Global Observer

Berlin cuts billions in solar subsidies

Berlin cuts billions in solar subsidies

Posting in Energy

BERLIN -- The German government has negotiated an agreement to cut solar investment subsidies by one-third, sparking outcry from both opposition politicians and environmental advocates.

BERLIN -- German government officials have agreed to cut subsidies to the country's highly-successful solar industry by up to a third, spelling out billions in losses for the sector.

The hotly-debated issue of government funding revolves around several key points, not least that some 50% of renewable energy subsidies are invested into photovoltaic technology, while the industry only accounts for some 3% of the nation's power supply.

Environmental Minister Norbert Röttgen of the conservative Christian Democratic Union (CDU) said photovoltaic power must “grow in a sensible framework when it comes to costs and maintaining grid stability,” according to TheLocal.de.

Meanwhile Economic Minister Philip Rösler explained that “if, out of 12 billion euros set aside by the Renewable Energy Act, 6 billion euros is spent on photovoltaic power, when it accounts for three percent of electricity production, then obviously we have to think about its economic value,” The Local reported.

The opposition, however, sees qualitative - if not yet quantitative - value in the subsidies, which would already be void for future investments starting March 9.

"This will break our entire solar industry," environmental politician for the Left party Eva Bulling-Schröter told German news agency dpa. "This could mean the end for solar companies in many new states." German magazine FOCUS reported that several east-German state governments have also voiced strong opposition.

The solar industry has warned of massive job losses as a result of the cuts and labeled the change "solar phase-out legislation" following months of tough competition with cheaper Chinese producers.

It is also still unclear how the German government plans to reconcile an EU recommendation for more energy efficiency, reported FOCUS. Brussels wanted to regulate companies by requiring them to sell 1.5% less energy each year, but Rösler and his libertarian party view this as a step toward a command economy.

Instead, Rösler wants EU member states to vote to increase energy efficience by 6.3% within three years, which could be achieved, for example, via the renovation of old buildings. The other option would be lowering energy consumption by 4.5%.

But the solar industry says the compromise defeats the purpose of the EU recommendation altogether, especially since it maintains that governments have a tendency to focus too heavily on new networks and power plants, as representatives explained to FOCUS.

Photo: Flickr/fihu

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Shannon Smith

Correspondent (Berlin)

Shannon N. Smith has written for WNYC's The Takeaway and TheLocal.de. She holds a degree from the University of Texas at Austin. She is based in Berlin, Germany. Follow her on Twitter. Disclosure