France cuts, Germany debates solar support

PARIS, FRANCE - France slashed subsidies for solar power by 24 percent, with Germany expected to announce cuts soon, as both governments aim to deter massive speculation by the industry.

The French Energy Ministry said electricity from rooftop solar panels will now be fed into the grid for $0.61 per kilowatt hour, down from the $0.80 rate set in 2006.

Germany is also expected to announce further subsidy cuts. A top official from the German Environment Ministry was meeting with representatives from the solar industry to discuss the way forward.

Both countries react to what experts have called "energy speculation."

The building of generation capacity - whether it is rooftop panels or larger plants - has exploded recently.

Tens of thousands of people have filed applications to install panels in France in November and December to profit from the generous subsidies.

In Germany, several solar power companies have plans to erect large-scale solar panel fields across the country to cash in on money from the country's renewable feed-in-tariff program. Q-Cells, the world's largest photovoltaic cell producer, founded a company for that sole purpose.

Meanwhile, it surfaced that the lobbyists of the German solar industry have downplayed growth rates in a bid to prevent Berlin from cutting subsidies.

German news magazine Der Spiegel reports that more than 3,000 MW worth of solar panels were installed in 2009, more than four times the amount initially planned by the industry.

The industry said 682 MW were planned, but later had to admit that the actual growth rate was around 3,000 MW, Der Spiegel writes. This is costing consumers dearly: In 2009 German taxpayers funded electricity produced from solar panels with more than $15 billion.

There are talks that Berlin will cut the feed-in-tariff by around 25 percent, but the Germans will nevertheless have to pay billions more each year if growth in the industry continues.

The solar industry expects generation capacity growth rates of up to 700 MW per year until 2013 — compared with the 2009 figure, the current one seems grossly underestimated.

Experts hope that a drop in subsidies will put pressure on companies to reduce prices for their solar panels, meaning that the market share could further grow. Power from the sun accounts for only 1 percent of Germany's energy mix.