Germany Cuts Solar Power Subsidies

German lawmakers passed a law on Thursday cutting solar power subsidies by up to 15% from this summer, six months earlier than originally planned, dealing a blow to the world's biggest photovoltaic market. The German lower parliamentary house voted to introduce the cuts for solar roof installations from July and for ground-based solar arrays from September.

The vote ratified a compromise deal agreed at the start of this month by the German cabinet that brought to an end a dispute between the economy and environment ministries. The economy ministry had wanted cuts of up to 25% to slow booming growth in the sector in Germany. A government advisory panel presented a report in January saying the photovoltaic sector in Germany was growing too fast, but the German solar power association (BSW) lobby group said a cap would devastate the sector and endanger 130,000 jobs. Environment Minister Norbert Roettgen announced plans last month to bring forward the start of the subsidy cuts by six months to July 1.

Germany is the world's biggest photovoltaic energy market and has helped drive down prices for solar photovoltaic systems. The solar energy industry in Germany boomed after the Renewable Energy Act (EEG) in 2000, which guarantees investors above-market fees for solar power for 20 years from the point of installation. Germany added 7 gigawatts (GW) of capacity in 2010 to bring the total to nearly 17 GW, equal to 17 large power plants. 

In 2010 German incentives for renewables -- about half of which was for solar power -- totalled about $17.9 billion.