Germany announced its latest proposed cuts to its landmark solar feed-in law (FiT) and they are pretty severe. The decision will be made by the end of February.
Originally scheduled for July 1, the cuts have been pushed up to March. Although there's no cap on the total number of solar installations as was feared, the price paid is set to drastically go down.
The FiT, which pays people that produce solar energy premium electricity rates, will, as of March 9, get a rate cut to the tune of 20.2%-29%. Beginning in May, those rates will go down more every month, and after July 1, solar plants larger than 10 megawatts (MW) won't receive a premium rate at all.
As of March 9, small solar systems up to 10 kW will get EURO 0.195/kWh; up to 1,000 kW will get EURO 0.165/kWh; ground mounted plants up to 10 MW will get EURO 0.135/kWh.
As of May 1, those rates will go down by EURO 0.15 every month in 2012 and will then be stable through 2013, when they'll be cut once a year through 2016.
In 2011, Germany installed a record 7.5 gigawatts (GW) of solar.
Under the new plan, the government will target 2.5-3.5 GW for 2012, and will be reduced by 400 MW each following year to reacy 900-1,900 MW in 2017.
These are very severe cuts.
As the price of solar panels has plunged over the past couple of years, Germany has struggled to keep up with the surge in installations and thus the premiums paid for solar electricity.
The UK, Italy and France have also cut subsidies in the past year.
Constraining solar installations will, of course, have a negative impact on its indigenous solar manufacturers, which have been reeling for the past year from cheap Chinese competition.
Solar manufacturers will have to cut their margins even more to keep panel prices low enough to still be attractive.
The aim of Germany's program is to remove subsidies once the industry is competitive, which the FiT has made possible, noted Minister Philipp Rösler (Federal Ministry of Economics and Technology - BMWi) and Minister Norbert Röttgen (Federal Ministry for the Environment, Nature Conservation and Nuclear Safety - BMU) in a press conference.
Solar companies are planning a nationwide protest, under the slogan, "No demolition of solar subsidies!" More than 50 solar companies will participate.
Read about FiTs in the US, Japan, Malaysia and Europe: