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01/20/2012 11:49 AM     print story email story  

Solar Stocks Dive: Germany Could Cut Solar Payments Again News

After installing a record 7.5 gigawatts of solar last year in Germany, almost twice the target, the government announced it would cut solar feed-in payments once again to reduce skyrocketing costs. 

Although the news was widely expected, solar stocks dived on the world markets, also once again.

Representatives of Germany's solar industry met with government officials to find ways to address the costs of the feed-in program. The program pays above market rates for solar electricity fed into the grid - the more solar added, the more the program pays out.

Limiting new solar installation payments to 3,500-5,000 megawatt (MW) a year makes sense, Frank Asbeck, CEO of SolarWorld and a board member of BSW, Germany's largest solar industry association, told Reuters. 

"This would have worked in 2011, if the German market had not been flooded by Chinese modules at dumping prices by the end of the year," he said.

Instead of cutting payments by 15% this year, one option being floated is to cut them in smaller increments during the year. Another option is to pay more for solar systems in less sunny areas of Germany, reports Reuters.

Solar currently supplies about 3% of Germany's electricity.

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