Germany will probably install a record amount of solar panels this year even as the world’s biggest market for the industry plans to cut subsidies, according to the DIHK national industry and trade chambers.
The DIHK expects 8 gigawatts of installations this year, which would result in subsidy costs of 20 billion euros ($26 billion) in the next two decades, Martin Wansleben, managing director, said by e-mail today. Germany added 7.5 gigawatts last year, double the government’s target. More will be installed this year as module prices drop to levels ensuring favorable returns even with lower subsidies, he said.
“The competitiveness of small and midsized companies will suffer as a result” as consumers finance the federal subsidies via their power bill, Wansleben said.
Chancellor Angela Merkel’s government is seeking to reduce the annual pace of solar installations by half after incentives for the industry pushed capacity past government targets. Lawmakers in the Bundestag debated today planned cuts of as much as 29 percent to aid for the solar industry starting next month.
The government earlier this week decided to postpone the subsidy cuts for rooftop units by about three weeks to April 1 and give developers of larger ground-mounted power plants until June 30 to complete their projects after protests from the industry that the plans threaten tens of thousands of jobs. It plans to lower subsidies further every month from May.
Opposition politicians have warned that the subsidy cuts will depress installation levels and threaten domestic manufacturers including Q-Cells SE and Conergy AG, which are already struggling with rising competition from China, where the world’s three largest panel-makers are based.
“This government doesn’t want the energy transformation,” Baerbel Hoehn, a lawmaker with the opposition Green Party, said today in the Bundestag, the lower house of parliament. “It wants to keep the market open for the big utilities.”
Bloomberg New Energy Finance revised upward its German installation forecast for the year to 5 gigawatts to 7 gigawatts after the delay to subsidy cuts became public, with possible first-half additions of 5 gigawatts.
“The postponement of the tariff cuts yet again in Germany will result in a strong surge in installations in the first half of 2012, as the returns at present tariffs remain favorable,” said Martin Simonek, an analyst at London-based BNEF. “The writing is on the wall for utility-scale PV in Germany and even for commercial systems. However, the residential segment should be fine.”