German Solar Subsidies at Stake as Ministers Clash Over Cuts

Germany’s solar subsidy program, the subject of dispute between two ministers in Chancellor Angela Merkel’s Cabinet, will take shape today as lawmakers debate support for developers in Europe’s biggest renewables market.

Economy Minister Philipp Roesler, who heads the Free Democratic Party junior coalition partner, proposes overhauling clean-energy support by capping new solar installations to curb costs. Environment Minister Norbert Roettgen, of Merkel’s Christian Democrats, is seeking to increase the frequency of subsidy cuts and has in the past opposed a fixed limit.

The positions will be tested at a meeting of coalition lawmakers in Berlin at 3 p.m. local time. They underscore tensions inside Merkel’s government over support for renewable energy, which provides a fifth of Germany’s electricity.

Subsidy cuts would threaten German solar companies such as Q-Cells SE (QCE) and Conergy AG (CGYK), which are already struggling with rising competition from China where the world’s three largest panel makers are based. Reducing support also may undermine the government’s efforts to develop more low-carbon power sources to replace nuclear stations that Merkel plans to close by 2022.

Bring to Standstill

Introducing an installation cap or abolishing the law on renewables would “bring to a standstill the switch to clean- energy sources,” the BEE renewable-energy lobby and its allies from consumer and environment groups said in a letter to the chancellor on Jan. 20.

A cap would mean “photovoltaic is dead in Germany,” said Franz Fehrenbach, chief executive officer of Robert Bosch GmbH, the German car-parts supplier that’s pursuing a 1.5 billion-euro ($1.9 billion) push into solar energy, according to Reuters.

A draft bill dated Jan. 12 and sent by Roesler’s ministry to coalition lawmakers proposes to limit solar-panel installations to about 1 gigawatt a year on average through 2020. Germany added a record 7.5 gigawatts of panels in 2011, more than double the government’s target.

Solar power “is the biggest cost-driver in the system,” the ministry said in a letter detailing the plan obtained by Bloomberg News. “There is urgent pressure to act.”

That runs counter to proposals being touted by Roettgen, who is responsible for renewable-energy law in Germany and has the final say on the policy before it goes to Cabinet.

Regular Rate Cuts

The environment minister has rejected Roesler’s demands for an installation cap and proposed instead more regular cuts to subsidies. Roettgen told solar industry representatives last week he wanted to reduce the feed-in tariff, a premium rate for renewable power, monthly instead of twice a year.

“That model won’t work because prices for solar products are dropping quicker than subsidies,” Joachim Pfeiffer, the CDU’s economic policy spokesman, said today by telephone. “A hard cap or a quick one-time subsidy cut of about 30 percent would help, and that’s why Roesler’s proposal makes sense.”

Roettgen may detail his plan for an overhaul of solar subsidies at today’s coalition meeting, according to Pfeiffer and Horst Meierhofer, a Free Democratic Party lawmaker.

While there’s no timeframe for a revision of the renewable- energy law, Roettgen has said any changes should be carried out “quickly.”

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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