First up, from Bloomberg:
German Chancellor Angela Merkel’s incoming government intends to slash solar-power subsidies to reflect declining costs in building systems that generate energy from the sun.Lawmakers from Merkel’s Christian Democratic Union and her coalition partners, the Free Democrats, have agreed to “quite an enormous” cut in prices for power from panels made by companies such as Solarworld AG and Q-Cells SE, Gudrun Kopp, the Free Democrats’ energy spokeswoman, said in an interview today.
“We have to think of the consumers who are paying for these plants,” said Kopp in Berlin. She said the cuts would take effect in January, though declined to specify the amount of the reduction. “We’ll react quickly and decisively,” she said.
The cuts, which may be sealed this weekend as lawmakers wrap up talks to form their Merkel-led coalition following Sept. 27 elections, would squeeze solar-industry profits. Germany, the world’s largest market for solar products last year, guarantees renewable energy generators fixed payments for the power they produce to nurture solar-panel makers such as Solarworld.
Power companies are forced to pay up to 43 euro cents per kilowatt hour to owners who erect solar systems this year, about five times the price paid for nuclear power, according to the government. The tariff will drop by 10 percent next year and 9 percent in 2011 for plants generating less than 100 kilowatts, Germany’s renewable energy law states.
The coalition is also planning to add a cap on subsidies beyond annual cuts set out in the law, said Kopp. Current panel owners will be paid for power at current agreed rates, she said.
Solar Competition
A faster-than-planned drop in tariffs may speed the decline of Germany’s solar-power industry as foreign competitors ramp up production, said Manuel Frondel, an economist at the Essen-based RWI institute.
About 50,000 German jobs linked to the industry “will sooner or later melt away,” said Frondel in an interview today....MORE
And from SmallCapPulse:
Cowen’s Stone Comments on Speculation About Cuts in German FIT and Caps on InstallationsAnalyst Comments – Cowen’s Rob Stone commented on reports that Germany will be slashing its Feed in Tariff and capping installations. He said he doesn’t expect implementation any sooner than mid-2010 and already falling prices should allow the industry to adapt.Key Takeaways
· Solar firms Stone is covering with the least amount of exposure to Germany are SunPower (Nasdaq:SPWRA) and Trina Solar (NYSE:TSL)
· Thinks German FDP spokeswoman statements about an ‘enormous’ cut in FIT is premature and posturing. Any cut would still have to go through legislation in both houses of the German parliament and will result in a lower compromise.
· Big cuts in German and a cap would risk repeating the Spanish solar market collapse and ‘drastic job losses’
