June 14 (Bloomberg) -- Germany’s federal government and its 16 states can’t find common ground on proposed cuts to solar-power subsidies in the world’s biggest market as installations of panels through April more than tripled.
Chancellor Angela Merkel’s government and the states failed to reach a compromise during an arbitration panel meeting, the Bundesrat, the parliament’s upper house, said in an e-mailed statement yesterday. The panel will resume talks on the subsidies on June 27.
State leaders, who are represented in the upper house, are opposed to Merkel’s planned subsidy cuts because of concerns the legislation will hurt domestic manufacturers including Solarworld AG that are already suffering from Chinese competition.
“While this may spur hopes of tamer cuts, the Bundesrat has no legal authority to overrule,” Aaron Chew, analyst at the Maxim Group, said in an e-mailed note. “While timing could be tweaked, the overarching spirit of the cuts” and the planned elimination of aid for plants larger than 10 megawatts “is unlikely to change,” Chew said.
Environment Minister Peter Altmaier will meet with state leaders on June 18 to discuss the solar subsidies, two coalition lawmakers with direct knowledge of the negotiations said on condition of anonymity because the talks are private. The two sides are so divided that the proposed cuts might be dropped altogether, one of the lawmakers said.
Merkel’s government has pushed to reduce the pace of annual solar installations by about half after new projects peaked at 7.5 gigawatts last year, making Germany the world’s top solar market by total capacity installed. A plan to lower subsidies by as much as 29 percent from April 1 was blocked by state governors in the upper house last month.
Suntech Power Holdings Co., the largest maker of solar panels, expects both sides to reach a deal on milder subsidy cuts before the summer recess that is to start next month, Bjoern Emde, a spokesman, said today in an interview.
Suntech and Trina Solar Ltd., the fourth-largest panel maker, expect Germany to install between 6 gigawatts and 7 gigawatts of solar generators this year, Jerry Stokes, head of Suntech’s European unit, and Trina Chief Executive Officer Jifan Gao, said today in separate interviews in Munich.
Germany added about 2.3 gigawatts of panels in the first four months of the year, the federal regulator Bundesnetzagentur said today. That’s more than three times the amount in the same period in 2011. The government targets between 2.5 gigawatts and 3.5 gigawatts of new capacity a year.
The industry said in April it expected an installation rally that may last through September developers try to beat the planned subsidy cuts. German solar companies want the state to push through less stringent cuts after at least six of them filed for creditor protection since December amid tumbling prices.
“Politicians are deciding about the future of photovoltaics in Germany,” Carsten Koernig, the managing director of the BSW-Solar lobby, said in an e-mailed statement on June 12. Solar companies will suffer if lawmakers “don’t make improvements quickly.”