It has been rumored on the wires that there will be yet another change to the German FiT plans. Reuters has now reported that the German Environment Minister Norbert Roettgen wants to delay his proposed 15% cuts in solar subsidies by one month. This means that the proposed cuts will not go ahead until May 1 instead of April 1.
Reuters claims that its government sources say that there are plans for further cuts after 2011 that could be steeper than Roettgen is now planning. This new proposal would include 3.5% additional subsidy cuts (on top of planned ~9% subsidy reduction) if the overall installations exceed 3.5GW. The current proposal calls for 2.5% additional subsidy cuts.
According to the Reuters report, the proposal to delay the 15% cut by a month has been agreed in consultation with leaders of the CDU and CSU, however it is still seeking approval from the FDP.
Analyst at Barclays Capital, Vishal Shah has reported on this new development, suggesting that the 15% April cut proposal on the table is “likely the worst case scenario and upside exists when a final proposal reaches the cabinet next week. One additional month could lead to ~400-500MW new installations (assuming Q4 run-rate), perhaps as high as 600MW (if there are more pull-ins).
The proposal for free-field FiT cuts in July has not been pulled in, which could further mitigate the blow to Q2 German demand. Finally, a greater subsidy cut from 2011, further supports our view that 2H10 demand in German could increase in anticipation of another FiT change in 2011.
Shah concluded by suggesting that any potential supply/demand imbalance is likely to be short-lived.