German minister favours slashing solar tariffs

German Solar Feed-in Tariff Cuts signal reduced subsidies for photovoltaic power, pressuring renewable energy stocks and investors. Proposed 16-17 percent reductions could curb demand, affect utilities' feed-in prices, and weigh on Q-Cells, SolarWorld, and peers.

Slashing feed-in tariffs for the solar industry by 16-17 percent is feasible, German Economy Minister Rainer Bruederle said, dealing a blow to the sector which is still hoping for smaller cuts.

"Regarding the photovoltaic (industry), tariff cuts of 16-17 percent can be made. This is my opinion, this is not yet the position of the government," Bruederle said.

Shares in German solar companies extended losses on the news of potential subsidy cuts for the sector, with Q-Cells, SolarWorld, Conergy, SMA Solar and Phoenix Solar down 1.2-3.8 percent by 1024 GMT.

The OekoDAX, a composite of Germany's biggest renewable companies, fell 2.5 percent. "It looks as if there really will be a cut in tariffs and investors are nervous," said a Frankfurt-based trader.

Bruederle's comments came less than a week after Reuters cited sources as saying that such cuts were envisaged for April, sending solar stocks around the globe lower on fears that demand in Germany — the world's biggest solar market — would fall.

Markets have been awaiting plans by the German government to cut the industry's feed-in tariffs — prices utilities pay generators of renewable energy — which are now considered as being too high, amid talk that Germany may delay solar incentive cuts as well, but so far hoped for cuts of about 5-10 percent.

Although talk of a coalition delay to solar cuts has surfaced, a double-digit reduction in solar feed-in tariffs in the middle of 2010 would ruin many German firms and end Germany's worldwide leadership in solar technology, Germany's BSW solar industry association said.

Investors' appetite for shares in the once fast growing solar sector has been curbed already by oversupply of cells and modules as well as tight credit conditions, which have thrown the sector into a prolonged crisis.

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