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German Coalition Delays Solar-Subsidy Cuts on Investor Pleas

Germany, the world’s biggest solar- power market, will delay a plan to cut aid for the industry by three weeks and give developers of large-scale plants more time to complete projects, a lawmaker said.

Chancellor Angela Merkel’s Christian Democratic Union and coalition ally the Free Democratic Party have agreed to postpone subsidy cuts for rooftop units to April 1 from March 9, and give developers of ground-mounted power plants until June 30 to finish their projects, lawmakers Michael Kauch and Georg Nuesslein said today.

“I expect further small adjustment in the parliamentary process but support for the general direction of the draft,” Nuesslein, who is also an energy spokesman for the Christian Social Union, the Bavarian sister party of the Christian Democrats, said today by telephone. The bill is due to be debated March 9 in the Bundestag, the lower house of parliament.

Germany is seeking to cut the annual pace of solar installations by half after incentives for the industry pushed capacity past government targets. The opposition Green Party, the state premier of Saxony-Anhalt and companies including Solarworld AG (SWV), the country’s largest solar-panel maker, have protested that the cuts are too drastic and too soon.

Delaying the cuts “is but a mere reprieve,” Carsten Koernig, the head of the BSW Solar lobby, said today in a statement. It is “key” that the reductions after April 1 aren’t as deep.

Chinese Competition

The draft gives developers of large-scale ground-mounted plants, including those bigger than 10 megawatts, more time to finish projects they’ve already started, Kauch, environmental spokesman of the Free Democrats, said by phone today.

Plants that got preliminary construction approval before March 1 and start operating by June 30 will receive subsidies under the previous system, according to the draft. New plants bigger than 10 megawatts will get no more aid after that.

“History suggests that German installation volumes will remain robust despite the tariff cuts,” Matthew Yates, an analyst with Bank of America Corp.’s Merrill Lynch unit, said in a note today, adding that no cap was introduced.

The cuts may add to pressure on companies such as Q-Cells SE (QCE) and Conergy AG, German solar manufacturers that are already struggling with rising competition from China, where the world’s three largest panel-makers are based.

The current draft, obtained by Bloomberg News today, would give the government the power to adjust subsidies without approval from the Bundesrat, the upper house of parliament, if installations exceed or fall below government targets.

Kauch said he expects lawmakers to change that clause after the coalition parties agreed it should be adjusted, but failed to strike a compromise on the details of the changes.

The draft repeats earlier plans to reduce solar subsidies by between 20.2 percent and 29 percent and to cut them by 0.15 euro cents per kilowatt-hour every month from May.

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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