Several sources, including Bloomberg and Reuters, have now confirmed that Chancellor Angela Merkel’s Cabinet has backed plans to cut solar-power subsidies in Germany. New rooftop solar systems’ FiT rate will be chopped by 16% while solar parks built after July 1 will receive cuts of 15%, less than the 25% the Environment Ministry originally proposed for parks.
A government report has been released alongside this news, warning that German solar companies such as Phoenix Solar and Q- Cells should prepare for ‘tough’ competition from China.
Since this announcement, shares of Solarworld rose as much as 5.8%, the most since Feb. 15, while Q-Cells gained 5.1% as of 11:25 a.m. local time. SMA Technology rose 2.6%.
“It’s now important that the German solar-panel industry secure its role as the worldwide technology leader and maintain its technological advances to hold out against tough global competition,” said an Economy Ministry report distributed to lawmakers on Feb. 25. “The subsidy cuts are also a pointed signal to the industry to work on this massively.”
The cuts have been approved by the government due to the cost of solar panel prices falling as much as 40%. Without cuts, there would be a potential overcapacity of solar panels on the German market. The proposal now has to be approved by the German parliament.
Other changes to the revised FiT include an 11% cut to subsidies for systems constructed on conversion sites such as former dumps and army bases. Farmland converted to take solar systems will no longer be subsidized from July 1.