Germany all for reducing solar-power subsidies

FRANKFURT: German lawmakers are clear about proceeding with reductions in solar-power subsidies - of up to 16 percent. They have also offered the industry three extra months to adjust to the cuts in the world’s biggest market for photovoltaic panels.

Solar-power industry representatives said the bill on the issue, which was passed by the lower house of parliament in Berlin today, is certain to increase pressure on companies such as Q-Cells SE and Solarworld AG. The industry in Germany is facing stiff competition from producers in China.

Word from the industry is that Germany’s solar industry now faces a huge challenge — that of lowering production costs even faster than they were cut in the past. Resistance to the subsidy cuts comes mainly from eastern Germany, where much of the country’s solar industry is based.

The government’s stand is that they have been forced to cut the subsidies following the fall in solar-panel prices by as much as 40 percent, which led to a leading to a surplus on the German market. The coalition had pressed for deeper cuts than the one implemented due to rising electricity prices for consumers.

Domestic manufacturers’ shares have fallen this year mainly due to uncertainty about how much the tariffs would be cut. But according to reports from the Bloomberg New Energy Finance, despite these cuts, the German PV market is expected to remain the world’s largest this year, accounting for more than half of installed capacity