German Clean Energy Must Face Free Market, Economy Minister Says

Germany needs to overhaul its subsidy system for renewable energy created in the 1990s to ensure the clean-power industry remains competitive, Economy Minister Philipp Roesler said.

Power producers will need to face competitors without earning above-market prices over the long-term if the country wants to reach its clean-energy targets and not overpay, Roesler said today in Berlin. German consumers paid about 13 billion euros ($16.6 billion) last year in subsidies, mostly for power from wind and solar plants.

“We must think about how to get out of the current system or, if we can develop it, to get a new one that’s more competitive,” said Roesler, who is also vice chancellor.

Roesler’s comments underline tensions inside German Chancellor Angela Merkel’s government over the future of clean- energy subsidies as the nation’s solar companies struggle with rising foreign competition including from China, where the world’s three largest solar-panel makers are based.

Germany, Europe’s biggest power market and home to No. 4- ranked Solarworld AG, seeks to increase the share of renewables in the power mix to 80 percent by 2050 from about 20 percent now as it shutters its nuclear reactors. Roesler has in the past warned of spiraling costs linked to solar subsidies.

Berlin-based module maker Solon SE and Solar Millennium AG, a developer of solar-thermal plants, filed for insolvency last month even as the country added a record 7.5 gigawatts of solar- energy capacity in 2011, more than double the government’s target of 3.5 gigawatts.

Record Installations

While the German government may reduce solar power subsidies in response to record installations late last year, the renewable energy law in its current form has “stood the test of time,” Christiane Schwarte, a spokeswoman for Environment Minister Norbert Roettgen, said yesterday. She expects the current law to continue, she said.

German consumers finance the clean-energy subsidies via their electricity bills. Under current regulations, Germany is expected to cut solar subsidies by about 27 percent this year after a 13 percent reduction in 2011, according to the BSW-Solar industry association.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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