It amounts to slightly less than the 16 to 17 percent reduction to the so-called feed-in tariffs that sources said last week was being eyed. Roettgen added that the tariffs for solar energy generated from open field and farmland sites should also be cut from July, by 15 percent and 25 percent respectively.
Cuts in public support will weigh on companies like Q-Cells, Phoenix Solar and SolarWord, which depend on demand from Germany, the world's biggest market for solar energy as measured by installed capacity. Proponents of cuts say the industry is overly subsidised. Prices for solar products have fallen by as much as 50 percent over the last year, which has increased pressure on industry players to have more efficient production and become more competitive.
"Such a step would lead to more consolidation, but this is what the sector needs," said Olaf Koester, manager of the New Energy Fund at VCH. Additional cuts of 2.5 percent will be made from 2011 if installations exceed 3,500 megawatts (MW) in the previous 12 months. A further cut of 2.5 percent is possible once the volume surpasses the 4,500 MW mark, Roettgen said. Feed-in tariffs will be raised from 2011 by 2.5 percent should installations fall below 2,500 megawatts.