Berlin has decided to accelerate the annual rate by which it will reduce the solar feed-in tariff from five percent to ten percent, partly because the overwhelming success of the scheme lead to concerns that its generous support was causing a proliferation of solar installations that were becoming less affordable as the German economy entered recession.
The success of the scheme has meant many more installations than expected have secured support under the EEG. Given the lower initial expectations, the subsequently much larger number of qualifying installations has taxed the allocated budget. With the economy in decline, this has meant the generosity of the scheme has become less affordable.
Consequently, the government cut the tariff for new solar plants by around 10 per cent on 1 January 2010. However, at around the same time as the shrinking of Germany’s economy in 2009, the price of silicon went into a slump, which in turn led to significant reductions in installation costs. Calls followed for a further reduction in the feed-in tariffs.
In response, the Ministry for the Environment released plans in January to reduce solar funding by a further 15 per cent in the summer of 2010 and by that amount again at the start of 2011 – this is in addition to reductions already planned.
Although the amendments are not yet law as the coalition government is still negotiating on the draft-proposal, reports in the media suggest that roof systems will receive 16 per cent less in feed-in tariff in June, in addition to the January cut of 10 per cent. They will also suffer a two per cent cut per 1000 MW of newly installed capacity should the market raise above a certain limit.
The thinking is that as the volume of installations increases overtime, costs will fall. A final parliamentary decision on the new tariff rates is expected soon.
Editor's Note: Some people believe that the recent elections in Germany signal that many people are not happy with the current administrations efforts to expand Nuclear energy at the expense of solar, and their is some hope that the FIT cuts will be postponed or softened.The thinking is that as the volume of installations increases overtime, costs will fall. A final parliamentary decision on the new tariff rates is expected soon.
Tariff Amendments Draw Fire
Proposed changes to the feed-in tariff in Germany for solar power have caused so much alarm in the PV industry there that the head of the country’s solar industry association has issued a strong warning about its possible effects. Günther Cramer, president of the Bundesverband Solarwirtschaft (BSW), went so far as to say that the proposed cuts threaten jobs. “Dozens of German solar companies would face insolvency or be forced to relocate their production outside of Germany,” said Cramer.
“The excessive feed-in tariff cut endangers one of the most important driving forces of jobs and the economy in our country. The creation of value added in the production of PV modules must be allowed to continue in Germany.” Cramer added the cuts even threaten to make the German chancellor’s policy on climate change obsolete. The BSW strongly advises a cautionary approach to reducing the feed-in tariff.
It says large sections of the German solar industry would not survive an additional reduction of the tariff for photovoltaic systems this year in the double-digit percentage range. “If this were implemented, around 50 000 jobs in Germany would hang in the balance,” a statement by the organisation reads.
Source: Renewable Energy World Read the full article here.
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