Germany May Cut Solar Subsidies

Oct 14 2009 | 9:20am ET

Germany's new center-right coalition government may slash solar subsidies, according to the German business daily Handesblatt.

The paper said German Chancellor Angela Merkel’s conservative Christian Democrats (CDU) and her coalition partner, the free-market Free Democrats (FDP), want to reduce support for photovoltaic panels significantly as of January 1.

The paper cited a draft section on energy issues of the CDU/FDP coalition agreement under discussion this week. The parties want reforms to the Renewable Energy Act (EEG), and have raised the possibility of cutting state-mandated feed-in tariffs, which utilities pay for CO2-free energy, by some 30%.

Speaking to the Reuters news agency this weekend, an unnamed coalition source denied the cuts would be drastic. "We're not going to take an axe to the EEG and we obviously won't agree to any changes that would damage such an important sector. Any cut in feed-in tariffs will be modest – not anywhere near as high (as) some are suggesting."

Last year, the German government aided the solar industry to the tune of EUR 2.2 billion ($3.3 billion), but many German manufacturers have hit hard times due to competition from cheap Asian components.

Germany produces more than half of the world’s photovoltaic energy.

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