The German environment minister and the German solar industry agreed on flexible solar photovoltaic subsidy rates that move along the lines of market growth in order to stabilize the industry and maintain competitiveness.
Germany’s federal solar industry association, BSW-Solar, and environment minister Norbert Röttgen’s proposal is to cut feed-in tariff rates by 3 percent to 15 percent when the PV market grows beyond projections. Conversely, the rates will be raised at times of declining growth.
Under this new plan, feed-in tariff rates for new PV installations will be reduced in July depending on market growth. If the market slows down and generates less than 5.3 gigawatts, the expected demand from March to May 2011, the feed-in tariff adjustment will not occur until 2012.
The proposal is to be discussed in Germany’s parliament, where it will likely face a warm welcome following the endorsement of the environment ministry.
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“The support of the industry itself bears witness to a high sense of responsibility, but is also an expression of economic rationality,” Mr. Röttgen said. “An overheated market leads to fluctuating prices and, ultimately, harms the competitive position of German solar companies.”
Half of the 13 billion euro ($17.54 billion) reallocation charges pursuant to Germany’s renewable energy act was put into solar PV last year. The sector produced about 7 GW of electricity, surpassing the 5-GW estimate.
The government deemed the industry boom as counterproductive, pushing it to reduce subsidies and narrow the market.
«Moving forward these flexible portions sets the PV industry to an ambitious goal of further reducing costs within a very short space of time, so that the price of PV systems remains attractive to consumers,” Günther Cramer, president of BSW Solar, said.
According to BSW-Solar, maintaining a reasonable level of investors will ensure industry viability so that the government can provide subsidies and facilitate further expansion.
«Flexible adjustments to the feed-in tariff significantly contribute to attaining our goal of expanding installed PV capacity from 52 to 70 gigawatts by 2020, while limiting the cost of solar power to around 2 cents per kilowatt-hour,» Mr. Cramer said.
By 2020, Germany aims at increasing solar power capacity to at least 10 percent, cutting costs by half at the same time.
