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German Solar Surges in December as Developers Beat Subsidy Cuts

Updated on

Jan. 7 (Bloomberg) -- German solar projects surged in December as developers rushed to complete systems before subsidies fall, driving total installation last year close to the record posted in 2010.

Developers installed 2 gigawatts to 3 gigawatts of panels last month, and total volume for 2011 will approach the 7 gigawatts reported the year before, the BSW-Solar lobby group said in an e-mailed statement.

The figures add to pressure on Chancellor Angela Merkel’s government to curtail subsidies that have supported a three-year boom, making Germany the world’s biggest market for solar power. They also indicate strengthening demand that may help offset the plunging price of panels that’s depressed the shares of manufactures from Q-Cells SE to LDK Solar Co.

“That’s probably the largest end-of-year rush ever,” Jenny Chase, the lead solar analyst with Bloomberg New Energy Finance in London, said by e-mail. “The German government’s attempt to use the ratcheting down feed-in tariff mechanism to bring the country’s market back to 3.5 gigawatts a year is not proving notably effective.”

The strength of the installations will probably trigger an automatic 15 percent cut in subsidies beginning in July, the lobby group said.

Renewable energy subsidies must fall to be more in line with the realities of the current economic climate, Economy Minister Philipp Roesler said.

Call for Cuts

“It’s right that we now adjust” above-market rates paid to operators of photovoltaic power plants, Roesler told his pro-business Free Democratic Party colleagues in Stuttgart yesterday. “Survivability means commercial viability.”

About 3.4 gigawatts of solar panels were installed in Germany in the first nine months of the year, according to Bundesnetzagentur, the grid regulator.

New Energy Finance had expected installations from 6 gigawatts to 6.5 gigawatts last year. Germany installed about 7.4 gigawatts of panels in 2010 before Merkel’s government trimmed subsidies.

Mild weather in December and lower prices for panels helped trigger the surge, Carsten Koernig, the head of the lobby, said by phone.

The country’s solar industry struggled with slowing demand in the first half of last year amid rising competition from manufacturers in China. Solon SE, based in Berlin, and Erlangen-based Solar Millennium AG filed for insolvency last month. Q-Cells is looking for a buyer.

Last month’s figures leave Germany on track to exceed the 52 gigawatts it aims to install by 2020, based on its National Renewable Energy Action Plan, New Energy Finance said.

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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