Feed-in tariff discussion

German government plans radical cut in Feed-in tariff

BSW-Solar/UpmannOwners of solar power installations in Germany receive a guaranteed above-market price for the electricity they sell to the energy grid. That amounted last year to a subsidy of some €6 billion ($7.9 billion), which is financed through a levy on every household's electricity bill. Homeowners and private investors installed new solar power capacity of about 7,500 megawatts last year, while the government had only forecast a new capacity from 2,500 megawatts to 3,500 megawatts. Solar power has become more competitive, making room for cuts to the subsidies, and showing that it is "a success story amid the country's transformation toward renewable energies," Environment Minister Norbert Roettgen said.

The government therefore wants to lower the guaranteed prices starting next month, he added. An initial cut of more than 20 percent will be deepened progressively so that the price will be on average some 30 percent lower by next January. The subsidy system is staggered to give smaller installations stronger backing, and will continue to be so, with the guaranteed price per kilowatt-hour set to fall from currently 24.43 cents to 18.15 cents by January. Facilities with a capacity of more than 10 megawatts will no longer be subsidized.

These newest plans for cuts hit the German solar industry particularly hard; the industry is currently up against tough international competition and in the past years has repeatedly had to endure cuts in support of considerable magnitude. In the past three years alone, support rates for the installation of new solar power systems have been cut by half. According to an amendment that just came into force in January, support rates will fall by 28 percent in 2012, which is twice the rate of the previous year.

Around one third of regenerative power produced in Germany from renewable energy systems installed last year came from solar power. All in all, there are more then one million solar power systems installed in Germany. This year, they will cover at least four percent of Germany’s demand for electricity. The industry’s goal is to increase the share of solar power in the energy mix to at least 10 percent by 2020. Already in2013, support levels for solar power will be on par with support for offshore wind farms and biogas systems, and as of 2016, initial market segments are expected to do without support measures altogether.

Mass Protests Against Solar Phase-Out Law

German companies producing solar panels, already under pressure from stiff competition from new manufacturers in China, protested against the new cuts. Several thousand employees of about 50 firms in the segment held protest rallies across the country, the German Solar Industry Association said.

Around 11,000 people converged on the Brandenburg Gate in Berlin on Monday to protest against the “solar phase-out.” This is an impressive signal to the Federal Government to abandon plans to radically curtail the expansion of and support for solar power.

The mass rally at the Brandenburg Gate was called by the German Solar Industry Association (BSW-Solar), together with the Confederation of German Trade Unions (DGB), the Industrial Union of Steel Workers (IG Metall), the Mining, Chemical and Energy Industrial Union (IG BCE) and German Environmental Aid (DUH). At the demonstration, political leaders including Sigmar Gabriel, Jürgen Trittin and Gregor Gysi declared their solidarity with solar industry employees who would be affected by the cuts.

The organizers of the rally appealed to members of the German Bundestag and to the Federal Chancellor to forego additional cuts in the support for solar power, which is already in rapid decline. If the draft legislation is not stopped or significantly revised, the solar industry fears a market downturn of up to 75 percent. In the process, the operation of solar power systems will for the most part become unprofitable, a wave of bankruptcies will be inevitable, and 100,000 jobs will be threatened. The energiewende, Germany’s transformation of the energy system, cannot possibly succeed without a continued robust expansion of the use of solar power.