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Germany Doubles Solar Capacity Installations as a Result of Scheduled Incentive Cuts

As a result of the government plans for deeper cuts to the feed-in tariff incentives for small-scale renewable energy installations, Germany doubled the amount of solar power installed in January and February2012 compared to the same period in 2011. As Germany’s grid regulator confirmed at the beginning of the month, around 650MW of new solar capacity was installed in the first two months of the year, compared to around 366MW over the same periodlast year.Solar power capacity grew by 450MW in January and a further 200MW in February.These solar power installations add to the country’s already record surge in the sector witnessed in 2011, when7.5 GWof solar power was installed.

The surge in solar installations can be seen as a reaction to the government decision to cut subsidies for the technology, with the country’s renewable energy targets having largely already been met. Currently Germany is the world’s top installer of photovoltaic power, with a capacity of around 25 GW, almost as much as the rest of the world put together. But Germany has a goal of 66 GW of solar capacity by 2030 and wants to add only between 2.5 GW and 3.5 GW solar capacity each year. This being so is the reasonthe incentives are being cut drastically. The German Bundestag has approved plans to reduce solar subsidies and adopted new regulations for renewable energy as of 29 March 2012. The cutsto the feed-in tariff startedon 1 April with a larger one-off reduction by 20 percent for smaller rooftop power plants and by as much as 30 percent for larger plants. The incentives will be cut more frequently in the future. As of May 1, the subsidies will go down by 0.15 cents per kilowatt hour (kWh) every month in 2012 and will then be stable through 2013, when they will start being cut once a year until 2016.

!m[](/uploads/story/82/thumbs/pic1_inline.png)But despite the planned further subsidy cuts, the German Bundestag could still appeal the decision.The lead Environmental Committee of the Bundesrat, Germany’s Upper House, passed a majority recommendation to enter into negotiations with the Federal Government in order to bring about corrections to the Renewable Energy Sources Amendment Act. A decision on that recommendation is expected to be made on May 11.

In the context of the future government decision, Günther Cramer, president of Germany’s Solar Industry
Association (BSW-Solar), warned that despite the reported increased solar capacity many companies have started experiencing a decrease in orders and thousands of redundancies in the last few weeks. “What we now need is quick damage control to safeguard tens of thousands of jobs in production, sales and installation and to protect the existence of many medium-sized solar companies,” said Cramer.As the subsidised support for solar is expected to be slashed by 40 per cent this year, the industry is concerned that such incentive cuts will depress installation levels and threaten German manufacturers, which are already struggling with the rising competition from China, home of some of the world’s largest panel-makers.

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