With the national elections recently taking place, Germany is poised to cut its renewable energy incentives. Germany seems set to follow the rest of Europe by cutting the high feed-in tariff rate (currently set at €0.45-0.55/kWh).
Just before the election, Gerhard Stryi-Hipp, head of energy policy at the Fraunhofer Institute for Solar Energy Systems ISE in Freiburg said, "If you reduce the feed-in tariffs to a level which is very low, it could affect the market a lot," he said. "The highest risk of overreaction is with the conservative parties — with CDU and FDP."
The Renewable Energy Sources Act (EEG) of 2000 makes grid operators give priority to renewable energy sources and pay fixed feed-in tariffs for that electricity. Some argue that this incentive rate is set too high. "There is a hot debate that the fees for individual renewable energy are too high, especially solar energy," said Claudia Kemfert, head of the department of energy, transportation and environment at the German Institute for Economic Research in Berlin.
Basically, Germany will probably see a change in the RE market before any amendments are made to the law. Those with solar plans will rush to complete projects sooner than expected in order to benefit from existing incentives. Reasons behind the European country’s move could revolve around the fact it is trying to compete with Chinese module manufacturers within the country.
SolarWorld’s CEO, Frank Asbeck, has also made calls recently for regulations to keep Chinese companies’ success at bay as their ability to offer cheaper solar panels have caused concern among European companies as well as American companies such as First Solar, which has a manufacturing base in Germany. First Solar will be especially worried, as it reaped in the profits by creating cheaper, non-silicon panels. "We will discount if necessary to defend our position in this core market," said Michael Ahearn, CEO of First Solar.