German solar cuts hit parliamentary hurdle

German Solar Feed-in Tariff Cuts face a Bundesrat challenge as states block July 1 reductions to rooftop and open-field incentives, with EEG degression triggers, retroactive risks, and jobs in Bavaria and Baden-Wuerttemberg at stake.

Germany's Bundesrat upper house of parliament is unlikely to pass cuts to solar incentives so a parliamentary mediation committee would be needed to resolve the matter, government sources told Reuters.

If the parliamentary committee is called, the proposed cuts, which include a 16 percent reduction in so-called feed-in tariffs for new rooftop solar installations, would not be able to take effect on July 1, as planned, the sources said.

The impasse has arisen because states in eastern Germany, along with the big western states of Baden-Wuerttemberg and Bavaria, where the solar industry is strong and provides thousands of jobs, have decided to block approval, potentially delaying solar incentive cuts nationwide, sources said.

The Bundesrat, which represents Germany's 16 states, is due to vote on the planned changes that would cut solar incentives by July across the country soon.

The cuts, which have been passed by the Bundestag lower house, could still be applied retroactively, the sources said.

Stocks in German solar firms such as Q-Cells and Solarworld were up just recently, a move some linked to France's solar subsidy cuts and ongoing debate, outperforming a rise in the DAX leading share index.

Other changes planned by Chancellor Angela Merkel's center-right coalition, which has sought to delay solar cuts in some cases, were a 15 percent cut in support for most open-field solar installations. Support for farmland solar systems is due to be scrapped entirely.

Furthermore, cuts of one percentage point in addition to those set out in the German renewable energy act EEG would be made by the beginning of 2011, if newly installed capacity exceeded 3.5 gigawatts within a year.

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