Oct. 26 (Bloomberg) -- Shares of German solar-power companies Solarworld AG and Q-Cells SE climbed after Chancellor Angela Merkel’s incoming government retreated from threats to cut their subsidies.

The gains came even as the benchmark DAX index dropped 1.7 percent. The government said it will talk with the solar-energy industry about “adjustments” to avoid “excessive subsidies,” according to the coalition contract published Oct. 24. Solar power is an important technology for the future, it said.

“This is a positive surprise,” Daniel Kluge, spokesman for the Berlin-based German Renewable Energy Federation BEE lobby group, said in a phone interview. “After all the tough talk, this is a sensible way to proceed.”

Earlier language drafted by lawmakers for Merkel’s Christian Democratic Union and her Free Democratic Party allies pointed to reductions in 2010 solar-power subsidies. They wanted “quite an enormous” cut in solar-power prices, Gudrun Kopp, the FDP’s energy spokeswoman, said in an Oct. 15 interview.

Such reductions would trim profits for solar companies such as Solarworld. The coalition is sending “a clear positive signal” on solar energy, Kluge said.

Solarworld rose 1 percent to 15.55 euros ($23.16) in Frankfurt trading. Q-Cells added 0.4 percent to 12.65 euros. Phoenix Solar AG slid 0.3 percent to 37.88 euros after gaining as much as 1.4 percent. It jumped 8.8 percent last week.

Power Prices

German power companies must pay as much as 43 euro cents per kilowatt hour to owners who build solar-powered systems this year, about five times the price paid for nuclear power, according to the government. Under Germany’s renewable energy law the tariff will drop by 10 percent next year and 9 percent in 2011 for plants generating less than 100 kilowatts.

Overall, Merkel’s energy policy is “satisfactory,” BEE said. While the program emphasizes the importance of alternative energy sources, plans to extend the life of nuclear power plants may hamper competition on the energy market, according to an Oct. 24 statement.

To contact the reporters on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net

Last Updated: October 26, 2009 13:00 EDT