By Isabella Kaminski

The German solar industry association (BSW-Solar) has agreed to a compromise on solar PV incentives with the Government, under which feed-in-tariffs will be reduced according to the amount of solar electricity installed annually.

The expected installed capacity for 2011 will be based on figures for new solar installations in the period from March to May. Feed-in tariffs will be reduced along a sliding scale of reductions based on these predictions.

For example, if the calculated solar PV market capacity for this year is over 3.5 GW, tariffs wills be reduced by 3%; if the projected capacity is 7.5 GW, tariffs will be reduced by 15%.  

As previously planned, funding will be cut by a further 9% at the turn of the year 2012. This new step is seen as an earlier than planned reduction, following warnings against the artificial stimulation of the solar market. The new tariffs will be introduced on 1 July, but open-space plants will not be affected until September.

Markus A.W. Hoehner, CEO of market research and consulting house EuPD Research, says: “The modification of incentives in line with market conditions along with a regular review of tariffs is generally a step in the right direction and is supported by the industry”.

However, he warns against the potential “pull-forward” effects of feed-in tariffs. “The German PV market is still overheated, the reoccurring discussion on amendments to incentives fuels this situation further. The review of the EEG [German Renewable Energy Sources Act] in 2012 will play a decisive role in the future of photovoltaic in Germany. Legislators, industry representatives and stakeholders now face the challenge of developing a concept that encompasses all sources of renewable energy.”