Germany Cuts Solar Aid to Curb Prices, Panel Installations

Germany’s parliament approved record cuts in aid for solar power, aiming to reduce the annual pace of installations by half in the world’s biggest market for the industry.

Subsidies will be cut by as much as 29 percent starting April 1, depending on the size of the solar plant, according to the legislation posted on the parliament’s website. The measure passed by 305 votes to 235 on the strength of Chancellor Angela Merkel’s coalition majority.

Incentives for solar units pushed capacity past government targets, prompting Merkel to cut subsidies even as she seeks to wean Germany off nuclear power and expand alternative-energy sources for Europe’s largest economy. The government argues that subsidies have driven up electricity prices for German consumers while propping up solar-panel prices for domestic manufacturers.

“A few people are lining their pockets while others have to foot the bill,” Michael Kauch, a lawmaker for Merkel’s Free Democratic coalition ally, said during today’s debate. “That’s something we will not support.”

Industry officials and opposition politicians say the cuts will depress installation levels and threaten manufacturers such as Q-Cells SE (QCE) and Conergy AG, which are struggling with rising competition from China, home of the world’s three largest panel- makers.

While the legislation adds to solar-subsidy reductions made in 2011, coalition lawmakers agreed in amendments drafted this week to waive cuts for solar plants built on sites such as former garbage dumps or former military bases until Sept. 30.

Automatic Cuts

Overall, subsidies will automatically decline further if solar capacity expands more than the government’s goal of between 2.5 gigawatts and 3.5 gigawatts per year. The aid cuts will be eased if installations lag behind that pace.

Subsidies for power fed into the grid from rooftop units will apply to 80 percent of the generated electricity, compared with 85 percent in an earlier draft. That change is aimed at spurring homeowners to use more of their own solar power.

European countries including the U.K., Italy and France have accelerated cuts for solar subsidies in the past year to adapt to falling product prices and limit runaway growth. Solar panel prices fell 46 percent last year after Asian manufacturers led by Suntech Power Holdings Co. boosted production.

Germany will probably install 8 gigawatts of solar power this year after adding 7.5 gigawatts in 2011, the DIHK national chamber of industry and commerce said in a March 9 statement.

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

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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