German photovoltaic firms protest govt plan to slash subsidies

20 January 2010 19:31  [Source: ICIS news]

TORONTO (ICIS news)--Germany's plan to drastically cut subsidies for solar power threatens to undercut the country’s technological edge in that sector and could prompt producers to shift production of photovoltaic modules elsewhere, an industry group said on Wednesday.

German solar firms had invested heavily and solar power was now on track to become competitive with conventional electricity within three to four years, said Carsten Kornig, general manager for industry trade group Bundesverband Solarwirtschaft (BSW).

“To cut us off now as we are in the final stretch, that would be absurd,” Kornig said.

Many chemicals and specialty materials firms, including Wacker Chemie and Dow Corning, are looking to the photovoltaic sector as an important growth market.

If the cuts are pushed through as proposed, the industry could face a reduction in subsidies of between 25%-55% by early 2011, depending on market segment, compared with current levels, according to BSW.

Such a drastic cut would lead to insolvencies, job losses and a shift of production from Germany to other countries, the group said.

However, federal environment minister Norbert Rottgen said in a media briefing that subsidy levels needed to be cut to reflect lower costs and prices in the solar sector.

The government under Chancellor Angela Merkel is expected to finalise the cuts, which could come to €1.0bn ($1.4bn)/year, in coming weeks.

The move comes as Germany faces a record €86bn deficit this year amid fall-out from the global financial crisis.

Germany grants producers of solar energy, including domestic households with photovoltaic panels on their roofs, favourable feed-in tariffs for their electricity. The country’s solar subsidies count as among the most generous in developed countries.

($1 = €0.70)

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