cut is as negative as a 25% cut (prior expectations) and this development should not alter the longer term thesis. Bears would point to the increasing risk to 2010 guidance (~5% risk just from this development) and tougher 2011-growth outlook. All things equal, farmland subsidy cuts could negatively impact 2011 earnings by ~15%.”
Barclays Capital’s view is that this news also impacts all Chinese companies that are likely to see more pricing pressure from companies such as First Solar. The analysts wanted to make it clear, however, that this is just a draft and could be contested when the cabinet meets on the 26th. “Nevertheless, given the market confusion from intraday positive updates from Bloomberg yesterday, we see some downside pressure on solar stocks,” said Shah.
