Germany to cut solar photovoltaic incentives by 16 pct from July

The feed-in tariff was already cut by 9 percent in January. German officials trying to pare back pioneering subsidies for electricity-generating solar panels agreed to block new arrays of photovoltaic panels on farmland.

German utilities are legally obliged to pay higher-than-market prices for electricity from solar panels on roofs and in fields. After a decade the government says it is time to unwind this start-up assistance, but has been bitterly opposed by a solar-power lobby.

A broad deal struck Tuesday in Berlin between the main parties in Chancellor Angela Merkel’s coalition government means the subsidies will only be retained for panels on buildings and on wasteland such as rubbish dumps, old artillery ranges or factory ruins.

The rates of return are fixed for 20 years from the date the panels are first connected to the electricity grid. Farm groups, who have been angered by big city investors buying up farm land to "harvest the sunshine," sought the change, which means the last subsidies go to farm-field arrays which were given building permits by last December and go online by the end of this year.

For rooftop arrays commissioned after July 1 this year, the feed-in tariffs are to be slashed by 16 per cent. Those rates of return had previously been cut by 9 per cent for photovoltaic systems commissioned after January 1 this year, and currently stand at 0.3914 of a euro (52 US cents) per kilowatt-hour.

Peter Altmaier, a Christian Democratic Union (CDU) caucus leader who led the inter-party talks, said, "The objective is to reduce excessive stimulation without hindering an expansion of green energy."

Manufacturers of solar panels gave staff days off work to wave placards in Berlin protesting at the cutbacks. Some environmental groups have claimed the government is betraying renewable energy.

Germany the last year accounted for half of the entire 18 billion euros ($24.5 billion) global market for photovoltaic installations. "It’s hard to give a concrete outlook (for 2010) given the great uncertainty in the market," Q-Cells’ chief executive, Anton Milner, said in a conference call for reporters. "We expect strong market growth in the future, but margins will remain under pressure."