German solar policy after elections

This weekend, Germany holds elections, and it is likely that a coalition between the conservative CPU and the Libertarian FDP will replace the current governing grand coalition (CDU & SPD). In all likelihood, the current rates paid for solar will be reduced.

Privately, I have been saying for several weeks now (if not several months) that few within the solar sector would actually oppose such reductions. Prices for solar panels have dropped by some 30 percent since last September. Companies are struggling to lower their costs to keep up with these plummeting prices, and I am sure that you will find the odd solar lobbyist who says we still need to keep prices up so that companies can work down there stockpiles of inventory that had built up over the past 12 months. But I think most people in the solar industry think a faster reduction in rates next year is necessary.

While some solar firms have gone bankrupt, the strongest ones still seem strong, and the main concern over here in Germany seems to be competition from China, which has not really opened its market. To make things worse, Suntech's CEO (a major Chinese PV manufacturer) recently admitted that it had been selling in the US below cost to secure a market share. Technically, price dumping is illegal, but as the article explains it would have to be demonstrated that US companies are detrimentally affected. In this case, however, it is primarily European competitors that are being squeezed out.

Yesterday, the CEO of Solarworld (a major German manufacturer) responded in a way by saying two things. First, he supports lower solar rates in the German Renewable Energy Act. And second, he thinks it would be a good idea to have environmental and social standards required for any equipment that receives special compensation from German taxpayers -- a requirement that would squeeze the Chinese out of Germany, currently the largest solar market in the world.

It seems likely to me that both of these changes are actually going to be made German law.