New German government takes a modest approach to solar subsidy cuts

Facebook
Twitter
LinkedIn
Reddit
Email

In line with our speculation at the very beginning of the month, the new German government is likely to cut solar subsidies – but not by a concerning amount. Reuters’ coalition source has given an inside take on what the plans for solar policies in Germany are expected to be, banishing all conjecture on the axing of the Renewable Energy Act.

Germany’s conservatives and their Free Democrat allies are tipped to reform the Renewable Energy Act (EEG) but cuts for solar power rates will be modest to prevent harming the fast-growing industry.

This article requires Premium SubscriptionBasic (FREE) Subscription

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

Or continue reading this article for free

“We’re not going to take an axe to the EEG and we obviously won’t agree to any changes that would damage such an important sector,” the source told Reuters. “Any cut in feed-in tariffs will be modest — not anywhere near as high (as) some are suggesting.”

The FDP and the CDU business wing want reforms to the EEG, talking of cutting state-mandated FiTs, for which utilities pay for CO2-free energy, by some 30%. This has hit share prices of German solar companies including Q-Cells, Solarworld, and Conergy.

However, the coalition source said any cut agreed is more likely to be half that amount – estimated to be somewhere in the region of 15%.

The FDP is at present fighting for beneficial cuts to the policy that stipulates that power consumers subsidize green energy through higher electricity bills. The current EEG adds about 3% to monthly power bills, or a total of €9 billion per year.

Previously, CDU leaders in states with solar PV industries such as Saxony, Thuringia, Saxony-Anhalt, Bavaria and Baden-Wuerttemberg have blocked steeper cuts during past reforms. The Reuters source said those states were again aligned against any drastic cuts.

“Germany is a world leader in photovoltaic and you can’t go out and destroy that industry,” the coalition source said. “We’re not going to allow anyone to run roughshod. There’s scope for a correction and we’ll agree to explore a modest reduction.” 

“It’s not only big companies but many smaller installation and electric companies that depend on the solar industry,” he said. “It’s essential that lawmakers remain a reliable partner.”

The source could not confirm anything for certain, yet he did allude to the fact that CDU leaders were not likely to agree to any demand for a 30% cut, but were far more likely to reduce the FiT by the more modest 15%.

The drop in the FiT rate has been falling by roughly 8% per year and is scheduled to drop by 9% in 2010 to €0.39/kWh.

Regardless of any of this subsidy decision-making, returns on investment have nevertheless soared in recent years as costs for PV systems have declined at a much steeper rate.

Read Next

July 23, 2024
African renewable energy company Infinity Power has reportedly signed a memorandum of understanding (MOU) with the government of Sierra Leone to develop 1GW of renewable energy projects in the country.
July 23, 2024
EneCoat Technologies has raised JPY5.5 billion (US$35 million) in Series C financing to support research into perovskite solar cells.
July 23, 2024
In the first half of 2024, Italy has installed 3.7GW of new renewable energy capacity, of which 3.3GW came from solar PV.
July 23, 2024
The modules are being shipped to SolarPro, a Bulgarian engineering, procurement and construction (EPC) company which specialises in renewable and hybrid energy projects.
July 23, 2024
LevelTen energy has published its latest report into renewable energy PPA prices, with the average European PPA price falling by 27%.
July 23, 2024
Western Australia has become the second state to sign a Renewable Energy Transformation Agreement with the Federal government, aiming to support renewable energy generation technologies, such as solar.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
July 31, 2024
1:00 PM (BST) / 2:00PM (CEST)
Solar Media Events
September 24, 2024
Warsaw, Poland
Solar Media Events
September 24, 2024
Singapore, Asia
Solar Media Events
October 8, 2024
San Francisco Bay Area, USA